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3 Stocks Soaring on Spread of Ebola Virus Epidemic - Stocks in the News


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On Tuesday, September 30, The Centers for Disease Control and Prevention (CDC) and Texas Health Department confirmed the first Ebola Case in the U.S.  The CDC confirmed through laboratory tests that the person who traveled to Dallas, Texas from Liberia had Ebola.  The patient did not develop symptoms until approximately four days after arriving in the U.S. on September 20.

The CDC said, "Ebola is only contagious if the person is experiencing active symptoms".  Since the patient expressed active symptoms days after the return flight, it is safe to say that nobody else on that flight was affected.

Pharmaceutical Stocks Gain

The three pharmaceutical companies mentioned on the CDC website, NewLink ( NLNK ) Genetics Corp, Tekmira Pharmaceuticals ( TKMR ) and Biocryst Pharmaceuticals ( BCRX ) gained 8.78%, 18.67%, and 1.12% respectively on Wednesday. That is because all three of these companies are working towards vaccines for Ebola, and now with the virus on American soil, there has never been a greater focus on finding a way to stop it from spreading further.  

Below, we briefly highlight these three companies and their prospects given this current panic over Ebola:

Newlink Genetics

New Link Genetics Corp and the Public Health Agency of Canada are attempting to develop an experimental vaccine for Ebola.  They are currently working with the Department of Defense for this possible vaccine candidate and have not stated what Phase trial they are in.  There are currently no FDA approved vaccines for Ebola.

Newlink gained about 9% in market value adding about $53 million on the news of a possible vaccine candidate. 

Tekmira & Biocryst

Tekmira Pharmaceutical alongside with Biocryst Pharmaceutical received funding from the department of Defense's Defense Threat Reduction Agency and have therapeutic candidates for Ebola in early development.  Biocryst added about $13 million in market value raising their market value to about $714 million in one day.

Main Difference

Newlink is currently working on a vaccine while Tekmira and Biocryst are working on therapeutic candidates for Ebola.  Vaccines are given to people before they are exposed to a virus or bacteria that cause a disease.  A vaccine stimulates the immune system to generate antibodies and cellular immunity that can fight off infection if it were to occur.  Typically, therapeutics are provided to people who are already infected with the virus.

Speculation vs Actuality

It is highly unlikely that Ebola will become a serious threat to people in the U.S., but Americans seem to be very precautious when it comes to speculative epidemics.  Amid the Japan nuclear crisis in 2011, the sales of anti-radiation tablets in US and Canada soared.  

The website, nukepills.com, received 3,800 orders in 18 hours at the peak of the pandemonium.  Professor Gerry Thomas , chair in molecular pathology at Imperial college London, said ," This has been so massively overhyped by the media it's unbelievable."

I am not saying the Japan event is as widespread as the current Ebola epidemic, I am just stating that Americans tend to go for the worst case in these types of situations and often overreact.

Still, in the short run, investors should be more interested in investing in Newlink given this stage of the Ebola Epidemic.  If the Ebola epidemic continues to the point where there is a small population that are affected by Ebola, look for potential vaccine sales to fly through the roof in preparation from spreading the virus even more.
But if the Ebola virus actually becomes a U.S.-wide epidemic, the Biopharmaceutical companies like Tekmira and Biocryst that are in the process of creating a treatment will be the stocks that investors will want to invest in. 

Possible Opportunity

With investors worrying about the CDC and the Department of Defense on how they are going to prevent the Ebola virus, there might be an opportunity to gain on the down-side.  If the CDC does their job and correctly contains and prevents the Ebola virus from escaping that one patient, then the market could sell off the impacted stocks. 

If investors feel that the Ebola virus will pass over and will not become an epidemic, this spike in stocks might be the perfect time to short them and reap the gains when investors start selling off.

Bottom Line

The Ebola virus has swept across West Africa and has made its way to America.  Investors are hoping to capitalize if the Ebola virus rapidly breaks out throughout America.   Biopharmaceutical companies working with the CDC and the Department of Defense are doing their best to create treatments and vaccines if Ebola breaks out.  Depending on the containment and rapid response by authorities, investors should keep a watch to see if Ebola becomes more than just another one-day news event or a serious health concern instead.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BIOCRYST PHARMA (BCRX): Free Stock Analysis Report

NEWLINK GENETIC (NLNK): Free Stock Analysis Report

TEKMIRA PHARMAC (TKMR): Get Free Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Stocks
Referenced Symbols: CDC , BCRX , NLNK ,



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