- The Washington Times - Wednesday, April 29, 2009

NEW YORK | The swine flu outbreak continued to move shares of makers of flu treatments, vaccines and tests Tuesday, with some smaller companies rising after big gains Monday but others slipping in mild profit taking.

Though Wall Street remains concerned that swine flu could put a damper on any global economic recovery, several companies could benefit.

Gilead Sciences Inc., Roche, GlaxoSmithKline and other companies with a stake in flu treatments and detection will likely see revenue boosts if the swine flu outbreak continues to spread, several Wall Street analysts said.

The toll has been worst in Mexico, where the virus has been blamed for 152 deaths. Britain, Israel, Canada, New Zealand and Spain also have confirmed cases. At least five U.S. states have confirmed outbreaks, including New York with 45, California with 13, Texas six, Kansas two, and one each in Indiana and Ohio, the Centers for Disease Control and Prevention reported Tuesday.

The U.S. government has declared a health emergency and released 25 percent of Tamiflu and Relenza treatment courses from the national stockpile to make sure health care providers are ready for any escalation in cases.

Tamiflu, which is an oral treatment, was developed by Gilead, which receives royalties from the drug’s maker, Switzerland-based Roche. Tamiflu is sold in Japan through a company mostly owned by Roche, while in India, Cipla makes a generic version.

Gilead shares rose fractionally to $47.60 Tuesday after gaining 4 percent Monday.

Relenza, an inhaled drug, is made by GlaxoSmithKline, which saw its U.S.-traded shares fall 3 percent to $30.58 after rising 8 percent Monday.

Both drugs are antiviral medications and are most effective when taken soon after the onset of symptoms. The companies have confirmed that the swine flu strain is sensitive to their drugs.

“Assuming the stockpile will be replenished, we estimate this represents up to $388 million worth of Tamiflu sales or $70 million in royalties for Gilead,” Thomas Weisel analyst Ian Somaiya said in a note to investors. “However, if the outbreak escalates into a pandemic we expect further upside driven by retail demand for the drug.”

Lazard Capital Markets analyst Joel Sendek also said Gilead is a likely beneficiary of the swine flu outbreak, with increased sales of Tamiflu.

Meanwhile, Rodman & Renshaw analyst Elemer Piros said Novavax Inc., a Rockville, Md., biotech company, could see a benefit from the outbreak, as its technology is one of the fastest methods for creating a vaccine.

“If the infection escalates and a government body decides to stockpile vaccine, we believe that Novavax is well positioned to capitalize on this opportunity with its recombinant vaccine technology,” Mr. Piros said in a note to investors.

Novavax shares rose 25 percent to $3.18 Tuesday after nearly doubling Monday.

Birmingham, Ala.-based BioCryst Pharmaceuticals Inc., which is developing the flu vaccine peramivir, rose 8 percent to $4.18 after jumping 76 percent Monday.

Elsewhere, shares of Quidel Corp. fell 1 percent to $9.91 after rising 5 percent Monday as the outlook for its flu tests improved.

“While we believe the probability of a near-term flu pandemic is low, we remind investors that Quidel’s QuickVue rapid flu test can detect the presence of swine flu and may be used in a screening setting to detect and manage flu outbreak,” Caris & Corp. analyst Zarak Khurshid said in a note to investors.

Other stocks moving on the swine flu outbreak include Corvallis, Ore.-based AVI Biopharma Inc., which develops treatments for viral infections. The stock fell 1 percent to $0.98 after rising 11 percent Monday.

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