About the best that can be said for biotech stocks right now is that a punishing January is finally over. Unless, of course, you have some sort of vaccine or new technology that just might be used one day to combat the sudden onslaught of the Zika virus.
In those few cases, January ended on a high note, as the Zika story--"Zika emergency talks to take place"--grabbed headlines around the world.
Every new pandemic story, whether it's bird flu or Ebola, excites a group of investors and analysts who like to spotlight who might be in the lead with experimental assets that may be snapped up by governments, even if it's far, far away from any kind of pivotal test. And there are plenty of media outlets only too ready to lend a hand as they feed a burst of 24/7 coverage.
Not surprisingly, Inovio ($INO) took the lead in this new race last week. The company touted its chances of having the first vaccine ready for human testing, while one of the scientists involved, Canada's Gary Kobinger, told reporters it could be ready for use later this year.
"I believe this will be the first to go into human testing," Inovio CEO Joseph Kim said in an interview with Reuters. "We believe we're ahead of the pack in the race for a Zika vaccine."
Over the years, Inovio has positioned itself in a variety of vaccine development races: swine flu, bird flu, Ebola, MERS and now Zika. The biotech won a $45 million government contract for its Ebola work, though the outbreak has since burned out. But so far Inovio, which was founded 36 years ago, has never actually gained an approval for any of its synthetic DNA vaccines.
It did, however, see its shares gain 15% on Friday and another 6% this morning as investors scrambled to find a stock with legs.
That surge followed Inovio's statement on a MERS vaccine in development with GeneOne Life Science, which also got a bounce last week, asserting that its Ebola work had established that its vaccine tech could be quickly applied to MERS, Zika and just about anything else that comes along.
Intrexon ($XON)--after its purchase of Oxitex last year--also gained some favorable attention for its work on a genetically modified mosquito which could be used to combat the outbreak. Stifel analysts pegged it as a $200 million to $400 million "opportunity." And some private outfits like Hawaii Biotech are also being tapped as players.
While analysts are counting the biobucks seemingly up for grabs on the table, there's another side to the equation that investors might like to think about.
GlaxoSmithKline ($GSK) and Sanofi ($SNY), both huge players experienced at the long-term development of vaccines, are looking to see how they can get involved. But neither company is touting some overnight miracle that will net big money.
"There are too many unknowns about Zika to reliably judge the ability to research and develop a vaccine effectively at this time," Sanofi noted last week.
Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases at the NIH, also provided a bucket of harsh reality.
"While these (new) approaches are promising, it is important to understand that we will not have a widely available, safe and effective Zika vaccine this year and probably not even in the next few years," Fauci said, according to The New York Times.
We will, though, have a new race that will be closely followed by investors. And another new vaccine R&D race is only an outbreak away. -- John Carroll (email | Twitter)