Vaccine stocks have become the cannabis stocks of 2020. At one point in early summer, it seemed like every biotech company was approaching the federal government with a Covid-19 candidate. So it’s not a surprise that CureVac (NASDAQ:CVAX) decided to throw its hat in the ring by going public in August. And not surprisingly, CureVac stock shot up like a rocket.
But now it appears that CureVac is coming back down to earth. And in this case terra firma is about 33% off of the $77 price CVAC shares sold for several days after it’s initial public offering.
But will it go lower? The race for a Covid-19 vaccine has moved from warp speed to hyper drive. However the closer we may (key word) be getting to a vaccine, the more clarity is entering the race. One thing we’re finding out is that the process hasn’t been as haphazard as the name Operation Warp Speed (OWS) suggests.
It is however giving investors a better idea of which biotech companies have a realistic chance of delivering a vaccine that meets the federal government’s guidelines. That list is getting shorter by the day. And it doesn’t include CureVac.
Take a Peek Behind the Curtain
In our cultural landscape it’s not surprising that many are dismissing the idea of producing a vaccine in record time as a reckless political gambit. There is an element of urgency to it, but Operation Warp Speed is actually a unique public-private partnership. And it’s bringing together the scientific expertise of the Food & Drug Administration (FDA) with the industrial experience of many of the nation’s top biotech firms.
And while the overarching narrative is that we need a vaccine fast, OWS set up four distinct criteria for choosing a candidate. First any candidate has to be supported by robust scientific data. Second, companies would have the potential to enter large-scale Phase 3 trials by the fall. Third, their vaccine platform would allow rapid and effective manufacturing. And finally, and perhaps most importantly, the companies were using one of four vaccine platforms that OWS believed were the most likely to deliver a safe, effective vaccine.
These platforms ranged from traditional technologies that have been used in vaccine creation for decades to unproven, but promising technologies. The latter describes CureVac.
It’s a Race to Be Right, Not First
I continue to emphasize that the race for a vaccine will not end with just one candidate. And there are many companies that have already received a participation trophy in the form of government funds.
But this is relevant to the public health emergency caused by the novel coronavirus. Because there will likely be multiple vaccine candidates when all is said and done. And in the end, safety and effectiveness will trump (no pun intended) expedience.
That’s where the hope lies for CureVac. As Josh Enomoto points out, CureVac’s vaccine candidate is based on a messenger RNA (mRNA) platform. This is one of the four platforms OWS is considering. But it’s the riskiest of the candidates. It’s not necessarily less safe than more traditional methods. Rather, it’s a platform that hasn’t been successful yet. Not even by Moderna (NASDAQ:MRNA) which is seeking to become the first company to successfully license an mRNA vaccine for human use.
In the most basic layman’s terms I can use, mRNA teaches our bodies how to make the proteins that are needed to fight off specific infections, in this case Covid-19. The technology is fascinating and has potential beyond the current pandemic. But in the meantime, a Covid-19 vaccine is the biggest potential catalyst for CureVac stock.
Is CureVac Stock Worth the Risk?
The European Union (EU) may present an opportunity for CureVac. Tezcan Gecgil wrote that the EU gave CureVac 80 million euros to develop a Covid-19 vaccine. And in June, CureVac initiated Phase 1 clinical trials. That still leaves the company behind other biotech firms.
But remember, when the haze clears there will be multiple vaccine candidates. And that may give CureVac a chance to shine. The stock has a great story behind it, but its success depends on whether that story has a fairy tale ending.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for Investor Place since 2019.