vaccine stocks rise on BioShield bill
Reuters, 05.19.04, 3:31 PM ET
NEW YORK (Reuters) - Shares of a few biotechnology companies and vaccine makers soared on Wednesday after the U.S. Senate approved Project BioShield, which will fund research to detect and protect against a potential bioterror attack.
The soaring stocks were led by Hollis-Eden Pharmaceuticals Inc., shares of which were up $1.93 or 25 percent to $9.80 in late dealings, after trading as high as $10.56 earlier, on hopes that the U.S. government will purchase loads of the company's Neumune treatment for radiation exposure.
The current plan in the case of widespread radiation is to distribute potassium iodide. But that chemical compound doesn't protect against potentially fatal bone marrow damage, as Neumune does.
Shares of VaxGen Inc. were up 21 cents or 1 percent to $15.56 after rising as high as $16.97. Among the company's projects is the development of an anthrax vaccine, which the company hopes BioShield will help fund.
Shares of Vical Inc., which is in the midst of developing a vaccine for the Ebola virus, were up 42 cents or 9 percent to $5.30.
Siga Technologies Inc. , which aims to develop vaccines including one for smallpox, saw its stock climb 45 cents or 35 percent to $1.79 on the Nasdaq.
Among other stocks rising was RAE Systems Inc., which makes chemical and radiation detection monitors. Some of its monitors are equipped with a wireless radio frequency modem that allows the devices to communicate and transmit readings to a base controller. Its stock was up 5 percent to $5.06 after reaching $5.15 on the American Stock Exchange earlier in the session.
In all, Project BioShield will provide $5.6 billion in funding over 10 years.
However, the money has not yet been earmarked for specific detection and treatment projects, so much of the stock movement is speculative, analysts said.
"If there's no teeth behind the announcement, if there's no direct visibility to a specific vendor getting specific dollars, these stocks tend to rally, then fall back. You've got to be careful," said Scott Greiper, an analyst at C.E. Unterberg, Towbin who covers security, anti-terrorism and crime control markets.
"The government is slow -- they're dealing with a huge amount of dollars and the process can go on for several years," he said. "There's very little visibility on who's going to be the ultimate winner."