Swine Flu Spurs Investor Interest in San Diego Biomedical Firms

9/21/09

San Diego’s Quidel, which signaled it would report better-than-expected quarterly results on Sept. 10, isn’t the only San Diego biomedical company to get a boost from worries about swine flu. At least four other companies with flu-related products or research programs also have seen their share prices surge since June 11, when World Health Organization Director-General Margaret Chan declared the H1N1 swine flu pandemic had begun. So does swine flu present a real opportunity for these companies?

Whether the investor reaction is warranted depends in part on the severity and spread of the swine flu, which right now is far and away the predominant flu virus circulating in the United States, according to the weekly flu update issued by the national Centers of Disease Control and Prevention. With the official Oct. 4 start of the flu season less than three weeks away, here is a quick look at some San Diego companies with a stake in swine flu.

Quidel flu test

Quidel flu test

—I’ll start with a recap of recent news from Quidel (NASDAQ: QDEL). The diagnostic-test maker said last week the government has granted a special marketing clearance that allows Quidel to revise the packaging inserts for its QuickVue rapid flu test to say the test can detect the H1N1 swine flu strain. But Quidel also said its test can’t differentiate between influenza subtypes, and the company hasn’t established exactly how well QuickVue performs in detecting the specific H1N1 virus.

In the previous week, Quidel, which laid off 10 percent of employees earlier this year, said it has been working seven days a week since April to meet demand from doctors and hospitals for its rapid flu test. Quidel’s shares have leaped 25 percent since the official start of the pandemic in June and have doubled since April, when the virus first broke out in Mexico. But according to two scientific reports summarized here, rapid tests detect no more than half the swine flu infections picked up by slower tests; Quidel claims a higher detection rate than found in those studies. So far, accuracy concerns haven’t impacted sales, which are expected to set a new quarterly record.

—Life Technologies (NASDAQ: LIFE), a biological tools company, posted $15 million second-quarter revenue from sales to public health laboratories of equipment and reagents for swine flu testing—about two percent of the company’s total revenue of $832.8 million for the period.

life_technologies_logo Life’s equipment runs a diagnostic test developed and distributed by the CDC that can be used to determine if patients who are positive for influenza A virus on commercial tests are infected with the specific influenza A virus that causes swine flu. Life Technologies said in May that it had established a ‘round-the-clock task force to respond to requests for equipment, service, and support from public health agencies around the globe. But the company cautioned during its quarterly earnings call on July 28 that the sales rush may be over. President Mark Stevenson said the company expected additional swine flu-related revenue during the second half of the year, but not at the pace seen in the second quarter. With the heavy equipment now in place at many public health labs, Stevenson says future sales will come from reagents and products needed to run the CDC test. That equipment-buying frenzy was nice while it lasted: Swine flu-related sales accounted for all of the company’s revenue gains in the second quarter. Life Technology’s shares have risen 19 percent since mid-June.

—Inovio Biomedical (AMEX: INO) also grabbed investor attention in July when it announced that its universal DNA-based vaccine protected pigs and mice that had been exposed to the swine flu virus.

Inovio logo The vaccine contains bits of DNA that encode for surface proteins from the flu strains that account for the majority of seasonal and pandemic influenza. The report suggested Inovio might be on to something; in a previous study, 100 percent of vaccinated mice exposed to the H5N1 avian flu virus survived, although the animals experienced minor weight loss. The company’s share price, although deep in penny stock territory, has more than doubled since June. Still, the likelihood of seeing an Inovio swine flu vaccine at a flu clinic near you this winter is… zero. That’s because no DNA-based vaccine has been approved for human use, and flu shots using the technology still face multiple layers of human testing and regulatory scrutiny. Inovio’s quarterly filing describes the swine flu program as pre-clinical; vaccines against cancer, HPV and HIV are in human trials.

—Vical (NASDAQ: VICL), the granddaddy of DNA vaccine companies, was one month ahead of Inovio in announcing that its swine flu vaccine looked effective in animal studies. The pre-clinical research was supported by the Navy, and Vical says it is working with the Navy to advance the vaccine to clinical trials. But Vical won’t proceed to human tests without outside support. As is the case with Inovio, Vical also faces substantial regulatory hurdles for its novel DNA-based technology. In short, the swine flu pandemic could be history before any DNA-based swine flu shots received FDA approved.

logo_vical3When I talked with CEO Vijay Samant in June, he said his aim in taking on swine flu was to demonstrate the effectiveness of Vical’s technology against a difficult target. A government order for vaccine would be an upside, he said. Still, Vical’s shares have jumped more than 80 percent since the official start of the pandemic. It should be noted that during this period Vical also reported promising interim data from a mid-stage trial of its cytomegalovirus vaccine in hematopoietic stem cell transplant patients. Not as sexy as swine flu, perhaps, but closer to reaching the market.

– Worries about swine flu could even give a lift to Pure Biosciences (NASDAQ: [[ticker: PURE]]), the El Cajon, CA, developer of the antimicrobial silver dihydrogen citrate, or SDC. In May, the Environmental Protection Agency added SDC-containing disinfectants to its list of antimicrobial products effective against swine flu and other strains of the influenza A virus.

Pure Bioscience logoThe EPA already had registered the substance as a disinfectant for use on hard surfaces, like countertops. A spray containing the silver-based germ killer, called PureGreen 24, is available in Home Depot. CEO Michael Krall said a national drug store chain and a national warehouse chain will soon stock silver dihrydrogen citrate-containing disinfectants. This month, Pure also raised $3 million from investors. Things are looking up—except the company’s stock price, which is off 17 percent since the pandemic got underway. Krall is unperturbed. “This could be a big year for us,” he told me.

Denise Gellene is a former Los Angeles Times science writer and regular contributor to Xconomy. You can reach her at dgellene@xconomy.com Follow @

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