There is no cure for the Zika virus. But investors are betting two companies may have a vaccine that can successfully treat the mosquito-borne disease.
Inovio and South Korea-based GeneOne Life Science announced Monday that they received approval from the U.S. FDA to start human trials for their GLS-5700 vaccine. The companies said the vaccine has produced positive results in animal tests so far.
Investors lapped up the news. Both stocks have popped this week, adding to solid gains for the year. Inovio () stock is up nearly 70% so far in 2016. And shares of GeneOne Life Science are up 50% on the Seoul stock exchange.
But investors need to be careful. There have been several instances in the past few years where small biotechs have surged when scary diseases like Ebola, SARS and MERS were making headlines.
Zika is particularly worrisome because of how rapidly it has spread, starting in Uganda and making its way to the South Pacific, South and Central America and Caribbean regions. It is spread by mosquito bites but can also be sexually transmitted.
The disease is linked to microcephaly, a birth defect resulting in an abnormally small head and brain development problems that can occur when the mother is infected with Zika during pregnancy.
“The incidences of viral infection and medical conditions caused by the virus are expanding, not contracting,” said Inovio CEO Dr. Joseph Kim in a press release about the clinical trial approval for GLS-5700.
Concerns about Zika have already led to significant worries about the upcoming Olympics in Rio. Brazil is one of the countries dealing with a Zika outbreak.
Savannah Gutrhie, a host of NBC’s “Today” show, recently said she will not attend the Olympics due to worries about Zika. Guthrie is pregnant.
And golfer Rory McIlroy also just announced Wednesday that he will not go to the Summer Games because of concerns about Zika, citing the fact that he and his fiancée want to some day have children.