The Danish biotech company, Bavarian Nordic (BAVA), controls the only vaccine widely approved for use against mpox. Following an outbreak of the virus, which the World Health Organisation has declared a “global health emergency”, shares of the Scandinavian vaccine maker have soared.

On Friday, August 23, shares of BAVA were up around 90 per cent during the month and more than 100 per cent during the previous six months. It followed large orders with the vaccine maker, as countries attempt to buy up as much of its JYNNEOS vaccine as possible to combat the virus which health officials say is threatening to spread around the world.

The company’s earning report revealed its mpox vaccine sales had dwarfed revenue from all of its other travel vaccines, which target rabies, cholera and typhoid, among other diseases, as per reporting by Forbes.

On Thursday, August 22, BAVA shares jumped 13 per cent in a single day, after it revealed it was supplying one European country – since revealed to have been The Netherlands – with 440,000 doses of its mpox vaccine.

Bavarian Nordic to expand mpox vaccine production

Bavarian Nordic anticipates demand for its JYNNEOS vaccine to increase, it said in a statement issued last week, saying it has the capacity to manufacture an additional 10 million doses by the end of 2025. Commenting, a spokesperson said:

“It would appear that mpox will remain a constant threat to public health, and the company is working closely with the Africa CDC to further expand the manufacturing capacity to produce the mpox vaccine in Africa through transfer of technology to selected African manufacturers.”

The company has also set out plans to secure EU approval for the use of its vaccine in adolescents aged between 12 and 17 and is also reportedly set to test JYNNEOS on children as young as two years old, as per Fortune.

Danish economy saved from slump by pharma success story

Bavarian Nordic isn’t the only pharmaceutical firm in Denmark to have made headlines in recent weeks. The small country of just 5.9 million people is also the home of Novo Nordisk, the manufacturer of the weight loss drug Ozempic.

The work of these companies, alongside others like Leo Pharma and the Orifarm Group, has been credited with returning the Danish economy to health after Denmark’s GDP grew by 0.6 per cent in the second quarter of this year – more than in the US or EU at large, according to government data.

Pharmaceutical companies now play such a large role in the Danish economy that their fortunes are often considered intertwined with the fate of the economy. As per reporting by Fortune:

“Denmark’s flourishing drugmaking industry, mostly known for Novo Nordisk’s popular weight-loss drugs and Bavarian Nordic A/S’s mpox vaccine, is an important growth driver in the Nordic country. It was responsible for half of the economy’s expansion last year when Denmark was one of the fastest growing in Western Europe.

“Pharmaceutical companies play a “disproportionately large role” in the Danish industrial production, causing “large fluctuations” in national GDP figures from quarter to quarter, Palle Sorensen, chief analyst at Nykredit, said in a note.

“Production by Danish drugmakers rose 8.5% over the quarter, according to data released earlier this month, following a significant drop the previous quarter.”

Is Bavarian Nordic a buy?

As of Friday, August 23, ZACKS rated BAVA as a ‘hold’, while data sourced via Market Screener suggested the analyst consensus was ‘buy.’ Data from Yahoo Financeshowed in July of nine analysts four recommended to hold, with the others issuing a buy or strong buy rating.

A key consideration for potential investors is that the near-term fortune of BAVA stock could be tied to the continued spread of mpox, and threatened by a rival company winning approval for the use of a separate vaccine.

The company itself cannot be sure what demand will be going forward, despite pledges to ramp up production, and was considering some manufacturing “at risk”, the firm’s CEO told Reuters in an interview.

Bavarian Nordic could still go higher

Bavarian Nordic’s recent surge in share prices underscores its value as the sole provider of a widely approved mpox vaccine amid a global health emergency – at least for now. While the firm has a strong portfolio, its immediate fortunes cannot be divorced from the spread of mpox, which is bolstering demand for its JYNNEOS vaccine. Feasibly, if this continues, the price of BAVA shares could continue to increase.

On the other hand, if the epidemic is brought to an early halt, and the vaccine maker has manufactured at risk, it could suffer as a result. As Bavarian Nordic expands its production capacity and explores new markets, including paediatric applications, it faces both opportunities and challenges.

Investors should carefully consider these factors, as well as the broader competitive landscape, before making decisions. While the current momentum is strong, the unpredictability of the virus’s trajectory and potential competition could influence the company’s long-term success.

Nevertheless, Bavarian Nordic’s ability to adapt and innovate in response to global health needs continues to position it as a key player in the pharmaceutical industry. Always take professional advice before making an investment decision.