Trading The Swine Flu
The Dynamic Wealth Report
April 29, 2009
The Swine Flu - A Secret Bio-Weapon?
by Robert Morris, Editor
Did you know the swine flu was genetically engineered? It’s a top-secret
biological weapon leaked by the government.
This is the latest conspiracy theory making the rounds on the Web.
Apparently two mainstream journalists interviewed a top scientist for
the United Nations who examined the swine flu virus (H1N1). The
scientist supposedly concluded H1N1 was genetically manufactured as a
military biological warfare weapon. The report stops short of
specifically accusing the military of releasing the virus intentionally
(but the implication is hard to miss).
Regardless of how it started, the swine flu is getting more dangerous by
the minute.
The first swine flu death occurring on U.S. soil was reported this
morning. A 23 month old boy from Mexico died in a Houston hospital
Monday evening.
Over 2,400 people are infected with the virus in Mexico, where the
outbreak began. And, more than 150 people have died there from the
virulent strain.
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The CDC reports 91 confirmed cases of swine flu in 10 U.S. states. They
expect more cases, more hospitalizations, and more deaths in the coming
days and weeks.
This is starting to get scary…
Cases have also appeared in Canada, Britain, Germany, Spain, Israel,
Austria, and New Zealand. As I write, the World Health Organization is
holding an emergency meeting in Geneva. They’re deciding whether to
raise the pandemic alert level. (That could send the world into full
blown panic mode!)
My heart goes out to all the patients and their families. And, I extend
my sympathies to the families who’ve lost loved ones.
I don’t wish to appear insensitive, but I want to share a few trading
ideas presented by the swine flu situation.
One idea is to invest in the manufacturers of surgical masks. The
Mexican government is requiring its citizens to wear them when they are
out in public. Other governments around the world could require the same
thing if the virus continues to spread. Major manufacturers of surgical
masks are 3M (MMM) and Kimberly Clark (KMB).
Another strategy is to buy shares of the pharmaceutical companies that
make the anti-viral drugs.
Tamiflu is sold by Roche Pharmaceuticals (RHHBY). And,
Gilead Sciences
(GILD) receives a 20% royalty of worldwide sales. The U.S. government
has already released 12.5 million doses of Tamiflu from its stockpile. Other countries are likely to follow suit. Expect sales to rise as
government stockpiles are replenished. And, if a global pandemic
outbreak occurs, global sales of Tamiflu will surge.
GlaxoSmithKline (GSK) makes the other effective anti-viral drug, Relenza. Sales could skyrocket as fears over swine flu grow.
A third strategy is to buy stock in the vaccine manufacturers. This is a
bit trickier as at least 20 companies make flu vaccines.
It looks like Astra Zeneca (AZN) and Novartis (NVS) have the inside
track. The CDC has reportedly shipped raw samples of H1N1 to AZN’s
subsidiary, MedImmune, which sells the only flu vaccine administered by
nasal spray. The spray would enable faster mass inoculations. Novartis
announced it also received the genetic code for the new virus.
Another potential winner is Baxter International (BAX). The specialty
drug maker has patented technology for making vaccines in half the time
it usually takes (13 weeks instead of 26). The company has contacted the
World Health Organization for a sample of the strain.
Dutch biopharmaceutical firm, Crucell (CRXL) is the largest independent
vaccine producer in the world. They use a patented technology to develop
vaccines from a single human cell which can replicate itself
indefinitely. The technology allows them to mass produce vaccines very
quickly. A huge competitive advantage in a pandemic scenario.
Finally, a speculative play.
Novavax (NVAX) is working on an experimental vaccine against one strain
of avian flu. The compound has shown a strong immune response in humans. The company also claims its technology can cut production time in half. This one’s not for the faint of heart. The stock has more than
quadrupled since the swine flu story broke.
If this turns into a full blown pandemic, these stocks could really
move. Aggressive traders should consider taking a position quickly.
• Lean Hogs ($0.63 per pound)
As you can imagine, Lean Hogs prices have fallen dramatically. The
swine
flu threat is creating fear about pigs and pork product in general. Despite repeated comments out of the federal government that pork meat
is safe, sales have started falling off.
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