Ebola Stocks Rise; Merck Inc. (NYSE:MRK), NewLink Corp. (NASDAQ:NLNK), Sign Vaccine Agreement.

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By Thomas Copeland on November 24, 2014 Company

It was a quiet day, Monday, for most stock news. But, Ebola stocks have had anything but a quiet day. Stocks of drug companies manufacturing Ebola treatments have shot up on multiple stock exchanges, and there are various causes contributing to such a phenomenon.

The first contributing factor to the rise in drug company stocks is the exclusive and global license agreement between NewLink Corp. (NASDAQ:NLNK) and Merck Inc. (NYSE:MRK) on the research and development of an Ebola vaccine, particularly its candidate rVSV-EBOV. The agreement also entitles distribution rights to Merck Inc. (NYSE:MRK) entirely.

Although phase 1 results of the Ebola vaccine are currently unreleased by the National Institute of Health of the United States, announcements were made earlier about an earlier-than-expected Phase 3 level of study in early 2015 for the rVSV-EBOV vaccine, in a largely randomized setting.

Talking to the press about the Ebola vaccine, Merck (NYSE:MRK) Vaccines’ President Dr. Julie Gerberding said that Merck Inc. was highly committed to “applying our vaccine expertise to address important global health needs”. Talking about Merck Inc. (NYSE:MRK)’s agreement with NewLink Corp. (NASDAQ:NLNK), Gerberding said the aim of such an agreement is to “advance the public health response to this urgent international health priority.”

Shares of both the companies to the agreement rose dramatically on their respective stock exchanges in the premarket segment of trading. NewLink Corp. (NASDAQ:NLNK) saw a rise in share value by over 1%, taking its share value to $35.80. Merck Inc. (NYSE:MRK) shares went up over 0.5%, to a figure of $59.97.

But this agreement is not all that has contributed to the overall rise in stock prices of drug companies supplying Ebola treatment drugs.

On the same morning as the vaccine agreement between Merck Inc. (NYSE:MRK) and NewLink Corp. (NASDAQ:NLNK) took place, an acquisition was announced, that by BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) of Prosena Holding (NASDAQ:RNA), both of which deal in Ebola treatment drugs.

According to the acquisition deal, BioMarin Inc. (NASDAQ:BMRN) is to acquire Prosena(NASDAQ:RNA) at a share value of $17.75/share, for all the shares which are currently outstanding of Prosena (NASDAQ:RNA) in the market. This values the total purchase consideration of Prosena (NASDAQ:RNA) at approx. $680 million.

This acquisition has had a very positive effect on the share prices of Prosena (NASDAQ:RNA), which have jumped up on the NASDAQ stock exchange. The share value of Prosena (NASDAQ:RNA) rose by almost a staggering 63% on the NASDAQ stock exchange, talking it’s per share value to a whopping $18.70 in the premarket trading spectrum.

However, shares of the acquiring company BioMarin Inc. (NASDAQ:BMRN) actually fell by 2%, and the value per share came down to $84.00. According to analysts, such a minute fall is expected of the acquiring company, regardless of its position in the market. Many investors become wary of the company’s future amidst an acquisition, and trading comes to a halt as the company’s future becomes risky.

Some other stocks related to Ebola that went up are Tekmira Pharmaceuticals Corp (NASDAQ: TKMR), which went up by 4%, and Cerus Corp. (NASDAQ: CERS), which went up by 1%.