Shares of Moderna (NASDAQ:MRNA) were soaring earlier this month when the company released interim results from its mRNA vaccine. Investors were bullish on the possible COVID-19 vaccine, sending the stock to an all-time high of $87. It's since fallen more than 35% since then as some of the hype's waned. Coronavirus stocks like Moderna are especially volatile surrounding news related to any treatments or vaccines. And in Moderna's case, investors have simply been too bullish on the results, and here's why.

The sample was far too small to be meaningful for investors

When Moderna released interim data from its phase 1 study, the results were encouraging. The company found that of the antibody data that it had on people in its study who it vaccinated, all of them had developed neutralizing antibodies against the coronavirus. While that was definitely an encouraging sign, data was only available on eight participants and Moderna has vaccinated dozens thus far. From a scientific perspective, it's encouraging because it's a good first step in the process. Phase 1 results are always limited in that they don't involve a large scale of participants.

People working in a lab.

Image source: Getty Images.

For investors, it's important to take that into consideration when reading and interpreting the results. Buying up shares of a company because its vaccine went eight for eight in developing antibodies in phase 1 is premature, to say the least. Although it's a good sign, with such a small sample size, there can be many factors that distort those results and there's no telling if it's safe on a much wider scale. Without a sample size that's in the thousands, where there's a good cross-section of the population tested, it's just not meaningful enough data for investors to be basing investment decisions on.

It's still too early on in the process

Companies are racing to try to get a vaccine for COVID-19 available as quickly as possible. But the reality is that it could be a long way from happening. Dr. Anthony Fauci, head of the National Institute for Allergy and Infectious Diseases (NIAID), estimated that it could take 12 to 18 months for a vaccine to be available. However, other experts believe that timeline is too optimistic. Dr. Paul Offit was a co-inventor of the rotavirus vaccine, and he believes such a short timeline is "ridiculously optimistic."

But regardless of how long it actually takes for a COVID-19 vaccine to be ready, the important thing for investors to note is that it's still a long road ahead. A phase 1 study with limited data is not going to be helpful in predicting whether a vaccine will succeed or not. According to data from the U.S. Food and Drug Administration (FDA), 70% of drugs that are in phase 1 move on to the next stage. It's in phase 2, which involves more people and where studies last longer, that only about one-third of drugs move on. So strong results from a phase 1 study are unfortunately not a strong reason to invest in a company working on a possible vaccine.

Several other companies are working on vaccines as well, including Pfizer (NYSE:PFE) and Inovio Pharmaceuticals (NASDAQ:INO). Which company ends up with the vaccine that the general population will end up using is anyone's guess at this point. While Moderna's early results are encouraging, it by no means is a guarantee that it'll be the one that's first at the finish line.

What should investors do?

If you're investing in Moderna, it should be for what the biotech company produces today, not based on vaccine results that may ultimately amount to nothing. Buying shares of a company based on its phase 1 interim results is a gamble at best. If Moderna's unsuccessful, the stock will likely crash. With the company recording losses in each of its past 10 quarter results and generating sales of just $60 million in 2019, there's not a whole lot for investors to fall back on if the company doesn't end up developing a successful COVID-19 vaccine. The stock trades at more than 350 times its sales and is a very speculative buy at this point.

Shares of Moderna are up 180% since the start of the year, while the S&P 500 is still down around 6%. However, a poor showing or any indication that the company's vaccine is struggling could quickly change the stock's trajectory. That's not a risk that investors may want to take, especially given how volatile the markets have already been thus far in 2020.