All those fears about the Ebola virus spreading like wildfire? We’re seeing that worst-case scenario right now.
Thankfully, it is for a different virus.
The Zika virus is nothing new. The first documented cases were in Uganda in 1947, at the dawn of modern virology, less than a decade after the discovery of RNA allowed scientists to grasp how viruses truly work.
Outbreaks and constant exposure have existed for a long time in Africa and Asia, undoubtedly before we even knew what was going on due to natural resistances in local populations.
However, the modern world gave the virus the chance to thrive in an unprecedented way. The disease crossed into the New World, exposing large populations with no immune system response.
Since the first documented find in Brazil in May 2015, estimates of millions of new infections spread across Central America and South America are the norm.
The virus has hopped the Atlantic to the United Kingdom, and is steadily working its way into North America as well. Public health officials are losing sleep over what will happen when the Northern hemisphere thaws and mosquito populations explode.
The effect of the virus was poorly understood up until doctors in Brazil made a terrible discovery while looking at public health data.
The spread of Zika correlated with a massive increase of microcephaly, with infants being born with abnormally small heads and often damaged brains.
Normally, about 150 cases of microcephaly are reported in Brazil amongst around three millions births each year. Public health workers in the country are now investigating nearly 4,000 cases and counting.
There is no way to address this problem once the damage is done. The only way to intervene is to prevent the cause.
So, who is in a position to do anything about it?
I brought up Ebola earlier for two reasons. First, the transmission is similar, in that some body fluid exchange, particularly blood, has to be involved.
The second is that the Zika virus is affecting very specific stocks in the same way that Ebola brought a handful of obscure biotech stocks to everyone’s attention.
As a result, small companies are seeing shares quickly soar. As treatment research accelerates via expedited funding – President Obama just announced he wants $2 billion in emergency funding – a handful of winners will emerge.
Stocks To Watch
Intrexon (NYSE:XON) is my personal favorite, due to its novel approach to a tried and true solution which was wildly successful over a hundred years ago..
The company is working on a way to kill off the mosquito population en masse and prevent breeding, the same basic approach used during the construction of the Panama Canal to contain yellow fever and malaria.
To be more specific, Oxitec – a subsidiary purchased by Intrexon last summer – is working on “vector control” programs which release genetically-mutated male mosquitoes into the wild.
They only differ from the natural members of their species in that their offspring will have a genetic flaw, causing any and all offspring to die before maturity. The females that breed with them do not live long enough to breed again, thus reducing the amount of mosquitoes that effectively mate and dropping the total population.
Only female mosquitoes bite animals for blood, so there isn’t even the possibility of infection from the released bugs.
Repeated releases have no risk of treatment resistance or unintended environmental effects. In controlled field trials, these vector control programs have reduced local populations of the Zika host species by 92%-99%.
Plus the approach is universally applicable to mosquito-born diseases. Malaria, dengue, yellow fever, encephalitis, West Nile virus, etc., are all possible targets.
GlaxoSmithKline (NYSE:GSK) and Sanofi SA (NYSE:SNY) are both worth a mention and continued attention because they are currently conducting feasibility studies to determine if their existing technologies can be used to create treatments.
Repurposing existing techniques, whether already approved for public use or well along the notoriously long pharmaceutical pipeline, could quickly create a target market numbering in the hundreds of millions.
Though both are massive companies with market caps around $100 billion, revenue resulting from any success is completely unexpected by investors and analysts alike, creating a potential windfall for existing shareholders.
Another approach from a smaller company is focused on blood transfusions. Cerus Corp. (NASDAQ:CERS) makes a product called amotosalen, which has been shown to inactivate the Zika virus in plasma for transfusions.
With the rapid nature of this outbreak and the resulting difficulty in determining how many people are infected, blood banks across the Western hemisphere are looking at what Cerus can do for them.
Amotosalen is already FDA approved, and is used for blood platelets and plasma for a whole host of other infectious diseases, such as: hepatitis B and C, HIV, West Nile virus and bacteria, as well as emerging pathogens such as Chikungunya, malaria and dengue.
Cerus’ kits have already been used in 100 blood bank centers in 20 nations, with over 3,000,000 units of blood treated. Regulatory approval is pending across South and Central American nations most affected by Zika, which is bound to accelerate the process.
Continued Coverage
Here at the Outsider Club, we’ll continue to keep a close eye on the intersection of the increasing number of infectious diseases we face today and biotech and pharmaceutical developments.
From Zika, to MERS, to antibiotic-resistant pathogens, there are plenty of challenges that will drive share price gains for the companies that can produce results.
Plus, there are a lot of groundbreaking therapies on the horizon, ranging from cancer therapies, to vaccines for Alzheimer’s disease vaccines, rheumatoid arthritis, Crohn’s disease, and more.
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