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Swine Flu Biotech Bubble Primed to Burst

NEW YORK ( TheStreet) -- As the most fraught influenza season since 1918 moves toward its Northern Hemisphere opening day, one outcome is perhaps more certain than any other: The hysteria surrounding the stocks of certain biotech firms will fade like summer itself.

Ever since swine flu entered the lexicon back in April, a kind of mini-bubble has developed in the shares of companies claiming to have an H1N1 fix, and that bubble seems primed to pop.

More than a few developers of antiviral drugs have seen their stocks explode on little to no evidence that their treatments have any near-term commercial prospects ( see: Biocryst (BCRX - Get Report)). But the case for the bubble's imminent deflation is even clearer among those companies attempting to develop novel influenza vaccines.

Swine Flu Outbreak

Traders, speculators and presumably buy-and-hold investors have piled into these shares. (Early-stage biotech, no matter the specific field, has always been closer to gambling than investing, after all.) Novavax (NVAX - Get Report), a Rockville, Md.-based vaccine specialist, has seen its stock price increase 217% since Jan. 1 -- a relative laggard. Shares of Vical (VICL - Get Report), a San Diego vaccine developer, have gained 256% over the same period, while Inovio (INO - Get Report), also of San Diego, has exploded by 285% and Hemispherix (HEB - Get Report), which has promoted its much-delayed chronic-fatigue treatment as a swine-flu-vaccine booster, has grown by a whopping 478%.

Needless to say, these stocks have outperformed the broader market.

The reason? Press releases by the bale, issued over the last five months touting this or that new study in which some new approach to flu vaccines has shown signs of not only besting the traditional vaccine methods, but of profiting big from any potential swine-flu plague.

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SYM TRADE IT LAST %CHG
BCRX $10.22 -2.60%
HEB $0.26 -4.80%
GSK $47.59 -0.48%
INO $7.57 2.90%
NVS $98.98 -0.06%

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S&P 500 2,101.04 +2.51 0.12%
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