It has been hard not to hear about the H7N9 flu virus. Everybody bears in mind the H1N1 scandal. Briefly, the H1N1 virus quickly received an exaggerated status, in a first time, by media, and in a second time, by World Health Organization (WHO). The WHO was suspected of being influenced by big pharma since it modified its definition of a pandemic influenza by removing the concept of severity from the disease : "An influenza pandemic occurs when a new influenza virus appears against which the human population has no immunity, resulting in epidemics worldwide with enormous numbers of deaths and illness." became "A pandemic is a worldwide epidemic of a disease. An influenza pandemic may occur when a new influenza virus appears against which the human population has no immunity." This change allowed the WHO to use the pandemic status for a disease that was not killing significantly more people than the flu season, leading countries to compete with others to acquire vaccine. Despite the fact that massive amount of money were spend and the panic created by the media, as few as 1 person out of 3 was covered by the vaccination in the U.S. It is therefore not surprising that the population is quite skeptical about the danger that the new H7N9 strain represents.
About the virus
The H7N9 strain is a subtype of influenza virus that displays the presence of variant 7 of hemagglutinin (H7) and 9 of neuraminidase (N9). Grossly, these two proteins (H and N) are part of the factors that determine which cell will be affected by the strain and therefore, which are the consequences (e.g. which species will the virus be able to infect).
The H7N9 strain was primarily identified in bird in 1988 and recently crossed the species barrier in China, generating more than a hundred cases. The ability of infecting mammals was probably acquired through a transition step in pig, an animal which is well known to be a "mixing bowl" for avian-to-human flu transmission. As noted by Kyle Spencer, in Chinese wet markets, birds are kept stacked in cages, sometimes directly above pigs and their excrement are allowed to fall into pig's food. Accordingly, the second victim of H7N9 flu was a pork-butcher. I also note that areas with highest densities of pigs match with areas where the chicken densities are the highest and that the very large majority of the human cases were detected in those areas. While I highly recommend you to read Kyle's article, I strongly disagree with his following statement : "Even if China were to throw itself completely into the mass production of a vaccine, right now, it wouldn't be available to the general populace until 2015 at the earliest." The vaccine against H1N1 hit the market the year of H1N1 outbreak. In my opinion, given the serious threat that H7N9 represent and that one company has already managed to develop a vaccine, it wouldn't take long for a vaccine to hit the market if required.
Let's be straightforward: the main and most serious difference with the H1N1 strain is the high mortality rate. According to the 4th report of WHO released on 1st may 2013, 126 cases were reported and resulted in 24 deaths.
In addition to that, the virus resembles to other avian viruses that cause mild disease in birds and it's very likely that it will spread silently in domestic and wild birds, a hypothesis which is reinforced by the large geographic area in which the cases were found.
Finally, if the virus acquired the ability of spreading from human to human, it could easily reach millions of people through flight routes.
Although 20% of cases did not report any contact with poultry, extensive monitoring has not found evidence that the virus was able of efficient human-to-human transmission. Moreover, the fact that the average age of infected people is around 60 years suggests that the virus is not well adapted to human and still need to reach weaker people (note, however, that cases from all ages were reported).
By the 10th April the U.S Centers for Disease Control and Prevention was waiting for its sample of H7N9 in order to develop a vaccine and had established partnership with leading drug companies including Sanofi Pasteur (NYSE:SNY), GlaxoSmithKline (NYSE:GSK) and Novartis (NYSE:NVS). However, an Aurora based company named Greffex announced last week that it had built the first comprehensive H7N9 vaccine and that this test will undergo safety tests before entering clinical trials. In addition, others have speculated that Novavax (NASDAQ:NVAX) might be called on to develop a vaccine. And indeed, Novavax recently announced that its H7N9 VLIP vaccine will enter in preclinical phase in less than a month.
First, I don't consider that the treatments such as the one developed by Roche (OTCQX:RHHBY), Gilead sciences (NASDAQ:GILD) and GSK will see a massive increase in sales since the prevention is usually preferred and more critical in flu diseases, reason why I don't discuss them in the present article (this article address some of the different treatments that might be used for treating H7N9).
While the virus presents really concerning features including its silent transmission in birds and its high mortality rate, there are no evidence that it's efficient in spreading from human to human. It is therefore possible that it won't result in a deadly pandemic as some predict. Therefore, one should be cautious when speculating on stock able to generate profit from H7N9. The pandemic is not here yet.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.