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Why You Might Want to Buy This Potentially Game-Changing COVID Vaccine Stock Right Now

By Keith Speights - Dec 10, 2020 at 6:10AM

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This could be the perfect time for aggressive investors to scoop up shares.

Sing along to the tune of "Rudolph, the Red-Nosed Reindeer":

"You know Pfizer and BioNTech, Moderna, AstraZeneca. But do you recall...the most promising dark-horse COVID vaccine maker of all?"

Many investors might not know which company this admittedly clunky COVID-19 carol refers to. However, it's one that I think is worthy of attention: Arcturus Therapeutics ( ARCT -1.88% ). Here's why you might want to buy this potentially game-changing coronavirus stock right now.

Gloved hand holding a vaccine vial with a needle attached to a syringe

Image source: Getty Images.

Potential game-changing vaccine

Let's unpack that statement, beginning with the claim that Arcturus may have a game-changing coronavirus vaccine. Is that an exaggeration? I don't think so.

For one thing, Arcturus' COVID-19 vaccine candidate, ARCT-021, uses a messenger RNA (mRNA) approach. That's especially promising considering the super-high efficacy levels already reported for Pfizer's and Moderna's mRNA coronavirus vaccines. These other mRNA vaccines also appear to be safe, which bodes well for ARCT-021.

However, Arcturus might find slim pickings if its only advantage is the mRNA technology used. With ARCT-021 only in phase 1/2 testing, it will be well behind other leading coronavirus vaccine candidates in making it to market even if all goes well.

But Arcturus has another advantage, and it's a big one: All of the leading coronavirus candidates, with the notable exception of Johnson & Johnson's experimental vaccine, require two doses. ARCT-021, on the other hand, appears to be quite effective with only a single dose.

In addition, Arcturus is developing a lyophilized (freeze-dried) version of its COVID-19 vaccine candidate to advance into late-stage testing. This version will be able to be stored in standard refrigerators, eliminating the need for expensive ultracold storage equipment.

Why buy right now?

I suspect that most investors would agree that a single-dose mRNA vaccine that can be stored in a regular fridge could be a game-changer. But why buy Arcturus stock right now?

First, phase 2 is historically the make-or-break phase for experimental vaccines. Fewer than 1 in 4 vaccine candidates that make it to phase 2 clinical studies go on to win approval from the Food and Drug Administration, based on data collected by industry trade group BIO. However, nearly three-fourths of vaccine candidates that advance into phase 3 testing ultimately win approval.

Granted, ARCT-021 hasn't quite made it into phase 3. However, Arcturus is already in discussions with Singapore regulatory authorities about moving forward with late-stage testing. I suspect there's a very good chance that the biotech will receive a green light to do so.

Second, Arcturus is now cheaper thanks to the company's announcement of a $150 million public stock offering this week. The biotech stock fell nearly 20% on the news of the secondary offering. But the prospects for the company haven't changed at all. Arcturus' market cap of around $2.4 billion doesn't come close to reflecting its potential if ARCT-021 proves to be successful.

The operative word

Don't overlook the operative word in my statement that you might want to buy this potentially game-changing COVID-19 stock right now. That operative word is might.

Arcturus Therapeutics isn't well-suited for every investor. It's a clinical-stage biotech with no approved product (and therefore no consistent revenue source). The company continues to lose a lot of money. If you're risk-averse, Arcturus definitely isn't a great pick for you.

But the word "might" is a two-edged sword. There are some investors who could really like Arcturus. The company's experimental COVID-19 vaccine is definitely promising, even though it still has a long way to go. Arcturus also has another potential pipeline winner with experimental mRNA therapy ARCT-810, which targets the genetic disorder ornithine transcarbamylase deficiency.

You'll have to assess your own risk tolerance to decide if Arcturus is a fit. If it is, you might not get a better chance to buy this coronavirus vaccine stock than right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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