With the avian flu hysteria spreading exponentially faster than the disease itself, investors have been stocking up on Gilead Sciences ( GILD), the maker of the influenza drug Tamiflu -- the product that appears to offer the best hope against the virus. Since the start of the year, Gilead's shares are up 49% compared with the 23% increase of the Amex Biotech Index and the almost 2% rise of the S&P 500. The company's market capitalization above $24 billion makes it one of the world's biggest biotechs. Recently the company has squabbled with marketing partner Roche over the rights for Tamiflu, but it remains at the forefront of any discussion about how best to prepare and protect against the bird flu. There's little doubt that Gilead has a leading position in this fight, but rather quietly, lesser-known and often very small companies like Biocryst Pharmaceuticals ( BCRX) and AVI BioPharma ( AVII) are stepping up their own attempts at easing spreading fears of a pandemic. The avian flu, primarily the H5N1 strain transferred from bird to bird, has been detected in more than 100 humans since the first reported bird-to-human case in Hong Kong in 1997. What's been garnering the most attention lately are worries that a mutant human-to-human version could be on the horizon. Now that the disease has leaked westward, with cases showing up in Romania and Turkey, biotech companies are scrambling to develop their own vaccines and treatments for the disease.
Treatment RushUnlike vaccines, which are given as a preventative measure, antiviral drugs are meant for people already exposed to the virus. The goal with this type of treatment is to kill the invading bug before it spreads. Besides Tamiflu, only one currently approved antiviral flu drug has been shown to work against the avian flu, Relenza from Australia's Biota. Relenza is marketed by drug giant GlaxoSmithKline ( GSK). On Friday, Biota said it would support the French government's plan to build its Relenza stockpile to 9 million doses in the next two years, but there are concerns about just how much of the drug can be produced. After all, the proposed stockpile equals three times the drug's total sales since its launch in 1999, and Biota is suing GlaxoSmithKline, alleging that the company hasn't adequately supported Relenza.
Among proposed new antivirals, Biocryst Pharmaceuticals' Peramivir is on its way to clinical trials with support from the National Institutes of Health. Peramivir, originally co-developed with Johnson & Johnson ( JNJ), was shown to stop the replication of the avian flu in lab mice in 2001. However, late-stage studies fell short of their goals and the partnership dissolved, with J&J saying it needed to focus its resources on higher-priority drugs. Biocryst has said safety wasn't a factor in the pact falling apart, and investor hopes are running high that Peramivir might have a future after all. Biocryst shares have tripled in recent months to $11.30 from a 52-week low of $3.68. Another antiviral drug developer, AVI BioPharma, is targeting several strains of the avian flu, as well as the common flu. AVI says its drug kills viruses by targeting a specific chunk of genetic code common in several types of influenza and that are critical to virus survival. The drugs were effective in early studies, and could enter animal studies as early as the end of the year, AVI Chief Executive Denis Burger said in an interview. AVI, though small with a market cap around $160 million, has seen its shares run up 66% from the beginning of September, closing Monday at $3.69.
Protective ApproachElsewhere, Novavax ( NVAX), which has a $130 million market cap, said it's focusing its resources to develop its own bird flu vaccine. Earlier this month, the company contended that it has a "compelling solution" to a pandemic and can produce large quantities of vaccine in a short period of time. The company says a planned secondary stock offering will help fund the production, and New Jersey-based firm Wave Biotech will manufacture it. Another tiny firm, Generex Biotechnology ( GNBT) (market cap $44 million) is looking to co-develop its avian influenza vaccine in China, and has proposed partnerships with the Harbin Veterinary Research Institute, Sinovac Biotech and Shanghai Institutes for Biological Sciences.
Of course, Gilead's Tamiflu has easily received the most attention. Tamiflu has been proven effective in treating the avian flu in humans, and it's already approved by the Food and Drug Administration to treat common strains of influenza. But Gilead says Roche has failed to adequately market Tamiflu, and the companies are involved in arbitration to decide the rights to the drug. Roche has the sole marketing rights to the drug Gilead developed. Where it could get worrisome for these two companies, from an investment standpoint at least, is the fact that Taiwanese researchers and Indian generic drug company Cipla claim to have copied the drug. Cipla has said it plans to manufacture it, despite a possible court showdown with Roche. Initially, Roche had refused to allow another company to manufacture Tamiflu, but that's changed amid growing worry and pressure from various regulators. Roche now says it's in discussions with eight companies, including large generic-drug makers, along with the governments of Taiwan and Vietnam. Roche estimates it will have the capacity to produce 300 million doses of Tamiflu a year by 2006, or 10 times its 2004 capacity. The company expects to select potential partners for more detailed production discussions by the end of this month.