Please ensure Javascript is enabled for purposes of website accessibility

Moderna and Novavax are Making Strides in Advancing Novel Coronavirus Vaccine Research

By Michael Dean McGrady Jr - Updated May 28, 2020 at 9:05AM

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

The biotechnology companies creating COVID-19 vaccines should give hope to patients and investors. Moderna and Novavax are no exception.

On April 27, biotechnology company Moderna (MRNA -4.97%) announced its submission of an investigational new drug (IND) application to the U.S. Food and Drug Administration (FDA) to start phase 2 clinical trials related to its mRNA-1273 vaccine, which is being developed to fight the novel coronavirus.

Moderna's chief medical officer, Tal Zaks, said that the FDA had given the investigational vaccine a "fast track" designation to expedite clinical trials.

What is mRNA, and how can Moderna build a vaccine with it?

mRNA-1273 is developed on an mRNA vaccine platform. RNA -- ribonucleic acid -- is a molecule that's essential in the biological coding, decoding, regulation, and expression of genes.

IMAGE SOURCE: GETTY IMAGES.

IMAGE SOURCE: GETTY IMAGES.

mRNA, or "messenger RNA," serves as a sort of translator between genetic information in DNA and the amino acids and proteins that are necessary for life. One strand of mRNA corresponds to the genetic sequence of one strand of DNA; it's made in the nucleus of a cell and then travels to the cytoplasm, where cellular proteins are made. There, a minute particle called a ribosome moves along the mRNA, reads its base sequence, and uses the genetic code to translate it into a corresponding amino acid. 

A 2012 study published in the RNA Biology scientific journal posits that mRNA could theoretically be administered to prompt the development of vaccine proteins at the cellular level. That's been Moderna's focus since its founding in 2010, and the company creates its own synthetic mRNA for that purpose. While none of Moderna's products have yet reached final clinical trials, mRNA-1273 could change that.

Lonza and Moderna: a love story

On May 6, the FDA completed its review of Moderna's IND application, with the expectation that phrase 2 trials will begin in the coming weeks.

The Biomedical Advanced Research and Development Authority also awarded $483 million to Moderna in April to support late-stage development programs expanding the scale of the company's manufacturing of mRNA-1273. That manufacturing includes a partnership with Swiss chemicals company Lonza Group A.G. (LZAGY 2.64%), which was launched May 1. The 10-year strategic collaboration and manufacturing agreement will enable the scaled-up manufacturing of mRNA-1273. 

All of this is a strong sign of significant long-term growth and (most importantly) a positive return on investment. Though the stock is already up 150% in the past year, Moderna remains a buy.

Novavax's obvious potential

It's also important to take note of vaccine developer Novavax (NVAX -8.57%), the NVX-COV2373 coronavirus vaccine it's working on, and that company's recent first-quarter financial results . Novavax is poised to be a game-changing investment that speaks to the post-pandemic potential of biotech and the value of investing in vaccines.

Like Moderna, Novavax is a solid buy. It's received a total of $388 million in research funding from the nonprofit Coalition for Epidemic Preparedness Innovations (CEPI), which will fund preclinical studies and phase 1 and 2 clinical trials of the vaccine. CEPI anticipates supporting the clinical development of NVX-CoV2373 through licensure with manufacturers.

Financial results and a flu vaccine could seal the deal

The company's first-quarter results outperformed expectations, with a quarterly loss of $0.58 per share looking much better than last year's $2.20 loss.

Novavax, like Moderna, may provide long-term potential in a post-pandemic world. While management said much of the better-than-expected first-quarter earnings were tied to the potential of NVX-CoV2373, the company's NanoFlu program also looks promising as a potential boost to long-term earnings. NanoFlu is Novavax's answer to other existing influenza vaccines, and it is expected to particularly challenge Sanofi S.A.'s (SNY 2.52%) Fluzone vaccine. Phase 3 trials for NanoFlu outperformed Fluzone on the measures of immunogenicity and matched or beat Fluzone in most metrics, so healthcare investors will want to keep this company in mind.

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

Sanofi Stock Quote
Sanofi
SNY
$54.40 (2.52%) $1.34
Novavax, Inc. Stock Quote
Novavax, Inc.
NVAX
$53.42 (-8.57%) $-5.01
Moderna, Inc. Stock Quote
Moderna, Inc.
MRNA
$136.25 (-4.97%) $-7.13
Lonza Group Ltd Stock Quote
Lonza Group Ltd
LZAGY
$56.43 (2.64%) $1.45

*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 service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

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.