RENEWED FOCUS ON AIDS : AIDS-Related Stocks Surge
Stocks of leading U.S. condom makers and companies researching AIDS treatments skyrocketed Friday, reacting to professional basketball star Magic Johnson’s announcement that he has the virus that causes AIDS.
The surge reflected speculation that the Los Angeles Lakers guard will help change the public’s perception of people with the AIDS virus and focus more attention on “safe sex” issues.
Although industry watchers said heightened attention about the virus will likely increase sales of condoms, they added that it will have no prolonged effect on investments in companies that are developing drug treatments.
Johnson announced at a news conference Thursday that he will retire from professional basketball because he has tested positive for the HIV virus that causes acquired immune deficiency syndrome.
On Friday, the day after the disclosure, stock of Carter-Wallace Inc., manufacturer of Trojan and other leading brands of condoms, soared $8.25 a share early in the day to $113 on the New York Stock Exchange. The New York-based company, which is estimated to have more than half the U.S. condom market, saw its stock price slip later in the day but still close up $4.75 at $109.50 a share.
The jump in the stock price was a reaction to Johnson’s disclosure, said Diana K. Temple, an analyst with Salomon Bros. Inc. Temple, who follows Carter-Wallace, said the company could see further increases in its stock price if Johnson encourages young men to use condoms.
“That could really have a great impact on condom sales,” she said. “A lot of men have been reluctant to use condoms because it’s seen as unmasculine. It’s very difficult to educate people about preventing AIDS, but this may start to change that.”
Meanwhile, biotechnology companies researching AIDS and studying treatments for the virus saw similar rapid jumps in their stock Friday.
The news “will shift attention toward treatment of AIDS patients earlier on, and that’s the best thing we can do right now,” said James McCamant, editor of the Medical Technology Stock Letter in Berkeley. “But it’s irrational to invest in companies developing treatment drugs, because their stock will come down in a day, a week or a month.”
A spokeswoman for Burroughs Wellcome Co., maker of AZT or zidovudine, a drug approved to treat the AIDS virus, said Johnson’s disclosure will have little effect on stock prices on biotechnology companies. The company does not trade in the United States.
“Magic Johnson’s announcement has put AIDS back in the spotlight,” said Kathy Bartlett, a spokeswoman for Burroughs Wellcome. “Burroughs Wellcome has always focused on the issue of people living with AIDS, but I don’t think the announcement will have a direct impact on stock.”
Carlsbad-based Immune Response Corp.’s stock price shot up $3.50 Friday to $57.50 in over-the-counter trading after peaking earlier in the day at $59.75. The company is conducting tests for a therapeutic vaccine that could slow the spread of the virus in HIV-positive people.
Stock of other AIDS-research companies also rose. Stock of Medimmune Inc., a company based in Gaithersburg, Md., that is trying to create a vaccine to fight the AIDS virus, rose $2.50 to $53 in over-the-counter trading. Repligen Corp., based in Cambridge, Mass., was up 50 cents to $18. Biogen Inc., also from Cambridge, rose $1 to $44.50. And Genentech Inc. of San Francisco was up a quarter to $35 on the NYSE.
