Many still doubt SIGA’s prospects. It is a blameless act, as any small-cap pharmaceutical company carries inherent volatility and risks. Conservatism is usually rewarded (especially in the pharmaceutical investment space). Particularly when the drug’s demand source (monkeypox treatment) is not officially approved against the said virus. At face value, it’s somewhat speculative.
The recent emergency declaration, which helped trigger Tuesday’s Emergency Use Authorization (EUA) of the JYNNEOS vaccine, rather than both (antivirals and vaccines), led to Representative Maloney issuing a letter to the Biden administration requesting the inclusion of TPOXX in the program. With this, it is easy to see why some consider it risky. Government regulation and decisions often appear inefficient and wrong, and many times, they are! However, considering the three factors outlined below, I believe SIGA is a good investment for those with a commensurate risk appetite.
1) Monkeypox is a pandemic.
Before very recently, it was difficult to ascertain whether the recent global outbreak of monkeypox would prove a widespread issue (to the degree that a share price many multiples from here would be justified by new demand). Now, it appears the expansion of monkeypox (potentially, eventually into the millions of symptomatic cases globally) could provide sufficient demand for an effective and safe treatment.
2) The Baseline Financials are Exceptional
In the yearly 12/31/2021 report, cash on hand and equivalents were at $103,139,000, total revenue was $133,670,000, and net income was $69,451,000. Coupled with no debt, SIGA’s financials are not a liability to the company’s performance in this emerging pandemic and beyond.
3) Market Research Indicates TPOXX Appears to be the Only Viable Antiviral (so far)
Taking note of government documents available in this article I wrote, it may be reasonable to infer that TPOXX has few competitors or potential competitors. This is only one piece of the equation, however. If all the drugs are sub-par (par being the level required for EUA, approval, and widespread public use), it doesn’t matter that TPOXX is better.
That said, from the data and testimonials I have reviewed thus far, it is fair to say it is likely safe and effective, warranting its use in this “lower virulence monkey-pox strain”. Elaborating on the last point made there, if you are aware of TPOXX’s approval status (it is FDA approved for smallpox), you might say governments are slow to act on the basis of its approval for smallpox instead of monkeypox. Thats probably not the case: (Though, don’t take my word for it). Rather than a smallpox vs monkeypox problem, it is an issue of virulence (and to a more precise degree, morbidity and mortality). If this monkeypox outbreak had a similar level of virulence to smallpox, I believe it would have been authorized by now (though it’s always hard to say). Why?
It is apparent that TPOXX possibly has a sufficient risk-benefit profile for most cohorts infected with this monkeypox virus strain. However, if you imagine an x-y graph, with y being safety and efficacy and x being virulence, as you go lower down the graph (lower virulence, morbidity, and mortality), the inherent reaction time by public health and regulatory authorities will be slower (considering caution). That said, I expect an authorization as case counts rise, and more data comes in.
I will continue to write on SIGA and other opportunities I find going forward. If you found this article informative or helpful, feel free to subscribe for updates (below) when I post a new piece.