Sinovac Biotech China's Premiere Vaccine Maker

Breaking news was reported Friday as Sinovac wins Beijing Public Health Bureau's bid to supply seasonal flu vaccine Anflu(R) to Beijing citizens on August 28, 2009. China-based Sinovac is one of four companies that won supplier contracts for seasonal flu vaccines. Sinovac (SVA) is China's premiere vaccine maker that focuses on the research, development, manufacture and commercialization of vaccines that protect against human infectious diseases. Current Vaccines produced by Sinovac include vaccines for Hepatitis A and B, Influenza, and H5N1(Avian Flu) pandemic flu for government stockpiling.

This is reminescent of Novavax's (NVAX) bid to supply Spain's vaccine for H1N1 swine flu. On June 30th 2009 Spanish officials committed €60 million to develop vaccines and establish the country's first vaccine plant to be built in Granada. This news sent the stock up 31% up 0.78 to 3.28. News from that can be found here titled Novavax in multi-million Spanish deal on vaccines. Since this announcement Novavax's stock has climbed to Friday's high of 5.89 +0.24.

Sinovac is a flourishing stock that was trading around 1.50 in April and month by month has a steady climb to today's 6.32 trade value. Q2 2009 saw 20.02M in revenue compared to 6.57M in Q1 2009. Gross profit rose to 16.25M with Net Income of 5.81M and a market cap of 268.12M. Sinovac has 46.70 million in current cash. Total Assets were 116.81M with Total Liabilities of 61.45M. Total Debt rose considerably to 26.30M.

But what about the future of Sinovac? I think that this year's flu season will not reach pandemic state as predicted but a slightly elevated outbreak status. I could be wrong but schools and the public will eventually start taking precautions to stop the epidemic. It will get bad but not as bad as the news is making it out to be. However, I do see the financials of this company improving and it could easily be trading around the 10-12 range during this flu season. However, after that it might drop considerably until the next pandemic arrives.

I think it would be a smart play to place a limit order on SVA at a discounted price and see if it falls a bit before investing right away. A note of caution before investing, there are another 10 Chinese drug companies that will obtain the flu strain samples "NYMCX-179A" from the WHO. China has a total of 11 drug companies that can produce seasonal flu vaccines, but Sinovac Biotech Company is the only one that can make pandemic flu vaccines. They are producing 5 million doses right now and under Pandemic status can produce up to 20 million doses.

A nice look at their previous pipeline and sales data from 2006 can be found here from China Analyst. Recent positive news from their current clinical trial can be found on News-Medical.net from August 19, 2009. The clinical trial is active currently and the estimated completion is January 2010. A closer look at the trial can be found on ClinicalTrials.gov as it is in Phase IV and is seeking approval for Swine Flu H1N1 influenza vaccine.

Another article on Swine Flu was published on USA Today titled US: 160M doses of swine flu vaccine due in Oct. from July 23, 2009. The article discusses Swine Flu vaccines due in October and the rush to get them to the public. It also mentions the state of the Flu season in the Southern Hemisphere.

Disclosure: Long SVA

Big Money in Swine Flu Stocks

Today was a good day for Swine flu stocks. Most small caps were up 5 to 10% today alone. So lets go over today's Swine Flu winners. Many investor's still think this is a lot of hype but with Flu season coming around the corner, I see things only getting worse. I have been a Microbiologist by trade and do see this as an outbreak, maybe not a pandemic, but anything is possible. The US government is spending Billions on getting vaccines ready for Flu Season. I am only including the small caps here but Novartis, Glaxo, Baxter, Roche and Gilead are the big players in the market.

BioCryst Pharmaceuticals (BCRX) 12.60 +2.55 up 25.37%
Hemispherx Biopharma (HEB) 2.22 +0.32 up 16.84%
Sinovac Biotech Ltd. (SVA) 5.47 +0.54 up 10.95%
Novavax, Inc. (NVAX) 5.21 +0.45 up 9.45%
CEL-SCI Corp. (CVM) 0.475 +0.0273 up 6.10%


All this is based on a report out from the President's Panel earlier today. The Washington Post article is titled Swine Flu Could Infect Half of U.S. Population, Report Says. Understood is the fact that no one can predict how good or bad the Flu season will be, but I see it above average at minimum. Most schools and colleges are starting back in the next couple of weeks if not already and anyone with kids knows how easy germs spread with children. Colleges are just the same. Colleges can be breeding grounds for these outbreaks to occur.

Most of these profits are on hype and you should take caution with investments based on volatility alone. However, I see these as strong buys coming into flu season. Wait for them to come down just a bit before investing with a limit order at a set price. As always, do your homework and check the companies financial information before investing.

Doing some research on the H1N1 outbreak here are some good links.

CDC's 2009 H1N1 Flu (Swine Flu)

CDC's Weekly Flu View

Google News Search Swine Flu

CNN Swine Flu Goes To College

Google News Search H1N1

Southern Hemisphere's swine flu experience holds hints of what may be ahead

Novartis recieves $690 million order for H1N1

Swiss company Novartis (NYSE: NVS) received an order for $346 million for antigen and $343.8 million for adjuvant totalling $690 million in July. Currently, Novartis is building a vaccine facility in Holly Springs and is hiring right now for validating the buildings and getting them up and running. So there are plenty of jobs created from their vaccine business and profits to come. Validation of buildings and facilities can be a pain-staking process but I expect them up and running by late 2009 Q4, if not sooner.

Current trading for Novartis is up around the 44-46 range. This is from their low point earlier this year with the global economic downturn, where their stock was trading around their 52 week low of 33.34. Their 52 week high is 56.23. It achieved this level twice in August 2008 and November 2006. So they are about midway to their highpoint and that is good news. I really don't see why a year from now they wouldn't be trading in the 60 point range again if not sooner. They have a healthy order of 690 million from the US government and are the striving to be the top vaccine maker in their sector.

What I like most about Novartis is that they have 337 open studies actively recruiting patients according to ClinicalTrials.gov. This is where their future lies. According to their website Novartis.com they have 155 projects in various stages of clinical trial. Here is a link to their 2009 and >2012 Novartis Pipeline. Most importantly, there are over 40 biologic molecules in the Novartis pipeline, and Novartis Biologics is growing. Roughly, 25% of their pipeline is in biologics. This is healthy for profits and for Novartis' future.

August 17, 2009 found FDA approval for the drug Extavia® (interferon beta-1b), the first in a new planned portfolio of multiple sclerosis (MS) medicines from Novartis to help patients manage this devastating disease. Extavia will be available to patients in the US this fall. The European Union has already approved Extavia in 12 countries.

Looking over their financials they are in good shape for the future. Most importantly, they own Sandoz, their $7.6 billion in 2008 sales Generic drug manufacturer. This is key for the future as many drugs are expiring and entering the generics market. They have a current market cap of 103Billion and 2Q 2009 profits of 2.044 billion and earnings of 0.90 per share. This wasn't as high as expected due to the fall in the dollar. Read more about the second quarter prospectus here: Novartis Q2 2009 Report. Although the global economic crisis was going on Novartis increased sales in various sectors. Most impressive sales included the oncology market and Diovan, a high blood pressure medication. Full sales data for Novartis can be found here for 2008: Novartis Product Sales

Gleevec/Glivec (USD 1.9 billion, +15% lc), a targeted therapy for certain forms of chronic myeloid leukemia(CML) and gastrointestinal stromal tumors (GIST), has achieved sustained double-digit growth based on its leadership position in treating these cancers backed by new clinical data and regulatory approvals. Glivec received European regulatory approval in May 2009 as a post-surgery (adjuvant setting) therapy for GIST following Swiss (February 2009) and US (December 2008) approvals.

So I really like the future and growth of Novartis. At their mid range of 45.49, I see it as a buy with long-term potential and plenty of room to grow for the future.