The U.S. Government declared an emergency Sunday and released 25% of Relenza and Tamiflu antiviral treatment courses for use by healthcare providers should cases escalate. Tamiflu was developed by Gilead and manufactured and sold by Roche; Relenza is made by GlaxoSmithKline. A travel advisory to Mexico may be issued today where there are 2000 cases and about 150 deaths.In the U.S. there are several cases in CA,NY and TX for a total of 40.
GSK was up 7.8% and GILD up 4% at midday trading. More speculative biotechs are quite volatile with BCRX up 68%,CRXL up 6.5%, and NVAX up over 90%.Be careful here.
Leerink Swann has a Market Perform on BioCryst (BCRX), which has Peramavir an IV/IM neurominidase inhibitor currently in Phase III studies in the U.S. and Phase IV in Japan and LS says the drug is likely to be effective against H1N1 swine flu.
Rodman and Renshaw has a Market Outperform on Novavax (NVAX) which has a Phase II seasonal flu vaccine in trials and could move due to the potential of a swine flu development.
Diagnostic stocks perked up as well with Becton-Dickinson (BDX) up 4.4%,Inverness (IMA) up 11.5%,Quidel(QDEL) up 7%,and Meridian(VIVO) up 11.5%.
Although it is way too early to forecast the impact of swine flu on the biotechnology stocks the sector will attract more investors as diagnostics and drugs have been languishing in the current rally.
We recommended IMA at 20 (now 30) and continue to like the stock on pullbacks and would add to healthcare positions with BDX GILD and GSK for the longer term.
(See Rayno 2009 Biopharmaceutical Portfolio-long GILD, IMA. GEN Feb.1 2009.)