Wednesday, October 13, 2010

SIGA Finally Hits

I first touted SIGA (a drug development company working in biodefense) in 2008 when its stock price was $2.92, and I've been keeping you appraised as they've awaited a government contract to stockpile their smallpox drug (effective against all poxes, including weaponized smallpox and animal poxes, with the safety profile of Tylenol).

Well, the contract's in (though it's being protested, weakly, by a competitor), and the stock price is hovering around $11-12. Congrats to all who bought. But don't even think of selling!

FDA approval is due sometime in the next year or so [update: nope, that's slipped back to 2012, but it's not a huge deal, because this isn't a drug your doctor will prescribe you,it's something that will be stockpiled for first
responders to use in case of catastrophe
] , and that will allow the World Health Organization to purchase ST-246. Other countries needn't wait. Israel has signalled its intention to stockpile it, the European Union is looking at it, and it's likely that Canada, India, and other countries fearing bioterror will want to stockpile it, as well. And stockpiles must be replaced every 3 years, as that's the drug's shelf life. Furthermore, the government bought ST-246 at a favorable price, $300/dose, since they financed the drug's development. So there will be higher profits on those other sales (it costs virtually nothing to produce).

ST-246 is highly effective against vaccine-related complications, and a new generation of advanced vaccines for various maladies is currently under development (sorry, Jenny McCarthy) and in need of a hedge against such complications. There is also a potential connection to HIV treatment.

News junkies will know that we face
a potential monkeypox pandemic, and ST-246 is safe and effective against monkeypox ("Tecovirimat, also known as ST-246, has shown efficacy in all small animal and nonhuman primate prophylaxis and therapeutic efficacy models of poxvirus-induced disease tested to date.", according to a scientific paper by SIGA's chief scientist). As with animal flu, the monkeypox virus must jump from animal-to-human, and then from-human-to-human, before we need to really worry, but we seem to be there now. From a recent issue of Scientific American: "The rise that we're finding is way above and beyond what anyone expected to see...[I]t's not linear, it's exponential. That suggests that secondary (person-to-person) transmission is going on."

You can read my first posting (same link as above) for information on SIGA's exciting drug pipeline (while you're at it, consider reading all the rest, in reverse chronological order). There have been no reports on this pipeline for a year. We may hear a humdinger - my first use of that word in print, by the way - of an update from SIGA now that they have everyone's attention.

Once many of those impending deals are sucked up and the pipeline's been advanced a bit, SIGA will likely be bought by a big pharma company for mid to high $30s. So it's still a good buy!

Finally, this contract is worth much more than $7 in additional stock value. "Efficient markets" be damned, it may take a while for the stock to reflect the full value of a $500M - $2.8B contract on this tiny company's 46M outstanding shares.


Ghalib said...


I just wanted to say thanks a lot for sharing the SIGA tips. There is no way I would have heard of the company if it weren't for you.

Jim Leff said...

My pleasure! Please don't make the mistake of selling!

Ghalib said...

Ha, are you crazy? No way will I sell now! :)

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