Why investing in vaccine companies could be dangerous for your financial health, even as fears of a monkeypox pandemic have fuelled a flood of speculation, writes RUTH SUNDERLAND

Call it insensitive. Call it macabre. For most of us, pandemics are human tragedies, like wars or natural disasters.

But there are also investors who view these events with an opportunistic eye.

The outbreak of mpox in Africa is a case in point. Shares in pharmaceutical and biotech companies that were thought to benefit from demand for vaccines and diagnostic kits soared.

It was a similar scenario during the Covid pandemic, with traders banking on what the World Health Organization (WHO) described as a “public health emergency of international concern.”

Some will see this as making money out of misery and will find the idea repugnant.

Others will argue that it is precisely the capital invested by these companies in valuable projects that saves lives.

Regardless of morality, investors should be careful: investing in companies whose share prices have risen due to mpox is a risky business.

It is not yet clear how serious the situation will become and how great the demand for vaccines and tests will be.

According to the World Health Organization, the virus could spread from the Democratic Republic of Congo and other countries in Africa across the continent and beyond.

The European Union expects more cases after Sweden reported its first case last Thursday.

Several companies that have fallen into the mpox stock mania are listed abroad. Small savers can buy and sell via an investment platform.

However, they should be aware that this involves both currency and investment risks.

Anyone considering jumping on the bandwagon should be aware that stocks in this segment are volatile and subject to dizzying rises and falls.

Risks include regulatory approval for tests and vaccines, which is difficult to obtain. Even if it is granted, companies may still struggle to make a profit from the situation.

That may sound contradictory. However, pharmaceutical companies are locked in a perpetual conflict between maximizing profits on the one hand and making vaccines and medicines available for the good of humanity on the other.

The mpox outbreak has so far been concentrated in poor countries, meaning there is pressure on providers to offer vaccines for free or at low cost.

As Dr. Jean Kaseya, director-general of the public health organization Africa CDC, said last week: “The vaccine is so expensive — we can put it at about $100 a dose. There are not that many countries in Africa that can afford the cost.”

However, vaccinating against a virus like mpox can also have non-financial benefits.

AstraZeneca had no intention of filling the treasury with the Covid jab, but did enjoy a halo effect.

It is one of the few British companies whose market capitalisation exceeds £200 billion.

But there are other risks, such as the potential for major lawsuits against a company if something goes wrong.

Rapid price increases in these types of scenarios are often fuelled by traders in the City looking to make a quick profit.

The standard advice for retail investors is not to be influenced by short-term market trends and to take a long-term view.

Ask yourself if you would consider investing in any of these companies if it had not been caught in the MPOX buying wave.

We don’t make investment recommendations here, but look at the companies behind the hype.

Bavarian Nordic

Much of the mpox market mania has centered around this Danish company, whose shares have risen more than 90 percent in the past year and have risen nearly 40 percent in the past five days.

Denmark, where Novo Nordisk, the maker of Ozempic and Wegovy, is also based, is building a reputation in the life sciences.

Paul Chaplin, the boss of Bavarian Nordic, happens to be British.

On Saturday, he said he was working with the WHO and Africa CDC to ensure “fair access” to the vaccine.

This can be taken as a clear signal that he is not out to make as much profit as possible.

He added that he wants to get approval to use the vaccine in adolescents, who are at particular risk, along with children, people with weakened immune systems and pregnant women.

The 32-year-old company, which reports first-half results this week, has the advantage of being the only MPOX vaccine approved in the US and Europe.

It yielded more than 15 million doses during an earlier outbreak in 2022 of a different strain of mpox.

So it has a proven track record, although the gains for investors from the previous mpox episode could not be sustained.

Stocks soared in 2022, but then fell sharply again.

Even after their last ascent, they are still lower than they were two summers ago.

Bavarian Nordic is valued on the Copenhagen Stock Exchange at 22 billion Danish kroner, equivalent to approximately £2.5 billion.

In addition to the mpox vaccine, the company also has other vaccines, such as vaccines against tick-borne encephalitis, rabies, cholera and typhoid.

Novacyt

Listed on the junior AIM market in London and Paris, Novacyt is a well-known name for small investors in the United Kingdom.

Many retail shareholders followed the dramatic rise and subsequent fall of stocks during the Covid pandemic.

The focus is on virus testing and shares rose more than 45 per cent on Friday to 96p on hopes it could provide diagnostic tests for mpox. It rose a further 23 per cent yesterday.

But as investors who have followed the company during the pandemic and its aftermath know, Novacyt shares are highly volatile.

They were listed on AIM in 2017 at 59p. In early 2020, before Covid hit, they were trading at around 13p.

Purchases during the pandemic saw an incredible increase, peaking at just under £12.80 in October that year.

Novacyt’s status as a City darling was short-lived as it found itself embroiled in a legal dispute with the government over its testing, agreeing earlier this summer to pay £5m as part of a settlement.

Emerging Bio-Solution

This company’s mission is to “protect people from things we hope will never happen,” including biological warfare, drug overdoses, and deadly viruses.

The 25-year-old American company produces the nasal spray Narcan, which is used to treat opioid overdoses and as a treatment for anthrax and botulism.

But what will interest the traders who sent their shares soaring 55 percent on the New York Stock Exchange last week — and another 15 percent yesterday — is a product going by the name ACAM2000.

It concerns a smallpox vaccine that Emergent bought from French pharmaceutical giant Sanofi in 2017.

That may have seemed like a quixotic purchase, given that in May 1980 the WHO declared smallpox eradicated, making it the only infectious disease to have been eradicated.

The smallpox vaccine was introduced in Europe as early as 1721, when Lady Mary Wortley Montagu, a pioneering scientist and feminist, inoculated her three-year-old daughter with a small dose of the disease.

So why such overwhelming interest more than 300 years later in a shot to protect against a disease we defeated? You guessed it: smallpox is related to mpox.

Emergent is hoping for approval from drug authorities to use the smallpox vaccine in the fight against this disease.

In November last year, the company filed an application with the US Food and Drug Administration.