Swine Flu Stocks Fizzle Out After Impressive Open

When I initially posted about swine flu stocks and investments likely to benefit from the worsening news out of Mexico and the US this past weekend, I anticipated some additional follow through from Friday, but nothing like what we saw at the open Monday. Some of the shares mentioned continued to rally over 100% in pre-market trading, seemingly reaching a peak right at the open, then slowly drifting back toward a still impressive but much muted gain.

Vaccine Player is Dominant

One of the most prominent players was Novavax (NVAX) on claims that they can turn around a vaccine in adequate supply more so than seemingly any other outfit. As evidenced in this 2 day candlestick chart, toward the close Friday, shares rocketed up close to 100% at the end of Friday's trading session and followed through more in after-hours. With all the buzz and anticipation of Monday's open, shares opened at an astounding $3.88 from an open of $0.80 at Friday's open for a return of close to 600% for those savvy enough to sell at the open Monday.

click to enlarge

But what a disappointment for those of us buying in the AM pre-market session or worse, at the open. Shares gradually fell to $2.50 per share, resulting in a decline of over 30% during the actual trading session. Paradoxically, shares rallied again in After Hours Monday another 16% to $2.95.

Other Swine Flu Investments

Aside from my thoughts on non-stock swine flu investment plays, tickerspy did a pretty neat job of pulling together an index of companies rallying on the news. They've dubbed this list the Swine Flu and Bird Flu Stocks Index. Here's a screen shot of Monday's trades in the 16 stock index:


Other Sectors

As evidenced by this neat graphical representation of Monday's sector behavior via the Map of the Market, while the overall indices were only down nominally at less than 1%, there was a major divergence between health shares (up big) and many other sectors, namely airlines, casino and entertainment stocks (for obvious reasons). For instance, Carnival (CCL) was down 13.5% on the day. Presumably, investors are trading on the notion that the prospect of 3000 passengers stuck in a confined vessel for a week during a pandemic flu outbreak may not be palatable.

In overseas trading Monday night, while travel shares continued to decline, major indices were actually back up. Since this situation will take weeks or months to evolve (no pun intended), you'll likely see spurts up and down as news trickles in. For instance, the fact that existing antivirals are effective against the flu is a welcome sign. The fact that no deaths have occurred in healthy individuals in the US yet makes one question whether this was one of the largest overreactions in recent history. However, counter that with the first news (should it hit) that existing therapies are no longer effective, the strain has mutated enough that it's now more virulent and contagious than the strain we're seeing now, and we may be in for more major swings just like we saw Friday and Monday.

What does Monday's session show? Everybody thought they could make some quick easy money on this trade (myself included) and it's likely that a select few made a 1 day windfall which was subsidized by the retail investor.

Disclosure: Long NVAX with May 2.50 puts.

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Sector Close-Up, Biotech Stocks Swing with Swine Flu

POINT ROBERTS, Wash., Delta, B.C - April 27 2009 BiotechIndustryStocks.com, a global investor website for the biotechnology sector within Investorideas.com, presents a biotech stocks sector close- up on stocks moving on swine flu news and fears of a global pandemic. Companies providing potential solutions moved up as the market opened.

Biotech Stocks Sector Close-Up Trading April 27, 2009

BioCryst Pharmaceuticals Inc. (NasdaqGM: BCRX) trading up at$4.03, up $1.82 (82.35%) 10:31am ET
BioNeutral Group, Inc., (OTCBB: BONU) trading up at $0.24, up $ 0.08 (50.00%)
Generex Biotechnology Corporation (NasdaqCM: GNBT) trading at$ 0.57, gains of $0.23 (69.40%) 10:33am ET
Novavax Inc. (NasdaqGM: NVAX) trading at $3.18, up $1.76 (123.94%) 10:35am ET
Vical Incorporated (NasdaqGM: VICL) trading at$ 3.02, up $0.49 (19.37%) 10:24am ET
Company Snapshots:

BioCryst Pharmaceuticals Inc. (NasdaqGM: BCRX) BioCryst is an integrated biopharmaceutical company utilizing crystallography and structure-based drug design to develop a deep pipeline of novel therapeutics targeting major illnesses. BioCryst is currently advancing investigational new drugs discovered in-house in late-stage clinical trials for influenza and lymphoma.

BioNeutral Group, Inc., (OTCBB: BONU) is a chemical technology-based Life Science company that intends to commercialize a novel combinational chemistry-based technology which can neutralize harmful environmental contaminants, toxins and dangerous micro-organisms including bacteria, viruses, mold, fungi and spores. The formulations, including Ygiene™ and Ogiene™, which are eco-friendly and include natural and common ingredients which are found in baby products and in every day foods. The Company has combined these widely-used compounds in highly specialized ways to create products that dramatically enhance disinfecting and cleaning results; products include BioNeutralizers and ChemoNeutralizers. BioNeutral’s proprietary platform technology has been proven effective in surface, water and airborne applications.

Novavax Inc. (NasdaqGM: NVAX) Novavax, Inc. is a clinical stage biotechnology company, creating novel vaccines to address a broad range of infectious diseases worldwide using advanced proprietary virus-like particle (VLP) technology. The Company produces these VLP based, potent, recombinant vaccines utilizing new, and efficient manufacturing approaches.

PURE Bioscience (NASDAQ: PURE) develops and markets technology-based bioscience products that provide solutions to numerous global health challenges, including Staph (MRSA). PURE's proprietary high efficacy/low toxicity bioscience technologies, including its silver dihydrogen citrate-based antimicrobials, represent innovative advances in diverse markets and lead today's global trend toward industry and consumer use of "green" products while providing competitive advantages in efficacy and safety. Patented SDC is an electrolytically generated source of stabilized ionic silver which formulates well with other compounds. As a platform technology, SDC is distinguished from competitors in the marketplace because of its superior efficacy, reduced toxicity and the inability of bacteria to form a resistance to it.

Apr 28 05:53 AM