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What Happens To GeoVax's Market Cap If They Win The Zika Race?

|Includes: GeoVax Labs, Inc. (GOVX)

The Zika virus continues to spread, with the WHO predicting that as many as 4 million people could be infected by the end of the year. As of Feb. 10, there were 52 cases in the U.S. associated with travel abroad, according to the Centers for Disease Control and Prevention. If you go to the CDS website at cdc.gov, you are greeted with the following banner:

The Obama administration announced on Feb. 8th that it will ask Congress for $1.8 billion in emergency funding to help prepare for and respond to Zika. Most of the money will go to the Department of Health and Human Services (which the CDC is part of) to help control mosquitoes, improving surveillance, boosting lab capacity, establishing rapid response teams, and a 1-yr increase in Medicare and Medicaid for Puerto Rico. $200 million will go to speed the development of vaccines and diagnostic tests.

GeoVax announced on February 3rd that it had entered the race to develop the Zika vaccine in collaboration with the University of Georgia.

What is the probability that GeoVax lands some of the $200 million from the government? GeoVax has a couple advantages:

1. They are located in Atlanta, where the CDC is also located. GeoVax is a partner with the CDC in developing their other vaccines (HIV and Ebola). The CDC knows GeoVax very well already.

2. GeoVax has a vaccine platform already in place. Robert McNally stated in the February 3rd press release: "We believe our MVA-VLP vaccine platform is uniquely suited to apply to the Zika virus. Our platform has been proven to produce in vivo non-infectious virus-like particles (VLPs) for both our HIV and Ebola vaccines, and we are confident we can demonstrate the same with Zika. Producing VLPs in the very person being vaccinated mimics a natural infection, stimulating the humoral and cellular arms of the immune system to recognize, prevent, and control the target infection. As an additional advantage, our vaccine platform has already been proven safe in humans through multiple clinical trials involving over 500 individuals in our HIV program."

I think the CDC partnership makes them likely to get some of the $200 million in funding.

GeoVax has a current market cap of $3 million and Enterprise value of $2.3 million according to Bloomberg. If they got some of the $200 million to develop the vaccine, it should be a big boost to the stock. If they can win the race for the Zika vaccine, the stock would be many multiples higher. For sure, a high risk/high reward investment but I think investors should take a small position in GeoVax, largely due to the risk/reward ratio. If Sanofi or GlaxoSmithKline win, the reward part of the equation is limited. If Inovio wins, it would be a big win for their shareholders also. If GeoVax wins, it would provide the biggest reward for your investment dollar at risk.

Disclosure: I am/we are long GOVX.