Moderna (NASDAQ:MRNA) has been scorching hot of late. Despite not generating much by way of revenue -- and not having a single approved product on the market -- the company's shares have soared by more than 190% since the beginning of the year, easily outpacing the broader market. Of course, the primary catalyst for Moderna's performance has been its efforts to develop a vaccine for COVID-19, efforts which have attracted a slew of headlines. The company also stirred up some controversy in May when executives sold large amounts of shares, a move that has been both criticized and defended. 

However, Moderna's valuation metrics have also skyrocketed recently. The company is trading at about 218 times its estimated future sales. Is the biotech company worth its rich valuation metrics? 

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Moderna's COVID-19 efforts

Moderna focuses on mRNA medicines, and as the company explains, these treatments are essentially sets of instructions that "direct cells in the body to make proteins to prevent or fight disease." Moderna's potential vaccine against COVID-19, called mRNA-1273, is of the same variety. In March, Moderna kicked off a phase 1 clinical trial -- led by the National Institutes of Health (NIH) -- for mRNA-1273. 

The trial was to test the vaccine's safety, its immunogenicity (the ability to trigger an immune response in the body), and its reactogenicity (the amount that causes expected side effects). This trial involved 45 healthy adult volunteers, each of whom received two doses of the vaccine 28 days apart. 

In mid-May, Moderna reported positive interim results from this trial; among other things, the company said that "mRNA-1273 was generally safe and well tolerated." After getting the green light from the U.S. Food and Drug Administration (FDA), the company kicked off a phase 2 clinical trial for mRNA-1273. 

Microscopic view of the coronavirus.

Image Source: Getty Images.

This trial is to evaluate the safety, reactogenicity, and immunogenicity of two doses of mRNA-1273 -- given 28 days apart -- in a much larger group consisting of 600 healthy participants. Further, Moderna is already gearing up for a phase 3 clinical trial, which the company said should start in July. Given all these developments, Moderna is undoubtedly one of the leaders in the race to develop a vaccine for COVID-19.

The best-case scenario for the company is that it manages to launch its vaccine on the market before any of its peers, which could turn into a cash-making machine for Moderna. No wonder investors have loaded up on shares of the biotech company in anticipation that it could win the race to develop a vaccine for the novel coronavirus.

Other programs

Despite not having any approved products on the market at the moment, Moderna does have a rich pipeline that boasts more than a dozen candidates, including potential vaccines for the Zika virus and several cancers. However, the company doesn't have a single pipeline product that is currently being evaluated in a phase 3 clinical trial. In other words, the company is at least a year or two away from getting any of those candidates on the market, provided these trials go well in the first place.

Looking forward

Moderna was selected by the Trump Administration as one of the five companies most likely to launch a successful vaccine for the coronavirus on the market. This list was part of its Operation Warp Speed initiative, meant to spur the development and distribution of a vaccine. Moderna's mRNA-1273 was granted the fast track designation from the FDA. However, none of these accolades matter nearly as much as the actual results from Moderna's clinical trials, and despite the company currently being one of the clear leaders in this race, it would be a mistake to ignore its competitors, particularly Novavax (NASDAQ:NVAX).

In late May, Novavax announced it was kicking off a phase 1/2 clinical trial for its own investigational COVID-19 vaccine, NVX-CoV2373. The company will conduct this trial in two parts. The phase 1 part of the study will be held in Australia and will enroll 130 healthy adult volunteers. This phase of the trial will test the vaccine's safety and immunogenicity. The phase 2 part will be conducted in several countries -- including the U.S. -- and will test the vaccine's safety, its immunity, and its disease-reduction capabilities in a wider pool of participants.

It's impossible to predict which of these two companies will get to the finish line before the other, or if they will get to the finish line at all. And while Moderna does have other pipeline candidates, none will hit the market anytime soon. For these reasons, and considering Moderna's rich valuation, only those investors who can stomach a significant amount of risk should consider adding this biotech stock to their portfolios. Risk-averse investors had better watch this one from the sidelines until more is known about the prospects of its coronavirus vaccine.