Daytraderbusiness.com - GENVEC - Why GENVEC INC surged more than 75%

Trade Information
Company	Date	Opening	Last Price	Variation	High	Low	Volume
GNVC	2010-03-18	2.79	2.8	+0.01	2.88	2.7	2331585

NEW YORK -- As the SARS virus scare continues to grow, biopharmaceutical companies seeking a cure have been embraced by investors. GenVec Inc. (NasdaqNM:GNVC - News) , Gaithersburg, Md., saw the value of its stock surge after announcing late Thursday that it was working on a SARS vaccine through its gene- therapy platform. gnvc surge 260403

Investors also snapped up shares of Medarex Inc. (NasdaqNM:MEDX - News) , after the Princeton, N.J., company said it was developing a potential SARS treatment with the Massachusetts Biologic Laboratories of the University of Massachusetts Medical School. The mysterious disease dubbed severe acute respiratory syndrome has infected more than 4,000 people world-wide and killed more than 250. Most of the deaths have occurred in Hong Kong and mainland China. Alexander Hittle, an analyst at A.G. Edwards, said GenVec's news comes as confirmation of the benefits of the company's gene-therapy platform, which is currently being used to develop a vaccine for HIV. Although Mr. Hittle acknowledged some speculation in the day's run-up, he noted the company's stock has been oversold for about a year now, and this kind of news brings recognition of the value that is intrinsically in the company. In afternoon trading Friday, shares GenVec rose 80 cents, or 52%, to $2.33. Medarex's shares increased 37 cents, or 9.5%, to $4.26. Both stocks are traded on the Nasdaq National Market. Biopharmaceutical companies that are in the early stages of development for a vaccine or drug often see large stock price run-ups on incremental news about the status of a preclinical study or the results of early stages of a clinical test. As with SARS, the threat of anthrax and bioterrorism sent related biopharmaceutical companies' shares surging in the fall of 2001. Companies such as Cepheid (CPHD) and Acambis PLC (ACAM) benefited from their work in anthrax. More recently, Vical Inc. (NasdaqNM:VICL - News) shares got a spark from news it would begin testing an anthrax vaccine on humans by the end of 2003. Standard & Poor's Frank DiLorenzo said such stock movement was more common a few years back, when biotechnology stocks would move upward on news that didn't correlate to companies' fundamentals. The better the market environment, the more willing investors are to make irrational moves on incremental news, he said. Nowadays, investors are a bit more discerning when it comes to investing in the biotechnology sector, which had been shunned in the last few years, Mr. DiLorenzo said. With some signs of economic recovery appearing, however, there are more examples of irrational run-ups resurfacing. Mr. DiLorenzo covers the biopharmaceutical sector for Standard & Poor's, but doesn't cover Medarex or GenVec specifically. He doesn't own shares in any biopharmaceutical companies. A.G. Edward's Mr. Hittle is optimistic about GenVec, which received $420,000 from the National Institutes of Health, under a contract managed by SAIC of Frederick Inc. "It's clearly very early in the whole evolution of the diseases and public health response to it," Mr. Hittle said. "I look at this as proof of the concept that GenVec's gene-therapy platform is something that is broadly useful." The combination of an oversold stock and the SARS headlines have boosted GenVec shares, Mr. Hittle said. He doesn't own shares in the company, but partnering analyst Craig West does have a stake. A.G. Edwards was an underwriter in GenVec's initial public offering in late 2000. GenVec plans to develop a vaccine by using a small, nonreplicable protein of the SARS virus to induce natural immunological systems in the human body. Having taken the vaccine, someone infected with SARS would have antibodies that can recognize and fight the disease, said Chief Executive Paul Fischer. The program is an extension of a current agreement to develop a vaccine for HIV. Dr. Fischer said that program was started a year ago, and GenVec hopes to have a candidate ready for Phase I trials by the end of the year. Dr. Fischer said the development of the SARS vaccine most likely will be accelerated as a result of the pressing dangers of the disease. The company hopes to have an initial candidate within a few months, he said. - Roger Cheng, Dow Jones Newswires; 201-938-5393; roger.cheng@dowjones.com