Mpox outbreak: vaccine makers see massive surge in share price

By Stuart Fieldhouse
16th August 2024

Related Topics: ETFs, The healthcare sector, Novacyt [LON:NCYT], WisdomTree, Bavarian Nordic [CPH:BAVA]

The World Health Organisation triggered another public health emergency this week as it began to look like the mpox virus is spreading in Africa. The WHO is actively involved in assisting countries in Africa with contact tracing, blood samples analysis and the roll out of vaccines.

A total of 13 countries in Africa have now reported cases, with 517 deaths reported this year. The epicentre of the disease is the DRC (Democratic Republic of the Congo) which has already identified 15,000 cases, double the entire total last year.

The news is turning investors’ thoughts back to who is likely to be spearheading the development and roll out of mpox vaccines. Unlike with Covid, there are already vaccines which the WHO is recommending for use. We have seen the most significant impact in the shares of vaccine makers as a result.

Bavarian Nordic stock up 45%

Danish company Bavarian Nordic [CPH:BAVA] is one of only a few companies that has an approved mpox vaccine and its shares have risen 45% this week while a Japanese medical tools supplier Precision System Science Co. [TYO:7707] also rose 53% in five days.

In general, healthcare stocks have performed well recently following a spike in Covid cases in Asia recently, of which more below. The mpox outbreak adds further momentum to this move but it remains to be seen if this reaction is something that will sustain over a longer time frame.

The WHO’s strategy will include efforts to contain the spread of the disease through vaccination. The African Centres for Disease Control and Prevention said they would need at least 2mn doses this year, and a further 10mn doses after that if the outbreak is going to be effectively controlled.

Bavarian Nordic said it has received orders for 175,000 doses through HERA – the European Health Emergency Preparedness and Response Authority. It has also donated another 40,000 doses.

The crisis in Africa is prompting speculative activity in small caps drugs developers as well.

Massive funding for vaccine distribution

Global vaccine group Gavi has said it is going to spend $500mn on distribution of shots of vaccines to countries affected by the mpox outbreak. There will also be, yet again, a need for protective equipment and testing kits to be used on the ground.

Shares in UK small cap Novacyt [LON:NCYT] shot up this week on the news, from 45.6p to hit 73p at time of writing. Novacyt is a specialist global diagnostics company which focuses on testing for highly communicable viruses like Covid. Novacyt shares are now trading at a YTD high and close to a 52 week high.

Other mpox vaccines are awaiting approval before they can move into full manufacture.

Covid sees new outbreak in Korea

Outside mpox, note that Covid is back on the agenda in Asia, with a surge of hospitalisations this month, especially in South Korea. This has seen feverish buying of Asian healthcare stocks. Shares in Japanese pharmaceutical giant Daiichi Sankyo Company [TYO:4568] closed the week up 6.7%.

Also worth keeping an eye on is Korea’s Shinpoong Pharmaceutical [KRX:019170], which saw a massive surge of +31% this week. It levelled off in Friday trading in Seoul, but could see further interest next week.