Amid the coronavirus outbreak, Moderna (MRNA -1.12%) has been making headlines as it works on a vaccine. The stock surged 28% during the Feb. 25 trading session after the biotech company announced the shipment of its vaccine candidate for a phase 1 study. The shares have climbed 55% from the start of the year to their peak earlier this month.

Strands of DNA carrying genetic instructions are shown against a green background.

Image source: Getty Images.

Since originating in China in January, the coronavirus has swept its way across the world racking up 118,000 cases so far. The crisis has shaken the stock market -- the S&P 500 has tumbled 15% since the start of the year -- as factory closures, quarantines, and travel warnings have halted activity across sectors. At the same time, investors have flocked to shares of companies like Moderna, which are working on vaccines or treatments to address the virus.

The power of mRNA

Now the question for the long-term investor is whether there is upside potential left in Moderna shares. Let's have a look at the company's technology and pipeline.

Moderna harnesses the power of messenger RNA (mRNA), which carries instructions from DNA to the part of our cells that produces the proteins our bodies need to function. Using mRNA, Moderna's investigative products give the body's cells instructions to make proteins that would prevent or treat disease.

Moderna has more than 20 candidates in the pipeline, including prophylactic vaccines to address Zika or cytomegalovirus (CMV), as well as therapeutic vaccines to treat diseases such as cancer. The size of Moderna's pipeline scores a lot of points for the company, but my concern is we don't yet know if the technology behind these candidates works in humans. Most of the programs are in phase 1 trials, which evaluate safety. In phase 2 trials, we begin to see efficacy findings in humans, but Moderna's phase 2 trials are ongoing.

Comments on efficacy

That said, there may be more data available to guide investors soon: Moderna said an initial phase 2 analysis of its CMV trial, evaluating safety and immunogenicity, will be reported in the third quarter. (CMV is a common virus that affects more than half of adults by age 40 and remains in the body -- but most healthy adults don't have symptoms or realize they carry the virus. It causes birth defects in babies who are infected.) Investors should be on the lookout for comments on efficacy in this phase 2 report or others in the future. Since Moderna's technology is based on instructing the body to make specific proteins, strong efficacy data for this method in one indication may be a positive sign for others.

Moderna faces competition from BioNTech SE (BNTX -1.36%) and CureVac, which both use mRNA-based technology for their programs. Like Moderna, their pipelines haven't yet passed the phase 2 stage in clinical development, so the race is on to see which company brings a product to market first. Moderna's coronavirus vaccine candidate may give it the upper hand as health authorities push to find treatments.

Is Moderna a buy?

It is either too late or too early to buy Moderna shares. Considering the stock's recent gains, those who already invested have benefited and may see more benefits if one or more of Moderna's programs is successful. For those who haven't yet bought Moderna shares, hold on before jumping aboard. Once the coronavirus panic subsides, it's likely share gains will be more moderate. And other candidates might represent more future revenue for Moderna than the coronavirus vaccine. Vaccines for epidemics and pandemics aren't necessarily the most lucrative areas for companies due to the short timeframe and the public pressure to set low prices.

Turning to the entire Moderna pipeline, data from various trials so far is encouraging, but it's best to wait and see if this biotech company's investigational products are efficacious in humans before betting on the shares.