Some might think they're feeling déjà vu. A virus is making headlines as it spreads from country to country. The U.S. president publicly addresses the issue. No, this isn't about the novel coronavirus. Instead, several countries are now experiencing a monkeypox outbreak.
Monkeypox was first discovered more than 60 years ago, when it occurred in monkeys used in research. By 1970, the first case of the viral disease in humans was recorded.
Four stocks soared last week as a result of the recent headlines about the latest monkeypox outbreak. Are those stocks smart picks to buy now?
1. Bavarian Nordic
Bavarian Nordic A/S (OTC: BVNR.Y) ranked as the biggest winner of all with rising concerns about the monkeypox virus. The biotech stock has skyrocketed close to 75% higher since May 16, 2022.
The company currently has four vaccines on the market. One of them, Jynneos/Imvamune/Imvanex, has been approved in the U.S. and Canada for immunizing against smallpox and monkeypox. It has also been approved in Europe but only for smallpox vaccination.
Bavarian Nordic announced on May 19 that it has secured a contract with an undisclosed European country to supply the smallpox vaccine as a direct result of monkeypox cases in the country. While no financial details for the deal were provided, the amount wasn't enough to change the company's guidance for 2022.
2. SIGA Technologies
SIGA Technologies (NASDAQ: SIGA) trailed relatively closely behind Bavarian Nordic. Its shares have vaulted nearly 60% higher since May 16.
The company markets TPOXX, a smallpox treatment that's available in both oral and intravenous formulations. The therapy's approved label in the European Union also allows it to be used in treating monkeypox.
Chimerix (NASDAQ: CMRX) stood out as another big winner that benefited from the monkeypox news. The stock has soared more than 40% over the past eight days.
Like SIGA, Chimerix markets a therapy that's approved for treating smallpox infections. However, the company recently announced that it's selling the exclusive global rights to that therapy, Tembexa, to Emergent BioSolutions (NYSE: EBS). Chimerix will receive $225 million upfront plus potential milestone and royalty payments.
4. Emergent BioSolutions
Last -- and least (based on recent performance, anyway) -- is Emergent BioSolutions. Its shares have jumped close to 40% since early last week, driven by the monkeypox outbreak.
Emergent announced its purchase of rights to Tembexa on May 16. However, the company also already has a smallpox vaccine, ACAM2000, on the market. The vaccine can also be used to prevent infection by the monkeypox virus.
Are they buys?
It's important for investors to realize that monkeypox almost certainly won't present an opportunity anywhere close to the magnitude of COVID-19. So far, there have been more than 100 cases of monkeypox reported worldwide. The numbers could increase, but monkeypox probably won't be nearly as concerning as COVID-19 -- mainly because we already have effective vaccines.
Some countries could boost their stockpiles of smallpox/monkeypox vaccines and treatments. However, President Biden stated on Monday that the U.S. already has enough vaccines on hand.
I think that the surges for Bavarian Nordic, SIGA, Chimerix, and Emergent BioSolutions in recent days already price in the potential that the monkeypox outbreak presents to the companies. It's likely that some of the stocks have even increased more than the monkeypox opportunity warrants.
My view is that none of these four stocks is an overwhelmingly compelling pick right now. There are plenty of other alternatives that offer better risk-reward propositions.
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