Why Vaccine Stocks Rallied This Week
Shares of vaccine stocks Moderna (NASDAQ: MRNA), Novavax (NASDAQ: NVAX), and BioNTech SE (NASDAQ: BNTX) rallied this week, appreciating 23.4%, 16.4%, and 9.3%, respectively, through Thursday trading, according to data from S&P Global Market Intelligence.
While these three stocks gained notoriety back in 2020 during the COVID-19 pandemic, it appears this week's detection of avian bird flu in a second U.S. citizen and the first-ever detection of avian flu in a human in Australia are spurring fears of an outbreak and thus a possible boon for companies that can quickly produce a bird flu vaccine.
Bird flu detected in Michigan and Australia in the first detections since March
A new avian flu, H5N1, was detected in cattle back in March, with one worker in Texas coming down with associated conjunctivitis at that time. But on Wednesday this week, a second U.S. dairy worker in Michigan tested positive for the avian flu as well. That same day, an Australian dairy worker also tested positive for avian flu, marking the first-ever human case of avian flu in that country.
The discoveries spurred fears of an outbreak. That same day, the Assistant Secretary of Preparedness and Response at the Department of Health and Human Services, Dawn O'Connell, noted that Moderna and Pfizer (NYSE: PFE), which partnered with BioNTech on the COVID-19 mRNA vaccine, were in talks over a potential mRNA vaccine program for the new avian flu.
Unlike the COVID-19 pandemic, when the U.S. government subsidized private companies to make the COVID-19 vaccine, the government actually has a stockpile of H5N1 virus candidates that could be used to make vaccines. If used, the resulting shots would actually be a government vaccine, although the government would hire private companies to help manufacture the drug. However, federal officials have said the government would only be able to supply 135 million doses, and every person would require two shots. So, that would only vaccinate about 68 million out of 330 million people.
Avian flu detection spurred the stocks of vaccine-makers this week. Image source: Getty Images.
Therefore, the government appears to be looking for ways to supplement its supply should the current bird flu become highly transmissible between humans. In a response to Barron's Magazine, Moderna confirmed that it was already in a Phase II study for an avian flu that's in the same family as the H5N1 strain.
While Moderna and Pfizer/BioNTech are currently in talks with the government, Novavax also confirmed earlier in the month that it's currently conducting a pre-clinical study for an avian flu shot. Novavax has its own unique "nano-particle" protein-based approach to vaccines that's different from Moderna and BioNTech and has attempted to advertise its COVID shots as having fewer harsh side effects than the others, even though it was later to market than Moderna and BioNTech.
Furthermore, the company just inked a landmark partnership and licensing deal with French pharmaceutical giant Sanofi earlier this month, which agreed to license Novavax's technology. Of note, Sanofi already manufactures "regular" flu shots, so their combined efforts may also yield something for avian flu.
However, investors may want to curb their enthusiasm
Unfortunately for the vaccine makers, but fortunately for the rest of us, it's still a low probability that avian flu will cause a genuine widespread outbreak. While people have been fearing for years that avian flu could jump to humans and then spread easily between humans, thus far, the positive cases only appear to be in dairy workers directly exposed to infected cattle.
While avian flu could potentially mutate into a human-transmissible disease, it appears the stock moves across these vaccine developers this week may be a tad premature.
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Billy Duberstein has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends BioNTech Se and Moderna. The Motley Fool has a disclosure policy.
