SIGA: The Return of the Jedi

Last time, I described a multi-pronged attack on SIGA's smallpox cure by a small group of parties. Those guys may well have a few more cards to play. But lawsuits, propaganda, and stock-shorting will only get you so far in attacking a drug our nation (and all peaceful nations) direly needs. This week, tectonic forces are finally reasserting that need, much to the relief of beleagured SIGA investors!

First, the LA Times, which had published the wildly inaccurate hatchet job (described last time) which started the recent firestorm, printed a response from the Department of Health and Human Services (which oversees the Biomedical Advanced Research and Development Authority (BARDA) - the agency that's paying us a few hundred million bucks per a signed contract, and intends to buy well over $1B more):

"The article ignores the importance of having a smallpox preparedness policy in place to provide antiviral drugs if needed. Smallpox was eradicated by 1980. Although only two labs are authorized to retain smallpox virus stocks for research, undisclosed or forgotten stocks may exist. If smallpox reappears, mass vaccination would take time. Without anti-viral drugs, mass illness or even death may take place[...].

Only two companies, Chimerix and SIGA, are developing a smallpox antiviral drug. Only SIGA can meet our time frame and regulatory requirements. We are committed to developing new smallpox drugs in the event that they are ever needed."

That's pretty clear, if absurdly understated ("death may take place"???). Then there's this big political news:

The U.S. House of Representatives on Tuesday approved legislation intended to help protect the country against acts of biological terrorism[...]

"Terrorists continue to actively seek out biological or chemical weapons to carry out horrific attacks against us," Representative Mike Rogers (R-Mich.), chairman of the House Intelligence Committee, said in a statement following the unanimous decision. "We must act to prepare for such threats that we continue to face on a daily basis more than 10 years after 9/11."

H.R. 2405 renews components of the 2006 Pandemic and All-Hazards Preparedness Act, which established the Biomedical Advanced Research and Development Authority[...]

The HHS branch manages the multibillion-dollar Project Bioshield, which was created to provide the U.S. Strategic National Stockpile with additional medical treatments for anthrax, smallpox and other agents that could be used to produce biological weapons or other unconventional threats. Rogers' bill renews the program's Special Reserve Fund, which would receive $2.8 billion from fiscal years 2014 to 2018.[...]

"I hope and pray that we never need to use such defensive measures, but they are critical to ensuring that the public stands protected," Rogers said. "We need to continue to expedite their development and strengthen the national stockpile. Quite simply, we must always prepare for the worst" (U.S. Representative Mike Rogers release, Dec. 6).

This removes the uncertainty that procurement might be cancelled due to budget slashing. Fear of tight government budgets is what recently tanked the entire biotech sector - SIGA along with it - but investors aren't sharp enough to have realized that SIGA's an exception.

Finally there's this, from Reuters:

BIOLOGICAL WEAPONS THREAT IS GROWING, U.S. WARNS

The United States called on Wednesday for closer international cooperation to prevent terrorist groups from developing or using biological weapons, a threat it said was growing.

Secretary of State Hillary Clinton said countries must strengthen their ability to detect and respond to suspicious outbreaks of infectious disease that could be caused by pathogens falling into the wrong hands.

"Unfortunately the ability of terrorists and other non-state actors to develop and use these weapons is growing. Therefore this must be a renewed focus of our efforts," she said in a speech in Geneva. "Because there are warning signs and they are too serious to ignore." She said Al Qaeda in the Arabian Peninsula had urged "brothers with degrees in microbiology or chemistry...to develop a weapon of mass destruction."

A crude but effective terrorist weapon can be made by using a small sample of widely available pathogens, inexpensive equipment and "college-level chemistry and biology," she added.

States must do a better job of reporting on measures being taken to guard against the misuse of biological weapons and scientists should exchange views on threats, Clinton said.

Consider the above in light of the statement from HHS secretary Kathleen Sebelius last April, who wrote in the NY Times that "The technology now exists for someone with the right tools and the wrong intentions to create a new smallpox virus in a laboratory."

This rebuts the "smallpox is eradicated, so this drug is unnecessary" angle, which seems too stupid to be taken seriously, but is being trumpeted by intellects as formidable as Glen Beck (here's a video of his recent rant against SIGA).

Not many people outside the drama are paying attention to any of this. To most of the market, SIGA's just another biotech company with longshot chances, when, really, they're a leading biotech company with prospects so bright as to attract a blitzkrieg of nefariousness.

And so the dots remain unconnected and SIGA still hovers at a ridiculous $2. But when the contract's fulfilled (the first payment - $40M - is due shortly), and other contracts appear, and the product pipeline's announced, lots of people will be hearing about it. So while I have no idea what's going to happen between now and then, and this is obviously not a ride for the faint of heart (and a terrible investment for money you can't afford to keep on ice for a few years), this might be a great point to buy. And then don't even look at the stock price for a year or two!