As of this writing, shares of Moderna (NASDAQ:MRNA) have climbed 25% in the last 10 trading days. The reason is renewed hope that the company’s vaccine candidate, mRNA-1273, will successfully complete a late-stage trial. Due to its public-private partnership with Operation Warp Speed (OWS), Moderna is already preparing quantities of the vaccine at scale.
So is it time to get excited about Moderna from an investing perspective? Maybe.
As the race for a novel coronavirus vaccine lasted through the summer months, I was consistent on two points. First, there will likely be more than one vaccine candidate that makes it through. Second, it’s more important to get a successful candidate through a late-stage trial than it is to be the first company to get a vaccine into a late-stage trial.
However, I was also skeptical that there would be a vaccine candidate ready to go by November. It turns out my skepticism may be misplaced. With three vaccine candidates in late-stage trials, it’s beginning to look as if a vaccine is possible.
And I’ll concede the obvious. If that happens, getting it right still matters. But from an investment standpoint, getting it first will be profitable.
Which brings me to Moderna. According to the terms of the contract, Moderna signed with the Biomedical Advanced Research and Development Authority (BARDA) via OWS. The biotech company stands to make at least $3 billion in the next year.
And as Mark Hake wrote recently, Moderna could stand to earn $35 billion if all goes according to schedule. That’s a good reason to pay attention to what’s happening with Moderna. But, if the company is successful, the impact goes well beyond our current pandemic.
Moderna Is Trying to Send a Message
As the fog lifted around the pandemic, it became clear that there was actual science behind the candidates selected by OWS. Each biotech chosen had to meet four distinct criteria. And one of those criteria was its use of an “approved” vaccine platform.
There has been a lot of talk about the efficacy of taking a “traditional” approach to developing a vaccine for the novel coronavirus. Certainly those approaches are among the approved platforms. But Moderna takes a different approach that uses messenger RNA (mRNA).
Moderna’s approach falls in the category of nucleic-acid vaccines. As simply as I can say it, the goal of a mRNA vaccine is to deliver instructions to our bodies. These instructions allow the body to make the proteins it needs to fight off the virus.
This is an approach that is gaining acceptance in the scientific community (hence it’s inclusion in OWS). However, there has never been an mRNA vaccine licensed for human use.
Does this mean the Moderna vaccine won’t work? Of course not. In fact, the vaccine has held up well in early clinical trials. But it’s now all about the success of the Phase 3 trial. Those results will be expected shortly after the trial concludes in late October.
Will a Vaccine Tip the Scales for MRNA Stock?
At this point in most presidential election cycles, I look at the headlines with a bemused expression. Are there really that many undecided voters out there? Apparently there are, and they are just waiting to see if President Trump can deliver on his “guarantee” for a vaccine by the election. Or was it the end of the year? Or was it just really soon?
Who knows? And as investors you really shouldn’t care. From a political standpoint, I believe a vaccine at this point amounts to nothing politically. If you are likely to vote for President Trump, the absence of a vaccine is not going to change your mind. Conversely, if you are likely to vote for Joe Biden, the presence of a vaccine won’t change your mind. And it’s likely that as you read this thousands of Americans have already cast their ballot by mail anyway.
But as an investor, a successful Moderna vaccine could be a game changer. Yes, it will bring society a step closer to the end of this pandemic. But a successful mRNA vaccine will be proof of concept for this innovative technology with some of the highest stakes imaginable. And that can open the door for the other vaccine candidates in the company’s pipeline.
That should get your radar up as an investor. Buy Moderna for the hope, not the hype.
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 six years. He has been writing for Investor Place since 2019.
