For anyone following biotech and pharmaceutical stocks, Moderna (MRNA 1.55%) is now a household name. The clinical-stage biotech company moved from the shadows to the spotlight in March when it became the first company to launch a human trial of a potential coronavirus vaccine.
Since that time, Moderna has reported positive interim phase 1 data, and the vaccine candidate recently entered a phase 3 trial.
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As this coronavirus program advanced, so did the company's market value and share price. Moderna's market capitalization soared to reach a peak of more than $37 billion in July from about $6 billion at the start of the year.
The shares surged 385% in that time period. Over the past month, however, Moderna has given back some of those gains. Market cap is now around $26 billion, and the share price slipped 11% in August.
MRNA Market Cap data by YCharts.
What's the outlook for this growing company with big dreams? Let's take a closer look.
Moderna has more than 20 programs in the pipeline. Its most advanced projects include vaccine candidates for cytomegalovirus (related to chicken pox) and personalized cancer vaccines, as well as a therapeutic for ischemic heart disease -- all in phase 2 studies. But these days, the company's future is riding on the investigational coronavirus vaccine. It's easy to understand why: Coronavirus cases worldwide total more than 23 million, and the death toll has reached more than 814,000, according to the World Health Organization.
Timeline and data
Moderna isn't the only one in the race to develop a coronavirus vaccine. More than 30 vaccine candidates are involved in human trials. From a timeline and data perspective, however, Moderna is one of the leaders. Six programs, including Moderna's, have entered the final stage of testing. As for data, Moderna is among the handful of companies that have reported interim phase 1 results.
In its report, Moderna noted neutralizing antibody activity in all trial participants across the three dosage levels used in the study. The 100-microgram dose -- the one chosen for later-stage trials -- produced neutralizing antibody levels more than four times higher than those found in recovered coronavirus patients. Neutralizing antibodies are seen as key in a successful vaccine because their role is to block infection. Investors should now look ahead to data from the phase 2 and 3 trials for confirmation of the observations so far.
Things also are looking bright for Moderna when it comes to funding and initial supply agreements. The U.S. government so far has committed as much as $2.48 billion to Moderna's program. Of that number, $955 million is from a Department of Health and Human Services award for vaccine development and $1.53 billion is for the delivery of 100 million doses if the potential vaccine is approved.
Moderna is involved in discussions with the European Commission about the possibility of supplying 80 million doses to Europe. And the company has already received $400 million in customer deposits for its potential coronavirus vaccine.
Moderna also plans to produce at least 500 million doses of vaccine per year as of 2021 and is studying the possibility of reaching 1 billion doses annually.
One big risk
All of this is good news for Moderna, but caution is essential. One big risk remains for Moderna and other clinical-stage biotech companies in the coronavirus vaccine race. And that risk is vaccine candidate performance in phase 3.
The probability of success for infectious-disease vaccines in clinical trials, at 33.4%, is higher than any other therapeutic group (such as oncology or endocrinology), according to research published in Biostatistics. But even that number is far from 100%. Vaccine developers can't claim victory until they gain regulatory approval -- or at least an emergency-use authorization.
Wall Street expects Moderna shares to rise 41% from here over the next 12 months. If the biotech company reports more positive data on the way to the finish line for its potential vaccine, that kind of increase could happen a lot more quickly. Disappointing data, however -- or even worse, a complete failure -- could be devastating for the shares.
Right now, there are plenty of reasons to be optimistic about Moderna's prospects. But the fact that share-price performance is so dependent on results from one program means that investment in Moderna is best left to the most aggressive biotech investors.
