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By now, nearly everyone has heard of H1NI virus, also known as "swine flu". To put it mildly, this is no ordinary flu virus. For most people, getting a run-of-the-mill flu virus means a few days of missed work and possibly a trip to the doctor's office. Within a week or two, our bodies have fought the flu off and we're back to normal. Unfortunately, swine flu can be fatal and has already caused 700 deaths worldwide.
Worse yet, the Center for Disease Control (CDC) estimates that more than 1 million Americans are afflicted with the virus and may not even realize it. On July 15, the CDC reported almost 41,000 confirmed cases of swine flu infection and 263 deaths in the U.S. The disparity between confirmed and estimated cases can be attributed to the fact that some patients display mild symptoms and recover quickly.
IN PICTURES: How To Make Your First $1 Million
Biotechs and Swine Flu
Obviously, there's nothing mild about swine flu, and with no cure yet available, the possibility for future outbreaks exists. Small biotechs and large pharmaceuticals companies are scrambling to develop vaccines to treat the virus. This gives investors the opportunity to profit.
Hey, believe it or not there is even a swine flu index that tracks the shares of companies working on vaccines to treat the virus. The Swine Flu Index is no laughing matter either - it has outperformed the S&P 500 by nearly 8% over the past month.
The Swine Flue Index
Let's take a look a few of the small names developing swine flu treatments to see if there are any worthwhile investments.
BioCryst Pharmaceuticals is typical of many small cap biotech stocks. It has a small market cap at just $302 million. Although that's large compared to some of its rivals, it has become a target of short-term traders who know the company's fortunes hinge on its ability to develop a leading swine flu treatment.
BioCryst appears to be poised to deliver, as the company recently reported positive clinical trial results for its swine flu vaccine, peramivir. Those results have BioCryst on the cusp of pushing for late-stage trials and FDA approval for commercial sales.
Swine flu stocks have been swinging wildly in anticipation of trial results and BioCryst is no exception. The stock has doubled in the past month and is nearly 830% removed from its 52-week low of 85 cents. BioCryst also offers another surprise that is rare among small biotech companies: no debt on the balance sheet.
Another Wild Mover
Hemispherx Biopharma could be considered the poster child for wild swine flu stock fluctuations. During two days in the week of July 20, Hemispherx was the biggest gainer on the American Stock Exchange; the next day it was the biggest loser. Such is life in the land of little biotechs.
Beyond the wild stock moves, Hemispherx was not among four companies recently named by the FDA to supply vaccines for the U.S. government. The company is also trying to get its flu treatment Ampligen approved as a treatment for chronic fatigue syndrome, but has had little luck on that front. Combine that with Hemispherx's negative free cash flow and this may be one of the more speculative plays in a group littered with speculative names.
A Nod for Novavax
Novavax shares have turned in a robust performance over the past month, surging nearly 40% compared to "just" 10% for the Nasdaq. Investors flocked to the stock after the company announced on June 30 that it signed a deal with Spain's health ministry and a Spanish specialty drug maker to supply the country with swine flu vaccines. The deal is expected to deliver tens of millions of dollars in royalties and milestone payments for Novavax.
Novavax is currently in mid-stage trials to produce vaccines more quickly and cost effectively than the traditional methods. The company is expecting to land approval for its flu vaccines by 2012. Throw in the fact that Novavax just paid down $5 million in debt, which lowers its debt load to $17.7 million, and this is one of the more compelling swine flu plays.
Profits to Be Had
Swine flu stocks are just like their biotech brethren that focus on other diseases and ailments. Investors focus on the success of clinical trials and the company's ability to generate cash. That makes Hemispherx a little too risky, but BioCryst appears to be worth embracing for the speculative area of your portfolio. On the basis of the Spanish contract, Novavax is also worth a look given its low valuation. (To learn more, see The Industry Handbook: Biotechnology.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
Worse yet, the Center for Disease Control (CDC) estimates that more than 1 million Americans are afflicted with the virus and may not even realize it. On July 15, the CDC reported almost 41,000 confirmed cases of swine flu infection and 263 deaths in the U.S. The disparity between confirmed and estimated cases can be attributed to the fact that some patients display mild symptoms and recover quickly.
IN PICTURES: How To Make Your First $1 Million
Biotechs and Swine Flu
Obviously, there's nothing mild about swine flu, and with no cure yet available, the possibility for future outbreaks exists. Small biotechs and large pharmaceuticals companies are scrambling to develop vaccines to treat the virus. This gives investors the opportunity to profit.
Hey, believe it or not there is even a swine flu index that tracks the shares of companies working on vaccines to treat the virus. The Swine Flu Index is no laughing matter either - it has outperformed the S&P 500 by nearly 8% over the past month.
The Swine Flue Index
Let's take a look a few of the small names developing swine flu treatments to see if there are any worthwhile investments.
- BioCryst Pharmaceuticals (Nasdaq:BCRX)
Market Cap: $302 million
Average Daily Volume: 1.4 million - Hemispherx Biopharma (AMEX:HEB)
Market Cap: $203 million
Average Daily Volume: 10.5 million - Novavax (Nasdaq:NVAX)
Market Cap: $282.1 million
Average Daily Volume: 5.9 million
BioCryst Pharmaceuticals is typical of many small cap biotech stocks. It has a small market cap at just $302 million. Although that's large compared to some of its rivals, it has become a target of short-term traders who know the company's fortunes hinge on its ability to develop a leading swine flu treatment.
BioCryst appears to be poised to deliver, as the company recently reported positive clinical trial results for its swine flu vaccine, peramivir. Those results have BioCryst on the cusp of pushing for late-stage trials and FDA approval for commercial sales.
Swine flu stocks have been swinging wildly in anticipation of trial results and BioCryst is no exception. The stock has doubled in the past month and is nearly 830% removed from its 52-week low of 85 cents. BioCryst also offers another surprise that is rare among small biotech companies: no debt on the balance sheet.
Another Wild Mover
Hemispherx Biopharma could be considered the poster child for wild swine flu stock fluctuations. During two days in the week of July 20, Hemispherx was the biggest gainer on the American Stock Exchange; the next day it was the biggest loser. Such is life in the land of little biotechs.
Beyond the wild stock moves, Hemispherx was not among four companies recently named by the FDA to supply vaccines for the U.S. government. The company is also trying to get its flu treatment Ampligen approved as a treatment for chronic fatigue syndrome, but has had little luck on that front. Combine that with Hemispherx's negative free cash flow and this may be one of the more speculative plays in a group littered with speculative names.
A Nod for Novavax
Novavax shares have turned in a robust performance over the past month, surging nearly 40% compared to "just" 10% for the Nasdaq. Investors flocked to the stock after the company announced on June 30 that it signed a deal with Spain's health ministry and a Spanish specialty drug maker to supply the country with swine flu vaccines. The deal is expected to deliver tens of millions of dollars in royalties and milestone payments for Novavax.
Novavax is currently in mid-stage trials to produce vaccines more quickly and cost effectively than the traditional methods. The company is expecting to land approval for its flu vaccines by 2012. Throw in the fact that Novavax just paid down $5 million in debt, which lowers its debt load to $17.7 million, and this is one of the more compelling swine flu plays.
Profits to Be Had
Swine flu stocks are just like their biotech brethren that focus on other diseases and ailments. Investors focus on the success of clinical trials and the company's ability to generate cash. That makes Hemispherx a little too risky, but BioCryst appears to be worth embracing for the speculative area of your portfolio. On the basis of the Spanish contract, Novavax is also worth a look given its low valuation. (To learn more, see The Industry Handbook: Biotechnology.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Todd Shriber
Todd Shriber was a financial journalist for five years with Bloomberg News and MergerMarket.com, covering a variety of sectors, including energy, financials and technology. He is also a Series 7 license holder and has actively traded equities, forex and options.
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