Ebola stocks have become quite a fad among investors in 2014. Names like Tekmira Pharmaceuticals Corporation (TKMR), BioCryst Pharmacuticals, Inc. (BCRX) and Sarepta Therapeutics Inc (SRPT) are just a few of the volatile ebola stocks that have managed to make headlines.
But now that some of the hype for these pharmaceutical companies has faded, so have their share prices. Every one of these ebola stocks is down double-digits in the last three months, while the S&P 500 is up 5%.
But it may be time for the headlines to start popping up again for these drug companies now that experimental Ebola treatments will begin trials next month in West Africa.
And with CNN reporting that the death toll from in that area has passed 5,000, ebola stocks could once again have their moment in the sun if one of them proves to have an effective treatment for the virus.
Ebola Stocks — A Lot Riding on Trials
The details are still emerging regarding these trials, including how to deal with ethical concerns. After all, typical drug trials in the U.S. involve a placebo to provide a benchmark against which to compare results … but giving ebola patients a sugar pill just for the sake of a scientific trial seems very inappropriate given the serious nature of this epidemic.
Doctors Without Borders is planning three trials in Guinea and Liberia. One will use an antiviral drug called brincidofovir, created by a North Carolina company, Chimerix Inc. (CMRX). Another will use an antiviral drug called Favipiravir, created by Toyama Chemical of Japan. The third trial will involve infusions of blood from Ebola survivors.
This last treatment is the preferred method of the World Health Organization, with the idea that those who have survived the disease can pass on some of their immune system’s might via a transfusion.
Other ebola stocks like Tekmira, with its TKM-Ebola therapy, aren’t included in this round of trials. But there is still promise, particularly because Tekmira has been working with the Department of Defense since 2010 to develop a therapy that works against the deadly virus.
Of course, it’s worth remembering that these are reactive treatments rather than proactive treatments. There is no vaccine for Ebola yet, and there is still a big desire for preventative drugs. Any drug company that has success on that front could see big demand in the short term to contain the epidemic, as well as long-term demand as vaccines prevent future outbreaks.
The bottom line for investors is that while ebola stocks are highly volatile, there is still great potential here given the need for treatment and prevention. The virus has killed thousands in Liberia, Guinea and Sierra Leone — and recently, there’s been fear that Mali is at risk of an outbreak after a handful of people have died, including a 2-year-old girl.
Beyond the dollars and cents, it’s crucial that the world’s pharmaceutical companies figure out a way to combat this epidemic and contain the deadly virus. The reason that the investment potential is real is because the risk is very real, and the sooner we establish a cure to help the people of Africa, the better.
More From InvestorPlace
- 3 Chinese Stocks Riding High on Earnings
- 2015′s Best Cheap Stocks to Buy Now
- 4 YHOO M&A Deals With Big Potential
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.
