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Monkeypox Outbreak is Pushing Up Smallpox Vaccine Makers’ Stocks

Story Highlights

Rising cases of the monkeypox virus are causing concern worldwide and pushing stocks of smallpox vaccine makers higher. However, weaker contagiousness and severity compared to the COVID-19 virus signals lower panic.

Over the weekend, Joe Biden, President of the U.S. said that “everybody should be concerned about” the monkeypox outbreak. The news pushed shares of certain smallpox vaccine makers higher on speculation that the vaccine was widely accepted to treat the rare monkeypox disease.

An outbreak has alarmed the masses and would need massive vaccination drives to curb it. Nonetheless, on Monday, Biden calmed the nation and said that the U.S. has enough “to deal with the likelihood of a problem.”

The monkeypox virus is in its endemic stages in the Central and West African regions. However, in recent weeks, the World Health Organization (WHO) warned that 92 cases of the virus have been reported in several countries, including the U.K., Europe, Australia, and the U.S.

According to the Centers for Disease Control (CDC) and Prevention, one confirmed case who had recently flown in from Canada has been detected in Massachusetts. Additionally, five more suspected cases of monkeypox have been detected in Florida, New York, Washington, and Utah.

Why are Smallpox Vaccine Makers Trending?

Smallpox vaccines are said to be effective against the monkeypox virus and have been used for years to treat the rare disease. Monkeypox is said to be similar to smallpox and is much less severe. The smallpox vaccines are also stored in the case of biological warfare.

Let us analyze two vaccine makers who may see their stock prices gain in the coming days.

Emergent Biosolutions (EBS)

EBS is a life sciences company with a focus on serving civilian and military clients by providing solutions for public health threats.

Its smallpox vaccine, labeled ACAM2000, is an FDA-approved drug and one of the supposed beneficiaries of the monkeypox outbreak. EBS stock gained as much as 14.5%, following Biden’s cautionary words on Monday. However, today, the stock is down nearly 5% during pre-market trading at the time of writing.

Last week, EBS announced that it was going to acquire exclusive worldwide rights to Chimerix Inc.’s (CMRX) antiviral smallpox oral vaccine, Tembexa, which is FDA approved for all groups of individuals.

Commenting on the same, Robert G. Kramer, President and CEO of Emergent, said, “The addition of TEMBEXA to Emergent’s portfolio of medical countermeasures builds upon our core capabilities and leverages our long and successful history of partnering with the U.S. government to address dangerous public health threats.”

Wall Street analysts have a Hold consensus rating on EBS stock based on one Buy and four Holds. The average Emergent Biosolutions price forecast of $42.40 implies 15.6% upside potential to current levels. Meanwhile, amid the monkeypox boom, EBS stock has gained nearly 16% in the past five days and is down 23.6% year to date.  

Bavarian Nordic (BVNRY)

Based out of Denmark, Bavarian Nordic focuses on the development, manufacturing, and commercialization of cancer immunotherapies and vaccines for infectious diseases. 

BVNRY stock has surged nearly 69% in the past five days after the monkeypox outbreak was reported in Europe. The company has secured a contract for the supply of its Imavanex smallpox vaccine for a European country in the wake of the outbreak.

The smallpox vaccine is labeled as Jynneos in the U.S., and in Canada, it is known as Imvamune, and it is known to be an effective drug against monkeypox. The U.S. government has already stockpiled Jynneos in an attempt to curb a breakout. 

Bavarian recently reported its interim results for the first three months of 2022. During the quarter, it narrowly missed estimates but reiterated 2022 revenue. Responding to this, Needham analyst Gil Blum maintained a Buy rating on the stock with a price target of kr380, which implies a whopping 71.3% upside potential to current levels.  

Blum is optimistic about the company’s performance because he believes “Jynneos orders from the U.S. and other governments could exceed expectations,” and its Ebola vaccine could get approval and lead to further orders from Janssen.

Concluding Thoughts

Despite the fact that monkeypox is not highly contagious, both Emergent Biosolutions and Bavarian Nordic are set to benefit if the disease continues to spread. Nonetheless, both drugmakers also have other drugs and vaccines in the pipeline, which are working well for the companies.

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