The share price of clinical-stage biotech Moderna (MRNA 4.16%) has risen 245% since it announced on Feb. 10 that it had already designed and produced its first batch of a COVID-19 vaccine candidate. In the intervening months, it has sped ahead in the development and testing process, and this week, the company launched its pivotal 30,000-subject phase 3 trial of mRNA-1273. At this point, is it too late to buy the stock? Or if you own it, should you sell? Here are some considerations.
Plenty of other vaccines in the works
The mRNA-1273 vaccine candidate for COVID-19 is in the spotlight now, but if it succeeds, it should be the first of many vaccines from the company. Moderna has nine others in its pipeline, with the most advanced being a vaccine for cytomegalovirus -- that one could have peak annual sales of $2 billion to $5 billion. Moreover, researchers in China publicly shared the genetic sequence of SARS-CoV-2 on Jan. 10. Mere weeks later, Moderna had crafted its experimental COVID-19 vaccine. So clearly, this company is prepared to respond rapidly to the next major viral threat, whenever it appears.
The development platform just grew in value
Prophylactic vaccines are only one of the six drug classes that the company is pursuing, and the possibilities for its mRNA platform go way beyond the 23 candidates in its pipeline. Other companies developing RNA drugs have spent years solving one of the toughest problems of the technology: a delivery mechanism that gets the RNA into the target cells in adequate amounts. Early trial data for mRNA-1273 appears to confirm that Moderna's lipid nanoparticle formulation works, and although there may be some royalty payments involved, that confirmation removes some risk and increases the value of the company's development platform.
Plenty of cash
With $2.4 billion available for investment and a cash-burn rate of about $500 million per year, Moderna has all the financial resources it should require to bring drug and vaccine candidates to market.
Near-term expectations are high
The one reason why an investor might want to sell Moderna shares is that the excitement over its COVID-19 vaccine candidate has pumped up the stock price to the point where it's extremely vulnerable to any disappointment. A failure in the phase 3 trial would be disastrous. But even if mRNA-1273 succeeds and is the first to cross the FDA-approval finish line, competitors not far behind Moderna may well have vaccines that offer superior protection to COVID-19. That risk may lead some investors to decide to take profits now.