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Editor’s Note:
On
May 27, 2006, a magnitude 6.3 Richter scale earthquake struck
Indonesia, increasing the eruption of the island’s Merapi
volcano. Earlier
in the week, on May 24, the World Health Organization announced
that it was increasingly concerned about the possibility that the
H5N1 strain of bird flu was responsible for the death of seven
people in an immediate family setting, raising the odds of a major
development in the history of the “bird flu,” the possibility
of human to human transmission. On
May 27, the Associated Press reported that the World Health
Organization (WHO) had alerted Roche Holdings, the manufacturer of
Tamiflu, the only antiviral agent known to have some success in
fighting H5N1 to ready its stockpile for shipment. So
far, the WHO is considering the current situation a “practice
run,” and according to AP: “the move was part of standard
operating procedure when WHO has "reasonable doubt"
about a situation that could involve human-to-human
transmission.” Nevertheless,
it is important to realize that the “bird flu” situation might
be taking a sudden turn for the worst. If there is a natural
catastrophe in Indonesia, and there are multiple clusters of H5N1
that are on the verge of making the leap toward human to human
transmission, a refugee crisis could easily be the start of the
worldwide spread of the disease. Much remains speculative at this
point. But from a human suffering, and a market-influencing
standpoint, this may well be the story that defines the next few
weeks, and perhaps the rest of the year. Dr. Duarte explores the
implications below.
Human To Human Transmission Of Bird Flu Mulled By WHO
A
Family Cluster Appears
A
family cluster of seven people has died in Indonesia, raising
the calamitous possibility that H5N1 Avian Influenza, "the
bird flu," may have finally evolved the ability to transfer
from one human to another.
The news was broken by Bloomberg on Tuesday afternoon and widely
disseminated by the Drudge Report. Financial markets, already
jittery have responded in mixed fashion, with the currency
markets moving most sharply and benefiting the U.S. Dollar.
According to the World Health Organization web site: "The
case is part of a family cluster in the Kubu Sembelang village,
Karo District, of North Sumatra. The man is the seventh member
of an extended family to become infected with the H5N1 virus and
the sixth to die. An additional person, who was the first member
of the family to fall ill, died of respiratory disease on 4 May.
No specimens were taken prior to her burial and the cause of her
death cannot be determined. However, as her clinical course was
compatible with H5N1 infection, epidemiologists at the outbreak
site include this woman as the initial case in the
cluster."
The latest death was a 32 year old man whose H5N1 status was
positive and confirmed, and whose 10 year old son also died of
H5N1 influenza. According to the WHO: "The father was
closely involved in caring for his son, and this contact is
considered a possible source of infection."
The evidence, although not overwhelming is increasingly
suggestive that this may be the decisive set of cases in the
saga of the H5N1 influenza, though, as: "Although the
investigation is continuing, preliminary findings indicate that
three of the confirmed cases spent the night of 29 April in a
small room together with the initial case at a time when she was
symptomatic and coughing frequently. These cases include the
woman’s two sons and a second brother, aged 25 years, who is
the sole surviving case among infected members of this family.
Other infected family members lived in adjacent homes."
Rising
Concern But No Definitive Proof
Although there is no complete proof that there is now human to
human transmission involved in this case cluster, the World
Health Organization is steadily raising the amount of alarm in
its bulletins, though.
"All confirmed cases in the cluster can be directly linked
to close and prolonged exposure to a patient during a phase of
severe illness. Although human-to-human transmission cannot be
ruled out, the search for a possible alternative source of
exposure is continuing. Both the Ministry of Health and WHO are
concerned about the situation in Kubu Sembelang and have
intensified investigation and response activities. Priority is
now being given to the search for additional cases of
influenza-like illness in other family members, close contacts,
and the general community. To date, the investigation has found
no evidence of spread within the general community and no
evidence that efficient human-to-human transmission has
occurred."
This is very important. Viral analysis shows no evidence of
mutation or resistance to the drug Tamiflu.
As the WHO succinctly puts it: "All confirmed cases in the
cluster can be directly linked to close and prolonged exposure
to a patient during a phase of severe illness. Although
human-to-human transmission cannot be ruled out, the search for
a possible alternative source of exposure is continuing. Both
the Ministry of Health and WHO are concerned about the situation
in Kubu Sembelang and have intensified investigation and
response activities. Priority is now being given to the search
for additional cases of influenza-like illness in other family
members, close contacts, and the general community. To date, the
investigation has found no evidence of spread within the general
community and no evidence that efficient human-to-human
transmission has occurred."
The WHO added "The human viruses from this cluster are
genetically similar to viruses isolated from poultry in North
Sumatra during a previous outbreak."
Conclusion
Viruses, unlike other parasites tend to evolve much more
rapidly. Although technically a virus is not alive, it does have
the ability to replicate, but must use the genetic code of its
host in order to reproduce.
Contrary to the commonly held belief, though, a virus is not
interested in killing its host. Its programming is meant to
incorporate the virus into the genome of the host. Thus, most
viruses are only looking for a home.
The problems arise when the virus is detected by the host immune
system and the battle for supremacy begins. That is what is
perceived as the illness.
In this case, we are witnessing the very early stages of an
evolutionary process which could take thousands or even millions
of years to reach its full expression.
To put this in perspective, consider the common cold. It has
taken the Rhinovirus, the most common producer of common colds
millions of years to perfect its craft and not kill its host.
The virus works the host genome into creating a set of
conditions where the host coughs.
The saliva particles that are coughed or sneezed are the
carriers of the virus, and that's how it propagates itself.
In other words, H5N1 is trying to work itself into the status of
a common cold, reaching its own survival without killing the
host.
For those with no interest in virology, it's about the chances
of survival if there is a pandemic. At this point, the odds are
not good, at least not on the first break out of the disease.
For the financial markets, it will be a source of volatility.
For epidemiologists and customs agents, travel from Asia,
Indonesia in particular will be aggressively watched.
Thanks to Frank Kollar and subscribers who contributed to this
report.
Bird Flu Stocks
Gilead Sciences (Nasdaq: GILD), Roche Holdings (OTC: RHHBY),
Novavax (Nasdaq: NVAX), Biocryst Pharma. (Nasdaq: BCRST), and
Quidel Corp. (Nasdaq: QDEL) are stocks to watch with regard to
bird flu.
Gilead
and Roche are the big players for now, since they share the
licensing, development, and distribution of Tamiflu, the only
known remedy that may work on some strains of H5N1.
The use of Tamiflu is controversial given the fact that it does
not necessarily work on all cases, and that if successful it may
lead to a faster mutation of the virus.
Biocryst has a Phase I antiviral in development called Peramivir,
but it is not ready for marketing by any means.
Novavax has two flu vaccines in even earlier experimental stages
of development than Phase 1 trials.
Quidel has a flu test that can be used at doctor's offices or at
the bedside of hospital patients.
The purpose of this brief summary is to inform the reader about
the possibilities of lasting up moves in any of these stocks due
to the potential for a significant break out of the disease.
The only real potential of such a move, in our opinion, without
some significant progress being made in a hurry lies with Gilead
and Roche.
Even then, both stocks have had huge runs on the expectations of
rising sales of Tamiflu. There has already been a surge in sales,
and the stocks have both drooped.

© 2006 Joe Duarte, M.D.
Dr. Duarte's Bio and Archive
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Joe
Duarte, M.D.
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Joe
Duarte M.D. is founder and Editor in Chief of Joe-Duarte.com. Dr.
Joe Duarte's Daily Market I.Q. is a premium service that provides
daily intelligence, trading strategies, and technical analysis at www.joe-duarte.com.
Duarte offers free analysis and news coverage at www.intelligentforecasts.com
. Dr. Duarte is a board certified anesthesiologist, a registered
investment advisor, and President of River Willow Capital
Management. He is author of "Successful Energy Sector
Investing" and "Successful Biotech Investing"
(Prima/Random House). Duarte's analysis appears regularly in major
outlets including CBS MarketWatch
and Investor's Business Daily.

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