GeoVax Labs: Is This Micro-Cap Biotech Stock a Boom or a Bust?

Key Points

• GeoVax Labs is a micro-cap firm that has seen its shares rise exponentially in recent days.
• The World Health Organization recently declared an emergency around a disease GeoVax is developing a treatment for.
• Should investors believe the hype around GeoVax Labs?

GeoVax Labs NASDAQ: GOVX is currently a micro-cap biotech stock that multiple Wall Street analysts see massive potential appreciation in. Working on a treatment for a disease that the World Health Organization (WHO) just declared a “public health emergency," investors should be informed about the company.

As of the close on Aug. 19, the company has a market cap of just over $37 million. This value comes after its shares spiked over 170% in just four days after the WHO announcement. So, what does GeoVax Labs do, and what is all the excitement about?

GeoVax: Working to Stop the Rise of Mpox

GeoVax Labs is a clinical-stage biotech firm developing infectious disease vaccines and cancer therapies. While its pipeline includes COVID-19 boosters and treatments for head and neck cancers, one treatment stands out right now: its Mpox vaccine.

On Aug. 14, the WHO determined that a surge in Mpox cases in several African countries "constitutes a public health emergency of international concern." In 2022, the organization made the same emergency announcement about Mpox but declared the emergency was over in May 2023 after cases declined.

However, it is now reinstating the declaration after a new strain, known as clade 1b, has spread rapidly in the Democratic Republic of the Congo (DRC). This year, authorities in the DRC have reported more than 15,600 cases and 537 deaths.

Shares rose 44% in pre-market trading on Aug. 19 on news that one of its main competitors, Siga Technologies NASDAQ: SIGA, had negative results in trials for its Mpox treatment. However, the stock gave back nearly all those gains by the market close.

Investors remember firms like Moderna NASDAQ: MRNA, whose shares appreciated over 500% from the beginning of the COVID-19 pandemic to the end of 2022. So, it’s not surprising that companies developing Mpox treatments are seeing massive spikes in share price. However, some key differences raise concerns over whether GeoVax can sustain similar returns.

GeoVax Labs: Mpox Vaccine Hope or Hype?

According to the National Academies of Sciences, Engineering, and Medicine, Mpox does not spread as easily as COVID-19. It states, “Because Mpox does not spread readily through the air and is endemic in only one part of the world, most people are at low risk of catching the disease."

Based on current data, it seems the disease spreads primarily through direct skin-to-skin contact with the scabs the virus causes or through the exchange of bodily fluids. With this, transmission should be much harder than COVID-19, which spreads quickly through respiratory droplets.

Although this is a positive for the world generally, it severely hurts the case for investments in Mpox treatments. Currently, the new strain remains confined to Africa, except for one confirmed case in Sweden involving a person who recently traveled to Africa.

Additionally, vaccines used to treat Mpox are already available. Bavarian Nordic OTCMKTS: BVNRY currently has the only Mpox vaccine approved in the EU, United Kingdom, Canada, and the United States. Known as Jynneos (Imvanex in the EU and Imvamune in Canada), it was originally approved to treat smallpox but is now also approved to treat Mpox, as the viruses are in the same family.

It is effective in treating both old and new strains of the virus. Other vaccines are also available in different jurisdictions.

GeoVax Labs' Mpox vaccine still has a long way to go before gaining approval or generating any type of revenue. Its treatment is still in pre-clinical development. That phase of development alone can take 1 to 10 years to complete. GeoVax began development in 2022.

The WHO authorized Mpox developers to submit an Expression of Interest for Emergency Use Listing (EUL), which could speed up vaccine distribution. However, this does not apply to GeoVax, as clinical data is necessary for eligibility.

Analysts' Bullish Price Target for GeoVax: Is It Justified?

Based on all these factors, GeoVax seems to be facing an uphill battle to accumulate big profits from its Mpox vaccine.

Two analysts who initiated coverage on GeoVax Labs have an average price target of $19, implying an upside of 165%.

Based on the analysis of the firm's Mpox treatment and the significant disadvantages the firm has in that space, it's possible these price targets are based on other drugs in the company’s pipeline.