SMALL CAP IDEAS: The small drug firms set to benefit from RSV vaccines

Here’s an investment idea that starts with large blue-chip companies, but has significant trickle-down potential to at least three smaller, growth companies listed in the UK.

Chances are RSV, or respiratory syncytial virus, which has symptoms similar to the common cold.

It is a highly contagious disease that affects people of all ages, but can be especially dangerous for the elderly.

The impact of RSV in adults can range from mild to severe and can include coughing, sneezing, runny nose, sore throat and fever.

In some cases, RSV can lead to more serious complications such as pneumonia or bronchitis, which can be life-threatening for older people.

The risk of serious illness from RSV is higher in this population because of several factors: As people age, their immune systems become weaker, making it more difficult for them to fight off infections.

In addition, many of this group may have underlying health conditions that weaken their immune systems and make it more difficult to recover from an illness such as RSV.

Estimates put global hospitalizations at 360,000 and deaths at more than 24,000.

It should be noted that the flu vaccine does not protect against RSV, but it can help prevent other respiratory diseases that weaken the immune system and make it more difficult to fight RSV.

A search for a jab has been underway since the first inoculation failed in 1966, with no luck so far. However, the search for an RSV vaccine has recently yielded a number of candidates that will soon disappear from pharmacies.

Three vaccines targeting older adults are set to receive regulatory approval in 2023, with GSK and Pfizer receiving priority reviews from the U.S. Food and Drug Administration.

Meanwhile, Moderna is lagging behind but is expected to possibly have the first messenger RNA-based RSV vaccine.

If the virus begins to mutate, the effectiveness of the first two vaccines may need to be reassessed.

In such a scenario, Moderna’s mRNA vaccine may have an advantage due to its ability to rapidly modify antigens to target newly emerging variant strains.

But mutation also opens the way for new entrants to enter the market.

AIM-listed Synairgen is developing a broad treatment that could potentially fight both flu and RSV Poolbeg Pharma has identified and developed a preclinical agent using artificial intelligence – a world first.

Our third small-cap, hVIVO (formerly known as Open Orphan), is a contract research group with a facility in the East End of London used to assess whether these vaccines really work. Business is brisk and hVIVO is currently trading well above expectations.

The big drug companies, such as GSK, Pfizer and Moderna, are likely to open a market that analysts estimate will eventually be worth more than $10 billion a year.

It’s a decent new source of revenue, but the challenge will be to find the follow-up treatments that help maintain and expand market share.

That’s where the likes of Poolbeg come in and provide the blue-chip drug developers with their next vaccine iteration.

It should also be remembered that in any gold rush, the big winners are usually those who make or sell the picks and spades.

In pharma, these are the support services needed to bring new RSV vaccines to market.

hVIVO is a classic “game of spades and spades” in that it offers the human challenge studies to show whether vaccines work or not.

Its services are highly sought after, it has already booked 95 percent of this year’s revenue and also has high visibility for next year’s.

For the risk averse, the RSV opportunity probably backs one of the big three: GSK, Pfizer or Moderna.

The more lucrative longer-term bet if you want pure-play exposure to RSV (figuratively in an investment sense rather than literally) might be to get behind one of the emerging smaller drug developers.

But remember that this strategy is not without risks – it can be binary. And as always, do your own research and don’t rely on a single source of information.