Could Moderna be a millionaire share?
The 2020 news cycle has been dominated by the coronavirus – and that’s understandable. There have been more than 36 million confirmed cases and 1 million deaths linked to the virus worldwide. The economic and health effects are tracked day by day, and each update on vaccine progress is greeted with a combination of hope and impatience. But if we take a step back, we may well realize that there is a positive side to the massive disruption experienced during this most extraordinary year. Medical research has accelerated in ways that could drastically change the way we treat disease in the future. And it could pay off big for healthcare investors as years of progress are made in trying to end the pandemic.
Moderna Therapeutics (NASDAQ: mRNA) was one of the biggest beneficiaries of this acceleration. The company’s still unproven technique of using messenger ribonucleic acid (mRNA) to prevent infectious disease is behind one of the main candidates for a COVID-19 vaccine.
The software of life
Most people are familiar with deoxyribonucleic acid (DNA) because it is often used synonymously with “genes” or “genetic material”. Not many people are familiar with complementary RNA, a similar substance that controls cell function and gene expression. While DNA is a set of instructions, RNA translates those instructions for cells so that they know what to do with them. Moderna President Stephen Hoge once called mRNA “the software of life”. Even though we don’t understand much about RNA and its role in the body, it’s hard to dispute this seemingly hyperbolic claim.
The simple metaphor is that cells are little machines following orders from RNA when it reads instructions from DNA. The distinction may seem irrelevant – that is – unless your goal is to give cells a new set of instructions to prevent or fight disease. This is exactly what Moderna has spent the last decade developing. In the company’s recent investor presentation, management estimated that COVID-19 has accelerated the development of mRNA-based therapies by three to four years.
The company currently has 23 treatment candidates in the pipeline from preclinical to Phase 3 trials, including seven vaccines. Management also recently announced its entry into the influenza vaccine market. Traditionally, flu shots are only 40-60% effective, but the market is estimated at $ 4.5 billion in 2019.
Management recently announced a partnership with Vertex Pharmaceutical (NASDAQ: VRTX) develop a gene editing approach to fight cystic fibrosis. If these early efforts prove that mRNA is more effective than standard processing methods, the benefits for investors could be huge.
Better, faster, cheaper
According to management, using mRNA to guide protein production inside cells has several advantages over traditional drug development. In theory, mRNA could replace biologics – the fastest growing segment of the pharmaceutical industry – and much of it. biotechnology industry, which as a whole is expected to skyrocket from a valuation of $ 255 billion in 2019 to $ 729 billion in 2025. In addition to the huge market potential, the approach could also help treat rare metabolic disorders, as the MRNA provides cells with an updated set of instructions to produce the necessary proteins.
In addition to the benefits of processing, there are also potential benefits in the development and manufacturing process. Using genetic material, vaccine development is able to skip the tedious stages of growing a disease, waiting for it to replicate, purifying, and then inactivating the disease in order to create doses vaccine. This could reduce the traditional manufacturing time from one to two years to a few months.
Despite these obvious benefits, much is still unknown about the effects of an mRNA vaccine in humans. Although Moderna has not had a drug approved by the United States Food and Drug Administration (FDA) and no mRNA vaccine has ever been approved, there is precedent for leveraging RNA for fight disease. Several drugs have been successfully developed using similar technology that silences the expression of certain genes with the help of RNA.
Is Moderna an investment or a lottery ticket?
While investing in a biotech company at such an early stage may be like buying a lottery ticket – only a few are big winners – Moderna has many characteristics that produce life-changing returns. investors. Reaping the rewards will undoubtedly require being disciplined enough to own the shares through the rollercoaster of inevitable news – from drug approvals and new partnerships to delayed trials and lack of efficacy – without any guarantees.
Right now, Moderna is near the front of the pack with one of the main vaccine candidates for a once-per-century pandemic. Unlike many others developing a COVID-19 vaccine, the benefit to society is not specific to the pandemic product, as it speeds up the potential approval of its transformational approach using mRNA. It looks like a great position, and the stock, up 262% year-to-date through September, is proof of that.
Although Moderna is getting a lot of attention for this new approach, the company has competitors who also use mRNA to fight disease. CureVac NV (NASDAQ: HVAC), BioNTech (NASDAQ: BNTX), and Translate the biography (NASDAQ: TBIO) have all gone public in the past year and have partnered with major pharmaceutical companies to develop mRNA-based drugs. For investors excited about the new technology but worried about the risk of investing in a single company, a basket approach – investing a smaller amount in each company – may be the best approach.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.