The first recorded case of Ebola happened in the Democratic Republic of the Congo in 1976. It slowly spread, in different strains, since then through parts of western Africa.
The deadly Ebola virus began its most recent incarnation as what looked like a containable outbreak in Guinea last December. But it has not been contained, and continued to spread to other countries in west Africa. With its recent exponential growth, experts in the medical field now say we could see an additional 1.4 million cases by year-end in a worst-case scenario.
That is jaw-dropping, to say the least!
The virus' rapid spread seemed to have caught both global governments and the major drug companies unawares. But, thankfully, that is beginning to change. . . . .
Drug companies are quickly advancing research and testing on drugs that may provide protection against the deadly virus. And rather surprisingly, government health agencies are being helpful.
Government's Helping Hand?
Global governments and international health agencies, such as the World Health Organization, are actually talking about granting drug companies fast-tracking Ebola vaccines indemnity.
This makes sense in order to protect the firms against potential losses and lawsuits. Especially considering Ebola overall is a rather small commercial opportunity.
And in particular when consideration is taken at how fast the drug companies are moving the process along. The CEO of GlaxoSmithKline PLC ADR (NYSE:GSK), Andrew Witty, was quoted in the Financial Times as saying, "We are literally doing in maybe five or six months what would normally take five or six years."
Witty is among those pharmaceutical company executives looking for some sort of indemnity.
GSK Leading the Way
That is because his company has the most advanced of the Ebola vaccines (ChAd3) being developed. The vaccine is being developed jointly by the biowarfare department of the U.S. National Institute of Allergy and Infectious Diseases (NIAID) and a subsidiary of GSK, Okairos.
Trials on macaque monkeys have proven successful. These monkeys enjoyed 100% protection against Ebola for up to 10 months.
Initial human trials of the vaccines, using various doseages, are underway in Mali, the United States and the United Kingdom.
If the phase one human trials go well, the company will be in a position to begin the final stage of testing early next year.
The company is not sitting on its hands waiting for the trials to end. With funding help from the Wellcome Trust, GSK is already setting up vaccine production facilities (five production lines). It says, in theory, it could have the first doses (10,000) of its experimental Ebola vaccine ready for distribution by the end of this year.
JNJ and NLNK
JNJ, which is committing $200 million to the project, is taking a novel approach by combining two vaccines into one. One vaccine was developed by NIAID in conjunction with JNJ. The second vaccine was developed by Danish biotech company Bavarian Nordic (OTCPK:BVNRY).
The company says it plans to have 250,000 doses of its experimental vaccine ready for trials by early 2015 (between January and May). The company adds that it will have the capability to produce up to one million doses of the vaccine by the end of next year if the trials are successful.
NewLink's vaccine was developed by the Public Health Agency of Canada and licensed to the company. Clinical trials on this vaccine (rVSV) from NewLink Genetics have just gotten underway in early October.
What should investors in these companies look for with regard to Ebola vaccines being developed?
The fast-track on development will continue with the blessing of the FDA (Food and Drug Administration) and others. Also look for an announcement very soon regarding some sort of indemnity being offered to these companies.
As for the stocks, all should benefit to a degree from this convergence of research and policy. NewLink, being only a $1 billion market cap company, will be the most volatile of the three that currently have, or will soon have, trials underway.
Financial Times: Industry Response to Ebola Quickens
Financial Times: GSK Expects First Doses of Ebola Vaccine Ready by Year End
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.