Will Moderna become the winner in the race to find the vaccine for COVID-19?
Among more than 100 experimental vaccines in development for the treatment of COVID-19, three leading candidates made by Cansino, Moderna (NASDAQ:MRNA), and Pfizer (NYSE:PFE) have advanced into phase 2 clinical studies.
Moderna is advancing to phase 2 clinical trials with its vaccine before data from phase 1 was even published. Moderna is expecting to commence its investigation shortly and plans to start phase 3 clinical trials early this summer. Is there something else going on behind the scenes hinting that the experimental vaccine shows promise?
So what's going on?
Moderna's experimental vaccine mRNA-1273 is currently undergoing phase 1 clinical trials. The vaccine is composed of messenger RiboNucleic Acids -- which are chains of nucleotides containing genetic information for cells to produce the antigens encoded in its helical structure. Once the vaccine is administered to patients, the cells transcribe the genetic information from mRNA and produce the corresponding antigens on its surface. Then the body's immune system is able to recognize the antigens and generate antibodies to produce an immune response.
mRNA-1273 is specifically designed to target the spike protein (S-protein) found in COVID-19, which facilitates the virus's entry into host cells by mediating the attachment receptors between the two types of organisms. If the vaccine is successful, then it would induce the immune system to produce antibodies against the S-protein and completely disrupt COVID-19's replication process inside the human body.
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The phase 1 clinical trial consists of administering mRNA-1273 to 45 healthy adult volunteers aged 18 to 55 over a period of six weeks. The primary endpoints are to measure the potential vaccine's immunogenicity (its ability to provoke an immune response in the body) and safety. There's been no interim data release on this study, although it did complete enrollment in all three cohorts. In addition, Moderna secured a $483 million contract on April 16 from the Biomedical Advanced Research and Development Authority to fund the investigation of mRNA-1273 into later stages.
On May 7, the Food and Drug Administration cleared mRNA-1273 for phase 2 clinical trials, which will involve approximately 600 patients randomized into treatment and placebo cohorts. The endpoints in the trial are largely the same as phase 1, and if successful, the company expects phase 3 to commence in the fall with a Biologic License Application filing by next year.
In my opinion, the investigation is more likely than not to be successful and justifies the trials progressing concurrently. This is because Moderna developed the vaccine directly with scientists at the National Institute of Allergy and Infectious Diseases (NIAID), who have access to the most up-to-date genetic data involving COVID-19 strains. Furthermore, mRNA-1273 received direct praise from NIAID director Anthony Fauci regarding its potential.
Additionally, Moderna has significant levels of expertise when it comes to vaccine development. Since its IPO in 2018, the company has registered more than ten vaccines in undergoing research and development in its pipeline. In a recent interim data release of its Zika vaccine involving 120 participants in phase 1 trials, the vaccine's seroconversion rate (percentage of patients having observable antibodies against a pathogen in their bloodstream) was found to be between 94% to 100%. There were no serious adverse events associated with this experimental vaccine.
Is the stock a buy?
In my view, investors may not be fully appreciating the potential effect of COVID-19 vaccines, especially ones that made it to this stage. Unlike previous pandemics such as the Spanish Flu, the ongoing COVID-19 pandemic is characterized by a large number of asymptomatic carriers. In fact, up to 56% of patients show no symptoms before the onset of the disease.
Furthermore, a study has found that 10% of patients show no symptoms until between 14 to 20 days after initial contact with those infected. Hence, I think the world will not only witness second- or third-wave coronavirus outbreaks but also see consistent pockets of resurgence over the next few years, making the distribution of vaccines essential. Moreover, Moderna has strategic collaboration agreements in place that would allow the company and its partners to manufacture up to 1 billion doses of mRNA-1273 contingent on success in clinical trials.
In the most recent quarter, Moderna disclosed more than $1.1 billion in cash and investments on its balance sheet, with no debt whatsoever, and expenses amounting to a run rate of $520 million per year. The financial health of the company is certainly good, and shareholders should not expect dilution while the company streamlines its investigation for mRNA-1273.
Aside from having a potential COVID-19 vaccine candidate, the company also garners significant interest in its cancer vaccine pipeline. In all, for brave biotech investors who are not afraid of buying high and selling even higher, Moderna presents an enticing hedge in the ongoing rout caused by the COVID-19 pandemic.