On January 25, 2016, the Director General of the World Health Organization (WHO), Dr. Margaret Chan, provided a report[1] on the Ebola outbreak in West Africa and spoke of the “monumental achievement” that has been made in bringing the crisis under control. On February 1, Dr. Chan declared “a Public Health Emergency of International Concern,”[2] in relation to a new threat which will no doubt require a similar effort to contain — Zika.

Symptoms

Zika has been widely considered as relatively harmless: The Centers for Disease Control and Prevention (CDC) estimates only 1 in 5 people infected will develop symptoms which are usually mild, lasting up to a week. However, the virus can be fatal, and much attention is being drawn to a possible causative link between the Zika virus and microcephaly in babies — a neurological disorder resulting in underdeveloped head and brain size, and to Guillain-Barre syndrome (GBS), a neurological disorder in adults.

Prevention

AlphaSense quoteZika is primarily mosquito-borne, and its current spread is being aided by two main factors — a lack of native immunity, and the endemic prevalence of the virus’ main host, Aedes mosquitoes.[3] As there is currently no vaccine for the Zika virus, and immunity will take time to develop, initial efforts to halt the spread of this distressing disease have been focused on mosquito control and limiting transmission.

GM Mosquitoes

On January 19, Intrexon ($XON) announced that their subsidiary, Oxitec, was expanding their “Friendly Aedes aegypti Project” to control the source of Zika after “positive program results.”[4] The solution Oxitec hopes to deliver is a “self-limiting gene program in which harmless [male mosquitoes] which do not bite are introduced and, in effect, compete for reproduction with females.”[5] So far, trials have been very effective, resulting in greater than 90% suppression of the wild [Aedes] mosquito population through this sterility program. The program gives great cause for optimism in controlling the virus, despite possible ethical objections to species control.

Blood Transfusions

The AIDS scare in the 1980s created a fear of blood transfusions, which required more robust screening to overcome.[6] Today, Cerus ($CERS) has developed INTERCEPT to enhance the safety of donated blood by “inactivating” viruses. This system has been used for years in response to similar viruses, and on December 9, 2015, the company announced approval for INTERCEPT to be used in Brazil to “proactively combat against transfusion-transmitted infections.”[7]

Insect Repellents

Mosquito repellents in the form of sprays or nets are nothing new. However, they are given new importance when mosquito-borne diseases break out. One company with a new Brazilian presence, American Vanguard ($AVD), claims to have the “next innovation” for mosquito repellent with their Guardian product, ready to compete in a “$1.2 billion market.”[8] Sterne Agee identified Avon’s ($AVP) Skin So Soft repellent as a possible beneficiary of the “new airborne virus” in Brazil, stating that they see “Opportunity in Adversity for Avon.”[9]

Vaccine Development

In some cases, it could be seen that the cost of developing a vaccine for less common illnesses can outweigh the potential return a company might enjoy. Until now, Zika almost certainly fell into that category. One company taking the fight to Zika is Inovio Pharmaceuticals ($INO), who is said to be entering preclinical studies for a vaccine.Tweet This Mr. Young K. Park, CEO of GeneOne Life Science ($011000.KR), who is collaborating with Inovio on the project said in a statement, “we aim to be on the front line of defense against major emerging infectious disease such as Ebola, MERS and now the Zika virus.”[10]

As the situation develops, more companies enter the fray. On January 28, 2016, the Swiss-based biotech Mymetics Corporation ($MYMX) announced in a press release that they too were looking into Zika by stating, “we will be starting the development of a vaccine for Chikungunya and have started to investigate Zika.”[11] Four days later, Premier Biomedical ($BIEI) announced a $6 million investment from the Brazilian Pharmaceutical Auramedi to support “investigations to apply Premier’s extracorporeal technology toward finding a cure for the Zika and Dengue viruses.”[12] On February 2, Valneva SE ($VLA.FR)[13] and NewLink Genetics ($NLNK)[14] also announced their own projects for finding a cure.

One must expect that more companies will make similar announcements over the coming days, so it will be interesting to stay on top of new filings and statements, as they are published. For example, in late December 2015, Brazil’s FDA, Anvisa, approved Sanofi’s ($SNY) vaccine for Dengue (a close relative of Zika).[15] GlaxoSmithKline ($GSK) has also been reported to be “evaluating its vaccine platforms” to help combat Zika following efforts on Dengue fever.[16] Perhaps it will be these companies that are the main drivers of progress in the near term? While more R&D is undoubtedly needed, it is heartening that big pharma is combating similar diseases, and gives further hope that a solution for Zika is not too far away.

Commercial Impacts

If not controlled in time, perhaps the biggest impact Zika will have commercially will be on the 2016 Rio Olympics in August. The biggest impacts will likely be seen by companies in the tourism and consumer spaces, as locals look to remain inside to minimize risk of infection and tourists reconsider holidays to affected regions. Using AlphaSense, it is easy to find companies like American Airlines ($AAL)[17] and JetBlue ($JBLU)[18] discussing the subject. So far, the companies have indicated that they have yet to see material impacts on bookings — but both airlines have offered refunds to pregnant fliers and companions. Companies with high exposure to Brazil in terms of revenue could be ones to watch, such as LATAM Airlines Group ($LFL) who claim 38% market share in the country.[19]

Should consumers not leave their homes or travel to events as much as before, one might expect an impact on sales for drinks companies, amongst others. Anheuser-Busch InBev ($BUD) is one company who might see a hit if that were to happen, considering Brazil represented “22.1% of revenue” in March 2015[20] and has seen robust growth since.

Conclusion

Only time will tell whether the Zika virus does indeed spread as some suggest it may. Hopefully, with the help of governments, organizations like the WHO and the CDC, as well as the companies involved in finding solutions to epidemics like Zika, it will not be too long before we can hear once more from Dr. Chan — and hopefully she will this time be able to praise the achievement of bringing Zika under control. 

The companies referenced in this article were identified using searches in and alerts from AlphaSense. Request a demo and our experts will demonstrate searches like these in action, and how you can track themes over time.

Sources
1. WHO Director-General addresses the Executive Board, who.int
2. WHO Director-General summarizes the outcome of the Emergency Committee on Zika, who.int
3. PAHO Statement on Zika Virus Transmission and Prevention, paho.org
4. Intrexon: Expansion of Oxitec’s Vector Control Solution in Brazil Attacking Source of Zika Virus and Dengue Fever after Positive Program Results – Press Release, January 19, 2016: 
5. Intrexon Corp at JPMorgan Healthcare Conference – Conference Transcript, January 13, 2016 
6. AIDS scare spurs fear of blood transfusions, the Citizen
7. Cerus Announces Agência Nacional de Vigilância Sanitária Approval of the INTERCEPT Blood System for Platelets and Plasma in Brazil – Press Release, December 9, 2015 
8. American Vanguard: Providing the Means to Safe, Efficient & Abundant Agriculture Worldwide –  Investor Presentation, March 31, 2015
9. CRT Capital Group: Bugs, Brazil & The Beneficiaries: How Avon Could Help Brazil And Its Brand Simultaneously – Research Report, December 24, 2015
10. Inovio: GeneOne Life Science and Inovio Pharmaceuticals to Collaborate on Zika Virus Vaccine Development – Press Release, January 22, 2016
11. Mymetics: Mymetics Announces Discontinuation of the RSV Collaborative Project – Press Release, January, 28, 2016
12. Premier Biotech: Premier Biomedical Announces Intended $6 Million Investment by Brazilian Joint Venture Partner, Auramedi, to Manufacture, Market and Distribute Premier’s New Technology Products – Press Release, February 1, 2015
13. Valneva: Valneva Evaluating Development of Zika Vaccine as Virus Spreads Through the Americas – Press Release, February 02, 2016
14. New Link Genetics: NewLink Genetics Corporation Announces Project to Develop New Treatment Options for the Zika Virus – Press Release, February 02, 2016
15. Sanofi: Brazil Approves Sanofi Vaccine – Dow Jones News Article, December 29, 2015
16. GSK : Glaxo Evaluating Vaccines for Zika Virus Potential – Dow Jones News Article, January 26, 2016
17. American Airlines: Q4 2015 American Airlines Group Inc Earnings Call – Earnings Transcript, January 29, 2016
18. JetBlue: Q4 2015 JetBlue Airways Corp Earnings Call – Earnings Transcript, January, 28, 2016
19. LATAM Airlines: Santander 20th Annual Latin America CEO Conference – Company Presentation, January 22, 2016
20. BUD: Annual Report by Foreign Issuer – 20F, March 24, 2015