Why Moderna Stock Is Still Only Good for Speculators

There are dozens of other candidates looking to make a vaccine for Covid-19

Speculation surrounding the novel coronavirus has taken over the stock market. Hope for a cure or, better yet, a vaccine, is driving traders into frenzies. Much of the action is centered around Moderna (NASDAQ:MRNA) and MRNA stock.

While the company had just $8.3 million in revenue for the March quarter, it entered trade May 29 with a market cap of $20.6 billion.

MRNA stock has been on fire for months. In February, the shares cost $18. It was the release of Phase 1 data earlier this month that sent traders into a frenzy. That showed, as expected, that antibodies against the virus were produced in test subjects. The company also said it was rapidly scaling up production.

Traders who had been buying Moderna rumors sold the news. The shares have since fallen from the mid-80’s to the mid-50’s.

Why Moderna?

Nothing has gone wrong, from a scientific standpoint. It’s just that there are no guarantees Moderna has the winning lottery ticket.

There are now 28 different vaccines being researched around the world, with eight in some type of clinical trial. There are vaccines being tested in England, in China and in Australia. Two other publicly traded U.S. companies, Pfizer (NYSE:PFE) and Inovio Pharmaceuticals (NASDAQ:INO), have Covid-19 vaccine candidates in trial. Novavax (NASDAQ:NVAX), Johnson & Johnson (NYSE:JNJ), and Altimmune (NASDAQ:ALT) are all doing pre-clinical work. So are Merck (NYSE:MRK), GlaxoSmithKline (NYSE:GSK) and Sanofi (NASDAQ:SNY).

Moderna just got there first, with the most publicity. It announced funding on Jan. 23. It’s working with the National Institute of Allergy and Infectious Diseases (NIAID), headed by the now-famous Dr. Anthony Fauci. It won an invitation to the White House to talk about its candidate, mRNA-1273.

Why Not Moderna?

The problem is that vaccines are hard. It’s not enough to create antibodies against the disease. A vaccine must stop the spread safely across millions or (in this case) billions of doses.

Safety is one issue. Four of the 45 people tested in the Phase 1 study developed reactions to the Moderna vaccine. One 29-year old tweeted that he got a 103 degree fever. He said his dose was 10 times what other patients got, and he didn’t go to a hospital in fear of triggering “anti-vax” people.

Efficacy is a second issue. Only eight of the subjects produced binding antibodies. Only four were sampled for neutralizing antibodies. The level of T-Cell generation, a measure of how the body is attacking the virus, wasn’t mentioned.

Moderna’s own actions are also an issue. The company announced a $1 billion secondary offering right after its Phase 1 results came out. Some executives sold shares within days. Moderna is moving directly into a Phase 3 study, and mass production, while its Phase 1 is still being evaluated.

All these actions have raised suspicions among people who know both science and market valuations.

The Bottom Line on MRNA Stock

This is my fourth piece on Moderna in six months.

I was very positive about MRNA stock when it came public in December. Its methodology, using Messenger RNA, impressed me. In April, I called Moderna “the greatest coronavirus speculation.” 

The problem is success against Covid-19 is now built-into the stock price. Success is far from guaranteed. There are many other horses in this race. It’s far from clear how profitable this vaccine will be.

It’s possible mRNA-1273 could be the start of a business that goes on for decades. It’s possible that mRNA-1273 proves Moderna’s methodology and it becomes one of the world’s great companies. It’s also possible that mRNA-1273 fails in Phase 3.

There are too many known unknowns for me to recommend investing in MRNA stock at its present price. But you’re welcome to speculate.

Dana Blankenhorn has been a financial journalist since 1978. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Follow him on Twitter at @danablankenhorn. As of this writing, he owned shares in JNJ.