Monkeypox is a pandemic. The market is still pricing this in. Consequently, certain stakeholders will gain tremendously in share price over the next several months, as they have in part already. Others will effectively, “pump and dump” in the speculative ecstasy of potential pharmaceutical solutions for an emerging pandemic. As of August 8th, over 31,800 have tested positive (CDC). There are few approved vaccines or antivirals for viruses in the Orthopoxvirus genus. JYNNEOS, by Bavarian Nordic, a Danish biotechnology company, is one of the FDA-approved vaccines for prophylaxis (prevention) smallpox. Because of this, in the last few months, it has seen its share price rise 170% from recent lows. Its market cap is at present $3.5 billion.
As smallpox and monkeypox are closely related, they present similar surface proteins, meaning solutions for treating smallpox often work effectively against monkeypox (and vice versa).
SIGA Technology is an American biotechnology company. In the pipeline is TPOXX (or Tecovirimat), an FDA-approved antiviral for the treatment of smallpox, available both orally and intravenously. It is currently under a compassionate use expansion by the CDC, for use against monkeypox (which was recently streamlined, making it somewhat easier to receive treatment in a timely manner).
Arguments are made that little to no data is present suggesting efficaciousness in monkeypox. However, it should be noted much of the data from the original trials for TPOXX (on which the FDA based their approval for smallpox) to determine efficacy figures were based on animals infected with monkeypox. For safety testing, human subjects were tested. The data showed sufficient safety.
Presently, real-world data is being collected worldwide, and trials are underway in Europe. This may help contribute towards an EUA (emergency use authorization for the USA), if one is not issued before the bulk of said data is released. An imminent authorization seems possible due to the exponential rise in case rates among multiple cohorts of the population.
Fortunately, TPOXX is approved in Europe and the UK for the treatment of monkeypox, meaning high volume orders may be probable in these nations prior to the completion of new extensive human trials.
One may say, “the drug looks fine with little present competition but will there be sufficient and durable demand over the next 6–12 months and beyond?”.
It is currently a pandemic. Furthermore (in my opinion) significant spread is likely to occur within the general population, contrary to present data broadly showing it within the so-called “MSM” segment of the population.
If Monkeypox continues to spread at greater case rate levels and a commensurate adoption of TPOXX for general treatment occurs (AKA: large orders from several governments/countries), expect the stock price to rise many multiples from here.
The share price is $22 (as of 8/9/2022), having risen ca. 190% since the outbreak began. Based on orders thus far, it is reasonable to assume large-scale orders will be priced between ~$300-$1000/dose. International sales thus-far have been at the ~$1000 a course price point, whereas US sales are ~$300/course. If the top 30 countries (in terms of cases) order 100,000 TPOXX doses each (on average), SIGA would incur approximately $2,000,000,000 in revenue, facilitating significant upward movement in stock price as the market capitalization is only $1.76 billion as of 8/2/2022.
-Announcement of orders from multiple countries.
-Emergency funding and orders (expected within 6-8 weeks [speculation]).
-Release of new real-world data (2-3 months).
-Release of trial data (4-6 months).
-Continued proliferation and rapid growth of monkeypox cases.
-Projected courses ordered/preordered internationally (6 months): 3,000,000-5,000,000
-Projected Revenue (6 months): $2,100,000,000-$3,500,000,000
-Project share price: $150-$300
The above estimates are based on TPOXX being a primary treatment drug for monkeypox, coupled with a continued proliferation and expansion of monkeypox cases. Possible delays in widespread administration and FDA approval (for the treatment of monkeypox) are possible, and therefore, the investment should not be considered risk-free. These estimates are based on a relatively (though not overtly) pro-active approach by public health authorities worldwide to treat the disease. If public health authorities consider a gap in data is present, significant delays for mass orders may occur. This may be related to a decision that the disease has few severe outcomes, and hence more testing may be required to establish the risk-benefit profile is sufficient for some/most cohorts. On the other hand, multiple severe longer-term complications are known to exist for the virus (both in this out-break, and past), which may contribute to an expedited widespread implementation of TPOXX.
In the following paragraphs, it will be detailed how SIGA holds an effective monopoly for anti-viral treatments for Orthopoxviruses such as monkeypox, making TPOXX the designated and “primary treatment drug for monkeypox”, as posited above.
Due to the threat of a re-emergence of smallpox, via biological warfare or naturally, US government agencies have funded and been involved in the development of orthopox-antivirals. “More than $1 billion in contract value has been awarded by the U.S. Government” via BARDA (Biomedical Advanced Research and Development Authority). The US holds a stockpile comprised of circa 1.7 million courses of the drug. The main revenue stream of SIGA derives from the replenishment of this reserve (the drug expires every 7 years).
Government file TPOXX (5/17/2022): https://govtribe.com/file/government-file/a02-tpoxx-ja-redacted-for-posting-dot-pdf
Control Number: JA-21-Edg-645
- “Market research, which included a search of all U.S. Food and Drug Administration (FDA) approved drugs and publications, identified only two drugs approved to treat smallpox infections, TPOXX and Brincidofovir. TPOXX, formerly known as tecovirimat, is manufactured and marketed by SIGA. SIGA holds the New Drug Application (NDA) for TPOXX and is the only company with rights to the intellectual property needed to manufacture and sell tecovirimat and TPOXX.”
- “Brincidofovir is the active ingredient in TEMBEXA, which is manufactured and marketed by Chimerix.”
- “TEMBEXA does not meet the DoD’s requirements since there is a “black box” warning issued by the FDA for increased risk of mortality when used for durations longer than that prescribed by its label…Its labeling also characterizes TEMBEXA as a potential human carcinogen in instances of extended use.”
- “Due to this black box warning and 14-day treatment course, the FDA currently would not approve TEMBEXA for a PEP indication.”
- “TPOXX, on the other hand, can be dosed up to 28 days without significant safety concerns.”
- “TEMBEXA is not a suitable alternative to TPOXX and does not meet the DoD requirement.”
- Market research indicates there are only 2 FDA approved products capable of meeting the existing requirement. Of the 2 products, only one meets the requirements of this procurement. SIGA is the only responsible source, and no other FDA approved products will satisfy agency requirements.”
If indeed the same criteria used by the government in the past, favoring TPOXX, remains during this outbreak, SIGA Technologies stands to gain significantly, being the only apparent effective and safe treatment at present.
Overall, SIGA is an intriguing stock and appears well positioned to profit from the emerging monkeypox pandemic.
The author currently holds a long (bullish) position in the above discussed security, SIGA Technologies (ticker symbol, SIGA). An investment in any security is subject to a level of risk. The above article should be accompanied by personal research prior executing market orders. Considerations for risk appetite should be made before entering positons. The author is not a financial advisor, and the article should not be construed as direct financial advice.