PTR Exclusives

Four Monkeypox Stocks to Watch

The World Health Organization (WHO) will vote on whether to declare monkey pox a public health emergency- the WHO’s highest alert- this week.

On June 8, WHO Director-General Tedros Adhanom Ghebreyesus cautioned that the window to contain the global outbreak may be narrowing.

A public health emergency of international concern is a warning for governments to prepare their health care surge capacity to respond to a circulating virus. It would trigger international coordination on the response.

There have been 1600 cases across 39 counties and an additional 1500 suspected cases reported to WHO since the start of May. The United States has reported 72 cases across 18 states in the last month, making it the largest monkeypox outbreak ever.

It should not have a major impact on the global economy, but the market may be sensitive to headlines as we emerge from the COVID global pandemic.

Most of the people have had mild illness, have not been hospitalized and recovered on their own. It is not as transmissible and does not pose as high a risk of severe disease as COVID. It is like smallpox but not as deadly with a 3-6% mortality rate in countries where it is endemic.

The virus is most often spread through direct contact. It can also be spread through clothing, bedding, and other items used by a person with monkeypox. Rash and sores from monkeypox can be itchy and painful.

Here are a couple of stocks that should see volatility around headlines:

Siga Technologies (SIGA)

SIGA makes one of the few available treatments against the disease. Its only commercialized product, Tpoxx, was approved by the FDA in 2018 as a treatment for smallpox. It is believed to be effective against monkeypox because there are similar replication cycles and genomes.

Tpoxx is currently being tested in two clinical trials in Africa as a monkeypox treatment. It has been given approval under the compassionate use program in past cases of poxvirus illness and was approved in 2022 by the EMA for treatment of orthopoxvirus diseases which includes monkeypox. It has an estimated efficacy of approximately 90% in these situations.

There are approximately 1.7 million courses of Tpoxx in the Strategic National Stockpile and it is seen as incredibly stable given its shelf life of approximately seven years.

The company has been in discussion with several government bodies around the world for a potential manufacturing ramp up.

Shares of SIGA have chopped around the $9-14 area since late May. This sets up as the best trading vehicle as its 40 million float provides liquidity.

Shares are up 97% YTD but valuation remains reasonable at 17.7x earnings.

Bavarian Nordic (BVNRY)

The Dutch company produces Jynneos which is the only vaccine approved anywhere against both smallpox and monkeypox. It is listed as Imvamune in Canada and Imvanex in Europe. Its label in Europe does not cover the monkeypox designation.

The company signed a supply contract for Jynneos with an unnamed country to ensure sufficient supply to meet the country’s requirements for vaccinating individuals at risk of monkeypox.

BVNRY will not release information on the country who made the order, but it did jack up its 2022 revenue guidance to reflect the increased demand. Revenues were raised form approximately $29 million to a range of $186-215 million for 2022. It signed an additional deal with a European country but it does not expect a significant impact to revenues.

The announcement comes after the CDC said it is in the process of releasing doses of Jynneos from the national stockpile.

The Department of Health and Human Services (HHS) instructed the company to deliver an additional 36,000 doses as part of the drawdown from a United States vaccine stockpile.

Currently, it only has 1,000 doses available in the United States.

A quick glance shows an uptick in volume starting on March 19. Shares have bounced around the $9-11 area. This sets up as the most legitimate play for the monkeypox theme as they already have multiple contracts in place.

Volume and liquidity remain light, so traders will need to proceed with caution if trading this name.

Emergent BioSolutions (EBS)

Like SIGA, the company’s smallpox vaccine, ACAM2000, is believed to be effective against monkeypox. ACAM2000 is already in the national stockpile.

The company announced that it made a $225 million deal with Chimerix to acquire the global rights of another smallpox drug, Tembexa.

EBS was recently in the news as the company severed ties with Johnson & Johnson (JNJ). The two sides dissolved their manufacturing agreement which could raise some concerns for investors.

Shares have been trending lower since hitting $137 in August of 2020. It has settled in the $28-30 over the past two months. The 45 million float and 8% short interest will open this up to bouts of volatility.

Forward earnings stand at a reasonable 11.7x.

Moderna (MRNA)

The company announced that it is researching a potential mRNA vaccine for monkeypox and is planning preclinical testing of a candidate.

Moderna specializes in vaccines and therapies that use messenger RNA to trigger the production of certain proteins in cells. Spikevax, its COVID vaccine, stimulates cells to make the coronavirus’ spike protein to spur immune response. Scientists have identified several proteins on monkeypox that antibodies bind to. This gives mRNA viruses targets.

Shares of MRNA have had a volatile couple of years as it emerged as a major player on the COVID vaccine front. The stock rallied from the $50 area to a high of $497 in August of 2020. This will help provide legitimacy to MRNA being viewed as a monkeypox play.

Shares have cooled off from the white-hot rally in 2021. We have seen them settle at the $125 level. This sets up as key support.

MRNA trades at forward earnings of 15x which is far more manageable for investors.

Tonix Pharmaceutical (TNXP)

The company announced that United States regulators issued a patent covering the technology used in monkeypox and smallpox vaccine candidates.

The company released data from its TNX-801 to protect against monkeypox. All eight animals vaccinated were fully protected with sterilizing immunity from a challenge with intra-tracheal monkeypox. The vaccinations were well-tolerated.

Shares of TNXP trade at $1.92. It has a low float of 16.3 million shares. This promises to be the most volatile name in the group which will make it an interesting play for retail traders.

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