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Moderna Banks on Unproven Technology to Develop Covid-19 Vaccine

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GuruFocus.com
·3 min read
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Hope for the best, but prepare for the worst. Investors in Moderna (MRNA) may want to keep that idiom in mind as the company strives to develop a vaccine for the novel coronavirus (Covid-19).

Shares of the Cambridge, Massachusetts-based biotech company have soared more than 60% from March 24 to April 16 on hopes the company will be successful in its quest. At more than $40, the stock is at a five-year high.


However, the technology being applied by Moderna has yet to be proven. It's called messenger RNA, or mRNA, which uses molecules to coax the body into producing proteins, according to an article in Biopharma Dive. In addition to Covid-19, Moderna is conducting human testing on six other preventative vaccines for infectious diseases.

As I wrotie in a March 18 article for GuruFocus, the company's Covid-19 trial began on March 16. The trial, which will include 45 young, healthy volunteers, is being conducted at the Kaiser Permanente Washington Health Research Institute in Seattle.

mRNA vaccines are faster to design and make, but the big question is this: Will they work as well as traditional protein-based vaccines? A noted expert in the field seems to think so, with a caveat.

Jonathan Watts, an associate professor at the RNA Therapeutics Institute at University of Massachusetts Medical School (who has no ties to Moderna) said, "The jury is out on what problems might still arise or where we might find hang-ups." He does say mRNA could be a game-changer. At the same time, investors should keep in mind that there hasn't yet been any vaccine developed for any of the seven types of coronavirus known to infect humans. Drug developers are relying on past scientific work on other coronaviruses.

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The U.S. government has set an aggressive timeline of 12-18 months to develop a vaccine. Is that feasible? It is according to Thomas Russo, chief of infectious disease at the University of Buffalo's Jacobs School of Medicine and Biomedical Sciences. But he thinks it will take a "home run" and nearly everything to go right in order for that to happen.

Other mRNA vaccines that could be in clinical trials this summer are being developed by CureVac, BioNTech (BNTX) and Translate Bio Inc. (TBIO).

A factor working in Moderna's favor is the success rate of vaccines in clinical trials. Infectious disease inoculations have an overall 33% probability of success, which jumps to 42% once the vaccine enters phase 2 studies, the highest of all therapeutic areas, according to an analysis published in Biostatistics in 2019.

Disclosure: The author holds no positions in any of the stocks mentioned in this article

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This article first appeared on GuruFocus.