Beware the outbreak hype cycle
The alarming spread of a new coronavirus has galvanized the agents of global health into action. It has also resurrected a long-practiced tradition among small-cap biotech companies.
"In response to the emergence of the Wuhan-version of the coronavirus seen recently in China, Novavax has initiated development of a vaccine candidate," read a statement from Novavax, a company with a roughly $175 million market cap. That single sentence sent Novavax’s share price up about 60% this week, as the company’s name popped up in articles titled “Coronavirus Stocks To Buy” and “4 Vaccine Stocks Making Big Moves Amid Coronavirus Outbreak.”
It is worth remembering that Novavax, which has burned through $1.4 billion in its 32 years of existence, issued similar statements about SARS in 2005, MERS in 2013, and Ebola in 2014. As of this writing, the company has yet to develop a single effective vaccine for anything.
"In response to the emergence of the Wuhan-version of the coronavirus seen recently in China, Novavax has initiated development of a vaccine candidate," read a statement from Novavax, a company with a roughly $175 million market cap. That single sentence sent Novavax’s share price up about 60% this week, as the company’s name popped up in articles titled “Coronavirus Stocks To Buy” and “4 Vaccine Stocks Making Big Moves Amid Coronavirus Outbreak.”
It is worth remembering that Novavax, which has burned through $1.4 billion in its 32 years of existence, issued similar statements about SARS in 2005, MERS in 2013, and Ebola in 2014. As of this writing, the company has yet to develop a single effective vaccine for anything.
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