In the year of the novel coronavirus, it’s no surprise that biotechnology and pharmaceutical firms levered toward vaccines and treatments skyrocketed. At the same time, the process of developing viable solutions is arduous. As a result, the once-celebrated sector is experiencing severe volatility. But so far, CureVac (NASDAQ:CVAC) has generally avoided the recent turmoil, with CureVac stock closing up more than 11% to enter the Labor Day weekend.
That’s in sharp contrast to several other names, specifically competitors in the nucleic acid-based vaccine production. These encompass the hot stocks of 2020, such as Moderna (NASDAQ:MRNA) and Inovio Pharmaceuticals (NASDAQ:INO). As a comparison, MRNA was down 3.45% on Friday while INO shed nearly 3%. Naturally, investors may wonder if there’s something special about CureVac that the other nucleic-acid vaccine firms couldn’t figure out.
Although the distinctions of biotech products is well beyond my specialty, the three companies I mentioned above have a similar approach: engineering a “platform” to help the body naturally fight the coronavirus.
For CureVac stock, the underlying platform is messenger RNA (mRNA). According to genome.gov, mRNA is “a single-stranded RNA molecule that is complementary to one of the DNA strands of a gene. The mRNA is an RNA version of the gene that leaves the cell nucleus and moves to the cytoplasm where proteins are made.”
In summary, CureVac engineers mRNA geared toward fighting Covid-19. This mRNA is injected into the patient, which essentially teaches the patient’s body to naturally manufacture tailor-made proteins. Later, these proteins go out and hunt the coronavirus.
If the science sounds impressive, it is. Hence, CureVac stock has enjoyed tremendous enthusiasm.
The Potential and Challenges of CureVac Stock
According to the medical resource Frontiers in Immunology, “During the last two decades, there has been broad interest in RNA-based technologies for the development of prophylactic and therapeutic vaccines. Preclinical and clinical trials have shown that mRNA vaccines provide a safe and long-lasting immune response in animal models and humans.”
Potentially benefiting CureVac stock and its direct competitors are the many advantages of nucleic acid-based vaccines. At this juncture, the most critical are “stimulation of innate immune response” and “rapid and scalable” production.
What could tip the scale in favor of CVAC is its experience working with coronaviruses (MERS in 2017). Additionally, the company claims it has the “capability to manufacture mRNA-based vaccines in a huge scale.”
To be fair, plenty of other biotechs/biopharmas make similar claims. But the combination of an exciting, though unproven technology being heavily supported by the federal government (along with other potential solutions) has inspired investors to take a shot on CureVac stock.
Of course, because nucleic acid-based vaccines are unproven, the concept has challenges. In a story about Inovio, I mentioned the case of Jesse Gelsinger, This was a teenager who submitted himself to a medical experiment utilizing a methodology involving transferring of genetic information. Sadly, Gelsinger suffered multiple-organ-system failure and died at age 18.
Though the incident happened decades ago, it still haunts segments of the biotech space. Therefore, no one should blindly buy CureVac stock assuming it has a clear Covid-19 pathway. In some ways, the vaccine development race is akin to shots in the dark.
Also, nucleic-acid based vaccines must be injected into the system. That may be a psychological obstacle for approximately 50 million Americans who suffer from trypanophobia, or the fear of needles.
An Economic Question to Consider
Even if CureVac genuinely has the capacity to deliver its vaccine – assuming approval – on a wide scale, the question of economics comes up. How much are these vaccines going to cost?
Now, I don’t think any American who wants to take a vaccine must worry. From what I understand, the federal government can apply an emergency use case for mass distribution. Certainly, the benefits outweigh the costs (spending billions to save the country, basically).
But the expectations between governmental estimates and the biotechs’ pricing departments will be an interesting dynamic. Many developers pivoted sharply to Covid-19 vaccines. Thus collectively, multiple opportunity costs exist due to resources that were redirected from other pipeline products.
Perhaps in the interest of rational economics, the federal government will pick the vaccines that have the right balance between efficacy and administrative/logistical ease of distribution. This is why I tend to be optimistic toward Inovio. By the same logic, CureVac stock may have an edge here.
Granted, the recent volatility of the Covid biotechs freaks me out. So, don’t hold my feet to the fire. But comparing the broader context, the speculative case for CureVac stock makes scientific and administrative sense.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
