As the coronavirus remains unsolved, each passing week seems to bring a new contender to the vaccine crown, including Moderna (NASDAQ:MRNA). This is reflected in MRNA stock, which jumped almost 12% on Thursday, April 2 and is now higher by about 76% year-to-date.
The impetus behind the rally in MRNA stock on April 2 is easy to explain. Chairman Noubar Afeyan said the company’s coronavirus vaccine could head to a Phase 2 clinical trial as soon as this spring, though he didn’t pinpoint a specific date. It certainly helped matters when National Institute of Allergy and Infectious Diseases Director Anthony Fauci, the face of the White House Coronavirus Task Force, mentioned the Moderna trial during his April 2 press briefing.
Even with the sense of urgency surrounding coronavirus treatments, developers need to worth their way through the regulatory process, one that dictates it could be a year or more before a COVID-19 vaccine, such as Moderna’s mRNA-1273, could be made available to patients. As such, it could be another couple of months before the company’s Phase 1 data is made public.
“Management is not offering guidance with respect to development timelines or regulatory requirements, but Moderna is preparing to build supply for limited distribution in late 2020 in the event the FDA concludes mRNA-1273 risk-benefit is favorable at that time,” said Needham analyst Alan Carr.
Translation: it would be surprising if mRNA-1273 or any coronavirus treatment is available prior to 2021.
Going All-in on MRNA Stock
Although Moderna’s financials are flimsy – the company lost $514 million with negative cash flow of $459 million last year – something the biotech firm had prior to COVID-19 pandemic was a strong pipeline. That pipeline is still there, but Moderna is halting other trials to focus on mRNA-1273.
The company “has decided to pause new enrollment of its Phase 1 rare disease clinical trials (mRNA-3704 for MMA, mRNA-3927 for PA) and its age de-escalation trial for its pediatric respiratory vaccine (mRNA-1653 for hMPV/PIV3),” according to a statement.
Moderna said those trials will be reevaluated and that Phase 2 CMV (mRNA-1647) and Phase 1 Zika (mRNA-1893) clinical trials are being disrupted because of COVID-19. According to the firm:
Due to the pandemic, the Company has decided to suspend new enrollment of participants in the on-going hMPV/PIV3 study (mRNA-1653), which had been actively enrolling seropositive pediatric participants (12-36 months of age).
The commitment to a COVID-19 vaccine is noble, but as companies like iBio (NYSEMKT:IBIO) and Inovio Pharmaceuticals (NASDAQ:INO) are showing investors, there is substantial risk involved with coronavirus stocks when markets grow dissatisfied at or leery toward the company’s prospects for success.
The other risk with MRNA stock is the sheer number of companies working on a coronavirus treatment. MRNA is one of 19 firms in this field, including well-heeled competitors such as Johnson & Johnson (NYSE:JNJ). As just one example, JNJ has the resources to work on a COVID-19 vaccine without having to scrap other trials. Plus it has plenty of cash and is profitable. Moderna isn’t.
With the announcement that Moderna could commence a Phase 2 trial on its coronavirus vaccine, it could be a while before the stock pops again. And that’s assuming the next batch of delivered news is good. That’s the risk in the company halting its other trials: it’s now reliant on a COVID-19 breakthrough – the new holy grail of the pharmaceuticals business.
And that introduces another risk: if another company beats Moderna to the punch with mid- to late-stage trial news that markets embrace, investors would likely ditch MRNA.
Todd Shriber has been an InvestorPlace contributor since 2014. As of this writing, he did not hold a position in any of the aforementioned securities.