The medicine Siga Technologies developed more than a decade ago to combat biowarfare is now being used in the ongoing viral outbreak, and Siga stock has exploded.
On Thursday, nearly three months after discovering the first U.S. case, the White House declared monkeypox a public health emergency. The declaration sent Siga stock to a record high on Friday — a repeat performance from May 18, the day after health officials identified the first case. Since mid-May, Siga stock has continued along the same trajectory, more than tripling.
Siga Tech makes the only medication allowed by the Food and Drug Administration to conditionally treat monkeypox, a viral disease characterized by fever symptoms as well as lesions or rash. The drug, dubbed Tpoxx, has full approval in the U.S. for smallpox treatment.
Smallpox and monkeypox both belong to the orthopoxvirus family. So, when monkeypox began to spread globally this spring, Siga was already in place. In fact, the U.S. government has a stockpile of 1.7 million courses of Tpoxx, the company says. Canada also has a stockpile. Siga stock has surged as orders have piled on — $56 million in requests to date.
Now, the rest of the world is trying to catch up, Siga Chief Executive Phillip Gomez told Investor's Business Daily. When Covid became a pandemic, epidemiologists warned that it wouldn't be the last viral outbreak. But no one expected monkeypox to arrive on its heels. This outbreak, says Gomez, will test the resolve of governments worldwide to prepare for what follows monkeypox.
"The real market for us in the long run is preparedness for orthopoxviruses," he said. "There are strains of monkeypox that are much more deadly. Part of the ultimate messaging around this outbreak is governments need to prepare in advance and have these products stockpiled."
Siga Stock Rockets Amid Outbreak
Public health officials declared smallpox eradicated in 1980. Only two labs are approved to have the virus for research: the Centers for Disease Control and Prevention and the Russian State Center for Research on Virology and Biotechnology.
But it's possible to engineer the virus from scratch. That's why the company received a grant from the National Institutes for Health in response to growing worries that laboratories abroad could engineer and weaponize smallpox. It's part of Project Bioshield, which was established in 2004 in light of the Sept. 11, 2001, terror attacks.
The CDC considers a single case of smallpox an emergency. The consequences of any spread would be "devastating," says Siga Chief Scientific Officer Dr. Dennis Hruby. The U.S. stopped routinely vaccinating against smallpox in 1972. So, most people in the U.S. born after that year would be vulnerable.
"It's probably the most serious bioweapon that could be deployed," he told IBD. "And, up until we developed a drug, there was no effective antiviral that could be used. If you got smallpox, you were either going to die and/or suffer the consequences of the disease."
Today, though, Siga stock is soaring on the use of Tpoxx in monkeypox patients. Tpoxx is available in the U.S. as a pill or intravenously. This year, Siga has received $60 million international order for Tpoxx from 10 countries. In the second quarter, the company reported $16.7 million in sales, surging about 92% year over year.
Tpoxx Orders Continue To Mount
The European Medicines Agency has fully approved Tpoxx for patients with smallpox, monkeypox, cowpox and complications of the smallpox vaccine. But U.S. and Canadian officials have approved Tpoxx only for smallpox treatment.
Amid the current outbreak, the FDA and CDC are allowing "compassionate use" of Tpoxx for patients with monkeypox. This means monkeypox patients can take Tpoxx even though it's not officially approved as a monkeypox treatment. But its use is limited due to a lengthy request process and specific criteria for prescriptions. As of July 23, just 215 patients had received Tpoxx, according to a CNN report.
Siga stock soared almost 25% on July 28 after the company announced an additional $28 million in Tpoxx orders from Canada and another $2 million from new jurisdictions in Europe and Asia-Pacific regions.
Since then, Siga has received "dozens of requests," CEO Gomez told IBD.
The market for the monkeypox treatment could be huge. But monkeypox, so far, appears to be slow to spread. There were just north of 7,100 cases in the U.S. as of Aug. 5, according to the CDC. Unlike Covid, which spreads through the air, monkeypox tends to spread through bodily fluids, requiring prolonged contact with an infected person, animal or contaminated surface.
But it could still go wider.
"We should nip this in the bud, so to speak," says Hruby, Siga's lead scientist. "We're all worried about it getting into animal reservoirs."
Two Smallpox Vaccines Available
The market could be massive. Some estimates suggest the smallpox vaccine offers about 80%-90% protection against monkeypox. But most people born in the U.S. after 1972 probably haven't received a smallpox vaccine.
There are two smallpox vaccines in the U.S. today. Sanofi makes one called ACAM2000 for people at high risk of contracting smallpox. It contains a live vaccinia virus. Vaccinia belongs to the poxvirus family.
And Bavarian Nordic makes Jynneos, approved in the U.S. to prevent smallpox and monkeypox. It also contains a live virus that doesn't replicate. Hruby says Jynneos is safer but not as protective.
Moderna said in May it's looking at a monkeypox vaccine in laboratory testing. But as of early August, the company says it doesn't have an update on that effort.
That puts investors' focus in monkeypox almost exclusively on Siga stock.
Gomez, the CEO, says Siga could soon seek full approval for Tpoxx in monkeypox treatment. The current outbreak is giving Siga the chance to run clinical studies in monkeypox patients. Tpoxx's current suite of approvals is based on smallpox testing in animals because human testing would be unethical.
Siga Stock Gets High Ratings
The outbreak is also putting Siga stock on the map.
Shares went public in 2018, but long traded under 10. Prior to that, Siga was embroiled in a legal battle with PharmAthene over the medicine that became Tpoxx. A court ordered Siga to pay PharmAthene $113 million plus damages for failing to execute on a license agreement. Around that time, Siga filed for bankruptcy. It emerged from bankruptcy in 2016.
The biotech stock has surged since May and now has a perfect Relative Strength Rating of 99, according to IBD Digital. This puts shares in the top 1% of all stocks in terms of 12-month performance. Shares also have a strong Composite Rating of 97. This means Siga ranks in the leading 3% of all stocks in fundamentals and technicals.
Siga stock broke out of a consolidation with a buy point at 14.90 on July 13, the day after it signed an agreement for $28 million international orders of oral Tpoxx, according to MarketSmith.com.
Investors now are watching what's next for the biotech company. CEO Gomez says the monkeypox outbreak stands as an example of "imperfect incrementalism" in terms of improvement. The quick development of vaccine and treatments marked the Covid pandemic. In the monkeypox outbreak, there are already vaccines and a treatment. But "we kind of stumbled out of the gate."
"I think there will be some learnings out of this outbreak that are really around that last mile of preparedness," he said. "We should have countermeasures — vaccines, drugs and diagnostics — available for virus families to make sure we're prepared in an outbreak."
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
