This might be the year for mRNA drugs. The most prominent name in this space, Moderna, is up a fantastic 700% in 2020. And returns for BioNTech haven't been too shabby with its stock quadrupling in a year. While those investors certainly aren't complaining, the biggest mRNA winner is actually tiny Arcturus Therapeutics (NASDAQ:ARCT) -- $10,000 could have bought you 1,000 shares of Arcturus on Jan. 2. That position would be worth a cool $105,000 as of this writing.

Why is the market in love with these mRNA pharmaceutical stocks? The race to find a COVID-19 vaccine gives us an answer. What people call "the Pfizer drug" is actually the BioNTech drug, as it was the smaller biotech that actually found the molecule. The two front runners in the vaccine race right now are both mRNA drugs.

The word "vaccine" spelled out on dice, plus two dice being turned over from "LIVE" to "mRNA"

Image source: Getty Images

Researchers can find molecules very quickly using this technology, but what we didn't know until recently was how well mRNA vaccines would work. And they've been strong on that score -- Moderna reported 94% efficacy rates in phase 3 trials, and Pfizer/BioNTech reported a 95% rate.

As a small-cap that received no funding from Operation Warp Speed (OWS), Arcturus is at a severe disadvantage in the vaccine race -- not because of the quality of its research but because of lack of funding. Now, Arcturus finally has its own COVID-19 vaccine in clinical trials. The company projects that it will initiate phase 2 trials in the first quarter of 2021 and follow up with phase 3 trials in the second quarter. And Arcturus has several other mRNA drugs in the pipeline as well. Investors tracking this segment of the pharmaceutical industry should keep an eye on Arcturus. 

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.