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Why Moderna Is Dropping Tuesday

By Prosper Junior Bakiny - Updated May 27, 2020 at 8:49AM

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Another biotech company is hot on Moderna's trail in the race to develop a vaccine for the novel coronavirus.

What happened

Shares of Moderna (MRNA 2.58%) -- a biotech company that has been racing to develop a vaccine for COVID-19 -- are down by 11.5% as of 2:32 p.m. EDT on Tuesday, and this despite the company not reporting any news. However, we can safely assume that Moderna's losses on the market today have something to do with Novavax (NVAX -1.17%) announcing that it has enrolled the first participants for a phase 1/2 clinical trial for its COVID-19 vaccine candidate, NVX-CoV2373.

So what

Moderna's stock has been on a tear of late thanks to the company's efforts to develop a vaccine for the novel coronavirus. The biotech company was one of the first to kick off a phase 1 clinical trial for its investigational vaccine, mRNA-1273. Moderna recently said it plans to start a phase 2 trial shortly, and while it looks like Moderna has the lead in this race, Novavax isn't too far behind. Today, Novavax announced that it is planning to conduct a study for NVX-CoV2373 in two parts. The phase 1 part of the study will be held in Australia and will enroll approximately 130 healthy volunteers between the ages of 18 and 59.

Doctor holding glass vial with sign that reads "COVID-19 vaccine."

Image Source: Getty Images.

This phase of the trial will test the vaccine's safety and its ability to trigger an immune response in the body. The phase 2 part will be conducted in several countries -- including the U.S. -- and will involve more participants than the first. This phase of the trial will evaluate the vaccine's safety, immunity, and disease-reduction capabilities. Novavax's announcement may have dampened the excitement surrounding Moderna's efforts to be the first to launch a vaccine for COVID-19 on the market.

Now what

It is still impossible to know which biotech company will successfully launch a vaccine for the novel coronavirus before its peers. That's why it makes little sense to bet on a biotech stock solely because of its efforts in the fight against COVID-19. And while Moderna's shares are up by more than 200% year to date, the company's stock could implode if one of its competitors manages to win the race to develop a COVID-19 vaccine. In short, only those investors comfortable with a significant amount of risk should consider buying shares of Moderna.

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Stocks Mentioned

Moderna, Inc. Stock Quote
Moderna, Inc.
$159.56 (2.58%) $4.02
Novavax, Inc. Stock Quote
Novavax, Inc.
$63.54 (-1.17%) $0.75

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