Although the COVID-19 pandemic hasn't been kind to most equities this year, some biotech and healthcare stocks have gotten a huge boost from this deadly respiratory illness. In particular, a select group of companies working on experimental COVID-19 vaccines and therapies have seen their share prices skyrocket in 2020.

Shares of biotechs Inovio Pharmaceuticals (INO 0.99%), Mesoblast (MESO -1.53%), and Moderna (MRNA -0.43%), for instance, have all gone parabolic in April. Can these three red-hot biotech stocks keep churning higher, or is it time to take profits? Let's break down the near-term outlook for each company to find out.   

A vial of blood positive for the coronavirus.

Image source: Getty Images.

Inovio Pharmaceuticals: A novel COVID-19 vaccine play

Inovio, a developmental-stage DNA-based vaccine company, is up by an astonishing 342% so far this year. Investors have bid up this small-cap biotech stock largely because of its experimental COVID-19 vaccine known as INO-4800. The core reason is that INO-4800 became the second vaccine to enter human trials earlier this month.

What's more,the vaccine's trials are being funded, at least partially, by grants from the Coalition for Epidemic Preparedness Innovations and the Bill and Melinda Gates Foundation. Inovio's goal is to have the vaccine ready for widespread use within 12 to 18 months from the start of its clinical program. 

Does Inovio's stock have more room to run? While it's impossible to predict the short-term course of any stock, there are two fundamental reasons to take a cautious approach with this high-flying biotech right now.

First up, there are several companies vying to bring a COVID-19 vaccine to market -- many of which have far more resources than Inovio. So even if INO-4800 hits the market, there's no guarantee that it will be able to successfully compete in a crowded market. Second, Inovio won't realize any sales revenue from this experimental vaccine for a very long time. This enormous run-up, in turn, is clearly being fueled by pure speculation. 

All told, Inovio's stock may keep ticking higher over the short term. But that's not a particularly great reason to buy a risky clinical-stage biotech stock. If the sentiment around COVID-19 vaccine stocks turns negative for some reason, the entire niche could reverse course in a heartbeat, which obviously wouldn't be good news for Inovio's share price. Therefore, patient investors with a long-term outlook may want to look elsewhere for more fundamentally driven growth opportunities.  

Mesoblast: Another early-stage COVID-19 candidate 

Mesoblast, an Australian stem cell therapy company, saw its shares gain a whopping 139% last Friday. The biotech saw it shares took flight after it announced the results from a small study evaluting remestemcel-L in a handful of COVID-19 patients with acute respiratory distress syndrome (ARDS). The attention-grabbing headline from the study was that 83% of patients survived, despite their serious condition and the fact that the vast majority of COVID-19 patients with ARDS typically die. 

Is Mesoblast's stock worth buying on this news? Although these initial results are certainly encouraging, this study assessed only remestemcel-L in a grand total of 12 individuals. A larger, placebo-controlled trial is therefore needed before drawing any solid conclusions about the therapy's efficacy in this setting. We've seen this same story play out twice already with remdesivir and hydroxychloroquine. Put simply, investors may want to curb their enthusiasm until there is more data on hand. So, in short, this preliminary COVID-19 data is not a good reason to buy Mesoblast's stock this week.  

Moderna: Riding the wave

Moderna, a mRNA-based vaccine developer, has risen by a healthy 158% over the first five months of 2020. The excitement around this mid-cap biotech stock centers on its experimental COVID-19 vaccine called mRNA-1273. The vaccine is already in an early-stage human trial, and the company thinks it might be ready for general use by perhaps mid-2021. Moderna thus has the most advanced COVID-19 vaccine in the game -- at least so far. What's more, the company recently grabbed a $483 million award from the Biomedical Advanced Research and Development Authority (BARDA) to fund the vaccine's clinical program. 

Is mRNA-1273 a solid reason to buy shares of this biotech stock at these elevated levels? No. This entire field of COVID-19 vaccine players is basically a crap shoot right now. Moderna could very well become the first company to bring a vaccine to market, but that's impossible to predict at this extremely early stage of the game. There is no preliminary human data to even speculate on at this point. Thus, Moderna's rapid rise in response to this catalyst should arguably be viewed with a healthy dose of skepticism.