Moderna (NASDAQ:MRNA) is one of the most popular stocks in the market right now. Investors are excited about the biotechnology company's experimental COVID-19 vaccine and its potential to end the coronavirus pandemic, while delivering fortunes to shareholders along the way.

Moderna's share price is up an impressive 228% so far in 2020, and even more gains could lie ahead for investors. However, an investment in this biotech stock is not without risk.

Here are three of the biggest risks Moderna's shareholders are facing today.

A road sign labeled risk ahead.

Moderna stock is a risky bet. Image source: Getty Images.

1. Moderna's COVID-19 vaccine will need to prove both safe and effective.

Moderna is currently conducting a phase 2 study for its novel coronavirus vaccine candidate, mRNA-1273. The study is designed to evaluate the drug's safety and ability to produce an immune response in 600 healthy participants. 

Moderna also intends to launch a phase 3 study in July. That will be a much larger study, with approximately 30,000 participants. Its primary aim will be to test the vaccine's ability to prevent symptomatic COVID-19 disease. 

Results from Moderna's phase 1 study were certainly promising, but there can currently be no assurances that its experimental vaccine will prove to be both safe and effective against COVID-19. If it fails to meet either of those two requirements, shares would likely plunge on the news.

2. Competition is intense.

There are more than 100 COVID-19 vaccines and treatments currently being developed around the world. Healthcare titans such as Johnson & Johnson, Pfizer, Merck, and AstraZeneca are all rushing to be the first to find a panacea for the deadly disease.

Moreover, while Moderna's drug is considered to be one of the more promising coronavirus vaccine candidates, AstraZeneca's development efforts are in more advanced stages, according to the World Health Organization's (WHO) chief scientist, Soumya Swaminathan. 

With such formidable competition, it won't be easy for Moderna to win this race.

3. Governments could demand low prices for coronavirus vaccines.

Even if Moderna's vaccine does prove to be safe and effective, it may not be as profitable for the company as many investors expect. Governments could pressure Moderna to make its vaccine available at a relatively low cost. This is particularly true if other COVID-19 vaccine candidates are also shown to be effective against the disease. In such a scenario, the companies that developed the vaccines would have less negotiating leverage with buyers.

Additionally, much of the potential upside from a coronavirus vaccine is arguably already priced into Moderna's shares. The company's market cap currently checks in at a whopping $25 billion, even though Moderna generated only $60 million in revenue in 2019. Investors are clearly betting big on the biotech's research and development program. Yet even if Moderna succeeds in those efforts, there may not be as much upside for its stock as many investors are hoping for, with its shares already being valued so highly.