Moderna (NASDAQ:MRNA) is one of those stocks you trade on news because fundamentals don’t exist. MRNA stock, which only came public late last year, has a market capitalization of $22 billion after racking up sales of $60 million for all of 2019.
When it came public I recommended readers buy it. Those who did have tripled their money.
It should have been a good investment. Instead it has become a speculative darling.
All credit goes to the novel coronavirus. The pandemic proved a perfect test bed for Moderna’s technology, which is to design messenger RNA to direct the body’s fight against disease. Moderna had interim results from a Phase 1 trial for a Covid-19 vaccine ready within a few months, and the stock was off to the races.
Can Moderna Win the Vaccine Race?
While Moderna has a viable vaccine candidate, it faces competition from many other companies, all of which are much bigger.
Even before trials were underway the U.S. government threw $450 million at Johnson & Johnson to supply its drug. Novavax got $60 million from the U.S. Department of Defense. Sanofi and GlaxoSmithKline are about to get $625 million from the United Kingdom. Pfizer is also showing promising results.
Fighting the Public Relations War
The problem is none of these vaccines may work. A slight delay in Moderna’s trial, which leaked just before the long weekend, sent shares down 10%. They recovered, after the company tweeted a reply, insisting trials will start this month.
While Moderna hasn’t been able to sell its vaccine — a vaccine no company may actually have — that hasn’t stopped its public relations department.
An admiring profile of CEO Stephane Bancel talks of Moderna supplying dozens of drugs and vaccines “for diseases for which there is no solution.” The story paints Moderna as a “high-stress environment,” characterized by “high expectations, sharp critiques of workers and heavy employee turnover.”
But none of that really matters. What matters is whether Moderna’s mRNA technology works, and whether a recipe it cooked up in just a few days results in antibodies that prevent Covid-19 from spreading. If the answer is yes, Moderna could save the global economy.
More importantly, if MRNA-1273 works, Moderna will have proven the efficacy of its technology. It would have the capital to expand into other areas of disease, and it might still be cheap enough, at $22 billion, to deliver a huge speculative profit.
The Bottom Line on MRNA Stock
The last few months have shown where Moderna’s strengths and weaknesses lie.
Its strength is in the speed with which its technology can deliver drug candidates. Having a system, like that of Regeneron Pharmaceuticals (NASDAQ:REGN), is better than having a drug. At least it is in my opinion.
Moderna’s weakness lies in lobbying. Bigger companies with weaker candidates have gotten huge piles of money before any Phase 3 work begins.
This means that, if Moderna’s system does work, MRNA stock will be in great shape even if it loses the vaccine race. A larger company, like Amgen (NASDAQ:AMGN), Regeneron or even Pfizer, could create candidates against a variety of diseases, and quickly profit from them.
This, too, is pure speculation. But in the Covid-19 vaccine race, that’s all investors have.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O’Flynn and the Bear, available at the Amazon Kindle store. Follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story.