An Ounce Of Prevention

In our latest issue, we discuss vaccines and the protection they provide from infectious disease. Vaccines are gaining more and more attention as new infectious agents are being discovered.

One company that we highlight in our report and I think that is worth mentioning is Acambis (NASDAQ: ACAM), a leading developer of vaccines to prevent and treat infectious diseases. Moreover, the company is well known for their ability to produce smallpox vaccines (the company is the only one who is allowed to produce the smallpox vaccine), was given a U.S. contract to manufacture more smallpox vaccine for the government to stockpile in the event of a bioterrorist attack. In addition, the company is in the process of developing a second-generation smallpox vaccine that they believe will be safer than the current vaccine, which can cause a smallpox-like disease in immunocompromised patients.

Acambis is also developing other vaccines, including for West Nile virus, which is a serious problem here in the U.S., and for Dengue and Japanese encephalitis virus, which are problems overseas. Overall, Acambis will generate revenue from the sale of the smallpox vaccine to the U.S. and eventually from the other vaccine candidates if and when they are marketed. We envision Acambis to do well in the short term as investors gravitate to the story: further smallpox government contracts and potential retail distribution of smallpox vaccine. Eventually, the story would slowdown as the need for smallpox vaccines reduces. As a result, revenues and profits will decline, but then the other vaccines as mentioned above would take its place. One thing that investors will notice is that Acambis recently had a 5:1 stock split, a reflection of the government contracts the company received.

Nadine Wong


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