Moderna Stock Continues to Excite the Market
It’s safe to say that the world’s never been quite as united as it is now in a single cause: finding a cure for COVID-19.
With the virus having killed hundreds of thousands around the planet and shut down economies and regular life in many countries, it makes sense that a coronavirus vaccine or cure would be the first priority right now.
As such, publicly traded companies working on finding that cure present a win-win situation: hopefully preventing potentially millions of deaths while letting us live our lives as normal—and helping investors realize huge profits (especially important in this time of economic uncertainty).
And that brings us to Moderna Inc (NASDAQ:MRNA).
MRNA stock has already skyrocketed by hundreds of points over the past few months, but I anticipate that those gains will only go higher as we edge closer to a cure.
So, let’s recap what I said about Moderna stock in March:
MRNA stock climbed when Moderna Inc submitted a vaccine to U.S. researchers for testing. (Source: “Biotech Company Moderna Says its Coronavirus Vaccine Is Ready for First Tests,” CNN, February 26, 2020.)
This vaccine is still about a year away from being approved, but during that time, there will be a number of tests and trials. With each successful trial—so long as COVID-19 remains a powerful threat—we can expect to see big gains from Moderna stock.
And that, of course, is something that veterans of the pharma stock market will be familiar with: a long process of trial after trial after trial, with each new event providing a catalyst for the stock to soar or dive.
It’s a volatile, hard market to play, but for those seeking profits in this economic downturn, it remains your best bet in the short term.
It’s cute that, at the time, I still wasn’t sure that we’d still be dealing with COVID-19 all these months later.
My past naivete aside, my other prediction proved to be accurate: MRNA stock has exploded in value. By how much? Since I wrote that article, Moderna stock has surged by a whopping 143% (see the chart below).
Chart courtesy of StockCharts.com
Now, I had been confident in the ability of MRNA stock to see growth, but I wasn’t sure it would be as much of a jaw-dropping success story as it turned out to be.
The stock, at one point, saw gains exceeding 200%. Year-to-date, those gains remain exponential.
Chart courtesy of StockCharts.com
Moderna Inc Is a Top Coronavirus Stock
So the COVID-19 cure is big business, is what this tells us. On top of that, it also shows us that the market has designated Moderna stock to be among the top coronavirus stocks around, a designation that I imagine will hold for some time.
Now, there are several competitors in the running for that title (I’ve written about numerous coronavirus stocks, those of companies that are seeking to develop a vaccine).
The most recent news came by way of challenger Regeneron Pharmaceuticals Inc (NASDAQ:REGN).
Aside from sounding like a “Transformers” reject, Regeneron has made some big pushes toward finding a coronavirus treatment. The company entered late-stage clinical trials to assess the effectiveness of its antibody cocktail in preventing and treating the COVID-19 virus.
The research, run jointly with the National Institute of Allergy and Infectious Diseases (NIAID), involves testing the treatment’s ability to prevent infection in those who have had close exposure to a COVID-19 patient. (Source: “Regeneron Begins COVID-19 Antibody Cocktail Late-Stage Trial, Shares Rise,” Reuters, July 6, 2020.)
“REGN-COV2,” an experimental therapy, has entered the mid-to-late-stage phase of two trials testing its effectiveness in hospitalized and non-hospitalized COVID-19 patients.
REGN stock, therefore, was also the recipient of a healthy share price boost, but that still pales in comparison that of MRNA stock.
Chart courtesy of StockCharts.com
What does this tell us?
First, there are multiple companies in the running to be the top coronavirus stock.
Second, however, is that there is room enough in the industry to see gains spread among the top stocks. Rising tides and all that.
While there is a pretty massive disparity between Moderna stock’s gains and those of Regeneron stock, ultimately anyone would be happy doubling their money in a 12-month span.
These two companies represent the top two coronavirus stocks, as they are the most closely linked to seeing real progress on a COVID-19 vaccine/cure/treatment.
Moderna Inc has recently made some headway with a complete enrolment for a Phase 2 trial. (Source: “Coronavirus Vaccine Progress: Moderna Partners for Manufacturing Deal, More Trials to Start Soon,” Boston Herald, July 11, 2020.)
Furthermore, five U.S. companies currently researching COVID-19 treatments will testify before Congress on July 21 in order to address concerns over safety and effectiveness during this rapid development cycle.
Moderna’s next step will involve an already finalized Phase 3 study based on feedback from the Food and Drug Administration (FDA). It is expected to include 30,000 participants and will start sometime in July.
On top of all that good news, Moderna Inc has partnered with European pharmaceutical company Laboratorios Farmaceuticos ROVI SA (BME:ROVI), which will provide vial-filling and packaging capacity for the vaccine at a facility in Madrid. (Source: Ibid).
The partnership will help with production and supply of the potentially hundreds of millions of doses of the vaccines that may be needed.
What this amounts to is a very positive picture for MRNA stock moving forward, but that doesn’t mean it’s all sunshine for this coronavirus stock.
MRNA Stock Pitfalls
I have one major concern with all the coronavirus stocks, Moderna Inc included: the hype.
There is a lot of interest in finding a COVID-19 cure (as you’d expect), and that desire creates a frothy market with many eager to get in on the ground floor of the company most likely to create a vaccine. The biggest risk here is that the treatments may end up being ineffective or having long-term negative side effects.
Another problem lies in the competitive aspect of this market. While there is certainly room for multiple COVID-19 treatments to be effective and produced globally (as well as knockoffs being developed), the first one through the gate will see the biggest reward, likely to the detriment of all its competitors.
This means that, for a while yet (most vaccines aren’t slated to be available until at least 2021), we’re set to see huge gains across the board for the top coronavirus stocks. Eventually, we might see a correction hit when one company is ultimately the victor in this race.
And that brings us to one last issue, one that is unique to Moderna stock: the company’s inexperience. Moderna Inc has never produced an approved vaccine or run a large trial before. (Source: “Moderna Spars With U.S. Scientists Over COVID-19 Vaccine Trials,” Reuters, July 7, 2020.)
This inexperience during such a critical time, as you’d expect, could be a major liability. We’ve already seen some of that play out as Moderna Inc’s researchers have clashed with government scientists.
The U.S. federal government has pumped almost half a billion dollars into the company, but the relationship appears to be on thin ice, according to Reuters.
The squabble is reportedly over advice on how to run the studies, leading to potential delays. One source (they were not named in the report) says that as much as two weeks have been lost due to these delays. Considering the lethality of this virus, that’s potentially thousands of lives that could have been saved (should Moderna’s vaccine prove effective).
Several vaccine developers, including Moderna Inc, are working with the U.S. National Institutes of Health (NIH) and the FDA, along with networks of immunologists and other vaccine experts tasked by the NIH to help oversee trial design. (Source: Ibid.)
To be fair to all parties, this is a difficult situation. We have on our hands a deadly and infectious virus the likes of which the earth has not witnessed in over 100 years.
At the same time, we all know that medications rushed out the door can carry with them adverse or sometimes deadly consequences, due to not being properly tested.
It’s a careful balancing act, and neither party wants to tip over.
Having said that, the emphasis remains on speed—warp speed, in fact. Or at least, that’s what the Donald Trump administration has named this vaccine program: “Operation Warp Speed.”
All this culminates in a situation in which speed is measured against caution, which is measured against necessity. In a word: tricky.
For all that, investors stand to make extreme gains (as evidenced by the massive growth by MRNA stock already) if they pick a winning coronavirus stock.
And, as I advised readers in March, I believe that Moderna Inc still has a lot of room to grow—provided you’re okay with volatility.
This is a high-stakes game here. It isn’t some hot, new streaming app stock; this is life and death. As such, there are a lot of things to consider when evaluating these companies (and therefore their stocks).
My final conclusion is that Moderna stock has huge upside—but also risk.
While Moderna Inc leads the COVID-19 vaccine race at the moment, this could change (and lead to a correction in the company’s share value). Moderna could also end up being the winner and see its stock value explode even further.
Having said that, MRNA stock will likely continue to grow on hype alone for the next few months, and potentially for the remainder of 2020. As long as Phase 3 testing is successful, those gains will continue for the remainder of the year even if, come 2021, another company ends up being the COVID-19 vaccine developer.
Overall, here are my thoughts: Moderna stock remains a great pick for those who are looking to see exponential gains and are willing to weather the volatility.
If someone searching for a safer route is investing now and selling off at the first big jump (a likely scenario), they stand to make strong profits in a short period, while also not exposing themselves to the worst-case-scenario risk.