Please ensure Javascript is enabled for purposes of website accessibility

Forget Coronavirus Stocks: Buy This One Instead

By Prosper Junior Bakiny - Updated Apr 8, 2020 at 8:53AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here's why Acceleron Pharma is a better buy than both Moderna and Inovio Pharmaceuticals.

Amid the COVID-19-fueled market correction, some stocks have performed well. In particular, several biotech companies that are racing to develop vaccines or treatments for the rapidly spreading disease have been crushing average market returns. Shares of Inovio Pharmaceuticals (INO 0.52%) are up by 153% since the beginning of the year. In February, Inovio claimed it had developed a potential vaccine for COVID-19 in three hours after the genetic sequence for the SARS-CoV-2 virus that causes the disease was made public by Chinese researchers on Jan. 10. 

The company is planning on starting clinical trials for its potential vaccine -- dubbed INO-4800 -- sometime this month. Similarly, shares of Moderna (MRNA 0.76%) -- another biotech company racing to develop a vaccine for COVID-19 -- are up by 66.5% year to date. Despite these stellar performances, though, both Inovio and Moderna seem like risky bets at this point. It is far from a sure bet that either one will successfully develop a vaccine for COVID-19, and neither has any approved product on the market yet. Investors looking for biotech stocks to buy should look elsewhere. One company whose stock I think is worth serious consideration is Acceleron Pharmaceuticals (XLRN)

Nurse holding test tube with blood for coronavirus testing.

Image Source: Getty Images.

Could Reblozyl become a blockbuster drug? 

Acceleron focuses on the development of treatments for rare diseases. The company currently has just one approved product, Reblozyl (luspatercept), a treatment for anemia in patients with beta-thalassemia who require regular blood transfusions. Beta-thalassemia is a rare blood disorder that leads to insufficient levels of beta-globin, an element of a protein in red blood cells called hemoglobin that carries oxygen in the body. 

Patients with this condition also have insufficient red blood cells --  a condition that is called anemia -- which can lead to symptoms such as tiredness, or, much worse, the formation of blood clots. The U.S. Food and Drug Administration (FDA) approved Reblozyl in November of 2019. Acceleron estimates that there are about 1,000 to 1,500 beta-thalassemia patients in the U.S. who require regular blood transfusions. And while this market isn't large, the company is looking to expand Reblozyl's addressable market.

While the FDA's recent approval of Reblozyl was for just one indication, Acceleron actually submitted Reblozyl to the FDA for review in April 2019 for two indications. The company is currently awaiting an FDA decision on Reblozyl as a treatment for anemia associated with myelodysplastic syndromes (MDS), a form of blood cancer.

Second, Acceleron also submitted a marketing authorization application (MAA) to the European Medicine Association (EMA) for Reblozyl in April 2019, and the company should receive the green light from the EMA in the second half of 2020. Acceleron estimates that the market for anemia-associated MDS in the U.S. is comprised of about 20,000 patients. This indication, and the potential approval of Reblozyl in Europe, should significantly expand the drug's target market.

Another exciting product

Back in January, Acceleron's shares soared by more than 50% after the company announced positive results from a phase 2 clinical trial studying the efficacy of sotatercept, an investigational treatment for pulmonary arterial hypertension (PAH), a condition marked by high blood pressure in the lungs. During the trial, patients treated with sotatercept demonstrated a statistically significant reduction in pulmonary vascular resistance -- a measure of PAH severity -- compared with patients treated with a placebo. Of course, that was only a phase 2 clinical trial, but since there are currently no approved drugs that specifically treat PAH -- and the condition affects about 70,000 patients in the U.S. and Europe -- this product could pay rich dividends for Acceleron in the future if it ends up being approved. 

The key takeaway

Acceleron already has an FDA-approved product, namely Reblozyl. The company will likely receive the green light to market Reblozyl in Europe and add another indication to this drug in the U.S. by the end of the year. Further, Acceleron's sotatercept could be a great addition to its lineup in the future if it's approved. For those reasons, I believe Acceleron is currently a more promising biotech stock than both Inovio and Moderna. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Inovio Pharmaceuticals, Inc. Stock Quote
Inovio Pharmaceuticals, Inc.
$1.95 (0.52%) $0.01
Acceleron Pharma Stock Quote
Acceleron Pharma
Moderna, Inc. Stock Quote
Moderna, Inc.
$145.36 (0.76%) $1.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.