October 9th, 2014
by Josh Grasmick, Daily Reckoning
After years of fighting on the market and searching in labs for answers to the human body... Medical innovators are now in the spotlight.
Their share prices are often jumping up double digits in days, or even hours.
You know why it's happening, right?
They're trading on news of the deadliest and most complex Ebola virus in living memory (out of 20 in the past four decades).
"It's the single greatest concern I've ever had in my 40-year public health career..."
Today, I want to show you how to profit from vaccines and treatments for an Ebola epidemic. But first, we have to answer a very important question: Is Ebola all hype?
You've heard stories like this before...
Five years ago, swine flu was supposed to put nearly 2 million people in the hospital.
And just last year, a strain of Asian bird flu threatened to be "one of the most lethal" ever, according to the World Health Organization.
Little to nothing came of either of them.
What about Ebola?
The truth is that nobody knows.
And what our government does know is trickling out little by little... maybe to prevent mass hysteria, maybe not.
It is curious, though, what our government has been releasing.
For example, President Obama's executive order to amend a subsection of a "quarantine" protocol for respiratory viruses went virtually unnoticed... when Ebola first broke African borders.
They did this because, as of now, Ebola spreads through direct contact. That means if you are exposed to an Ebola patient's blood or bodily fluids (urine, saliva, feces, vomit and semen).
But President Obama made his executive order in the event of the worst-case scenario: if Ebola goes airborne. If you can cough and infect someone, that would be the greatest trigger to an epidemic that expands anywhere and everywhere.
"It's the single greatest concern I've ever had in my 40-year public health career," said Dr. Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota. "I can't imagine anything in my career - and this includes HIV - that would be more devastating to the world than a respiratory transmissible Ebola virus."
As the virus spreads and mutates, Osterhold and other experts warn, the likelihood increases.
Osterholm calls it "genetic roulette."
One thing is for certain: We have to be prepared if the problem escalates. And if it does, there's a very high chance U.S. technology will ultimately save the day.
How come? Consider the case of Thomas Eric Duncan, the now notorious Liberian citizen who fled his native homeland of overcrowded hospitals... went through Brussels Airport (in Belgium)... to Dulles Airport (near Washington, D.C.)... and then to Dallas/Fort Worth to get treatment here in the U.S.
He didn't stay in the other developed countries along the way.
The U.S. has both the best supporting care system in the world and the most active drug market.
As a result, the U.S. offers the greatest possible access to an experimental drug.
Here, Duncan and many others will at least have a fighting chance to live.
Although he might be charged with a crime in his home country, the guy was just trying to save his own life (he's now in critical condition).
Is he going to be the last one to do so? Heh...
The more realistic question is how many others will follow suit? It's only a matter of time...
Refugees will increase rapidly, especially if, as the CDC predicts, the number of Africans infected with Ebola goes from thousands... to 1.4 million by January 2015.
With that spike comes risk to populations... demand for therapies, vaccines and cures... and investments in innovations.
There are 13 companies working on Ebola at the moment: seven on vaccines, six on other treatments. But as of now, there are no FDA-approved drugs for Ebola.
The U.S. government is so motivated to prevent a widespread crisis that they've imposed what's called the "Animal Rule."
"The Animal Rule," says Paul Mampilly, editor of FDA Trader, "allows the FDA to give conditional approval to drugs if they work in animal studies."
Why, Paul explains to us, is "because we're going to need more than one drug to make sure, because the virus is adapting to us as we're adapting to it. It mutates into different forms."
Besides, we all have different DNA, and therefore different ways of reacting to certain drugs. Some drugs that work on one person may not work on another, and vice versa.
"...we're going to need every single Ebola drug that we have to try to help these patients."
"That means we're going to need every single Ebola drug that we have to try to help these patients," Paul goes on. "And then pray that they work."
It's the golden rule of investing: Diversify; don't put all your eggs in one basket.
Skipping private companies like Mapp Biopharmaceutical... Here are three companies that we feel are top candidates for giving hope to this nightmare scenario:
3 Companies Working on Experimental Drugs for Ebola Virus
- BioCryst Pharmaceuticals Inc. (NASDAQ:BCRX) has a drug, unromantically named BCX4430 that is likely to be a second-line treatment. Second-line treatment just means you get it if the first drug fails. But don't let that fool you. BioCryst's drug could end up playing a critical role in helping patients. It has already shown that it may work against Ebola. So there's still upside for it.
- Tekmira Pharmaceuticals Corp. (NASDAQ:TKMR) has an Ebola drug that was used successfully on a patient already - one reason why it's been rallying so much. That patient was Richard Sacra, who was given the drug and survived. If this drug gets conditional approval, it could go up twice as much as BioCryst.
- Sarepta Therapeutics (NASDAQ:SRPT) is working on the problem from a therapeutic angle with an RNA molecule blocker to stop the virus upon infection (Ebola is an RNA virus - that means each time it copies itself, it makes at least another mutation). Already, there was evidence that showed this drug working in a different virus just last week: the flu. As our genius and cancer survivor turned biotech editor Ray Blanco says, "We don't realize how deadly the flu is, but it kills tens of thousands of people in the U.S. It's a variable figure, some years being much worse than others." The National Institutes of Health, Ray reports, conducted a Phase 1 trial of Sarepta's flu drug, the deceptively boring name of AVI-7100, with very high standards (randomized, placebo-controlled and double-blinded). "Not surprisingly, these innovators are leveraging their breakthrough vaccine technology to counter the Ebola threat," Ray informs us.