Moderna (MRNA +0.07%) wowed the stock market in March when it became the first to enter human testing with its investigational coronavirus vaccine. The shares got another boost when the clinical-stage biotech company announced encouraging interim phase 1 trial results. The vaccine has since entered phase 2 studies, and a phase 3 trial is expected to begin next month.
Though the coronavirus vaccine development path has been steady for Moderna, risks still lie ahead. As the company approaches its late-stage trial, here are the three biggest risks that could throw the program off track, and therefore, hurt Moderna share performance:
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1. Adverse effects in older patients
So far, the positive trial data Moderna has presented pertains to healthy volunteers in the 18-to-55 age group. Adverse effects were few. Among those participants, one -- at the 100-microgram dose -- experienced redness around the injection site. And a 29-year-old participant who said he received the highest dosage -- 250 micrograms -- said in a STAT News interview he experienced high fever, nausea, and other symptoms. He sought medical attention and quickly recovered.
Though the 250-microgram dosage isn't being used in phase 2 or phase 3, that doesn't mean significant adverse effects won't happen. And older participants who will take part in these trials may be more vulnerable. At the same time, vaccine performance in this group is particularly important, as older adults seem to be at a higher risk of developing more serious complications from COVID-19. The illness is fatal for about 13.4% of patients age 80 or older, according to a study published in The Lancet Infectious Diseases. That's compared to 1.25% for patients age 50 to 59.
Moderna has already enrolled an initial group of participants aged 55 and older in its phase 2 trial, so we may expect data about these volunteers soon. Positive results in this group are essential for Moderna's program to move forward as planned.
2. Antibody disappointments
Moderna's interim data from phase 1 is reason to be optimistic. Across all participants in two dosage groups, levels of binding antibodies were at or above levels seen in people who have recovered from the virus. Binding antibodies alert the body's immune system, but they don't stop infection. That's the job of neutralizing antibodies, and so far, Moderna has only reported that result for eight patients. But it was positive, showing levels of neutralizing antibodies were at or above levels of those of recovered coronavirus patients.
Neutralizing antibody production, in the 600 volunteers in phase 2 as well as the 30,000 Moderna hopes to enroll in phase 3, is key as it offers clues about efficacy. But the picture won't be complete until we know how long those antibodies last in the body and if they truly will fight infection. Still, the production of neutralizing antibodies across a large study population is a good first step -- and a miss here could be a major setback.
3. A drop in coronavirus cases
Of course, a drop in coronavirus cases is great news for everyone. But in order for Moderna and other vaccine makers to test their investigational products, the virus must be actively circulating. In an outbreak situation, the vaccine or placebo is administered to a group of healthy volunteers. If a high number of placebo participants get sick and those who received the vaccine don't, it's likely the vaccine is working. But if the virus is hardly present, it would be impossible to draw such a conclusion.
In the U.S., coronavirus cases recorded by the Centers for Disease Control and Prevention are cumulative, so they will continue to grow. And some states are still seeing spikes. But nationally, the number of people seeking medical attention for symptoms has been on the decline. If the trend continues, it may present difficulties for Moderna and rivals conducting trials in the U.S. to prove vaccine efficacy.
That doesn't mean the vaccine is doomed, but testing it could become more complicated. If virus circulation drops considerably, researchers may conduct a "challenge" trial. That means healthy volunteers are immunized, then exposed to the virus. There also is the possibility of conducting trials in other areas where the virus is on the rise. At this point, Moderna hasn't said it would turn to either of these alternatives.
What's the outlook for Moderna shares?
Clinical trials involve risk; there's no avoiding that fact. Anything can happen at any moment, and the market may severely sanction setbacks. And as a clinical-stage company, Moderna doesn't have other immediate revenue to satisfy investors if this project fails. Still, so far Moderna has reported solid data, making the shares popular among investors with some risk tolerance. If Moderna's vaccine doesn't fall victim to one of the problems mentioned above, it's likely the shares, already up 227% this year, can climb higher.
