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With COVID-19 cases at an all-time high in the U.S., which biotech companies are leading the race for a vaccine? Will Moderna (MRNA) or Inovio Pharmaceuticals (INO) create the first COVID-19 vaccine?
This is Sailesh Tirupasur. I'm a part of Stock Card's summer internship program in 2020, and this post is a part of my Stock Battle series. I don't own these two stocks, and my goal here is to study them to decide whether to invest or not.
These stocks are apart of our Companies Shaping the Future stock list. If you want to see other stocks in this category, click here.
Stock research and analysis:
The COVID-19 vaccine race has been on the mind of many investors looking to take advantage of the pandemic. With several biotech titans and new-comers tackling this issue, many investors are confused about who is at the forefront of this race. Out of many choices, Moderna and Inovio Pharmaceuticals seem to be in the running to create the first successful COVID-19 vaccine.
Shares of Moderna are up almost 7% today due to its unveiling of positive test results for a phase one study. Moderna's COVID-19 vaccine contains mRNA that tells the body to produce a structure similar to the spike protein. The theory behind this is it will stimulate the immune system to create antibodies. This potentially groundbreaking research has investors eagerly awaiting the beginning of a phase three test that includes around 30,000 test patients.
Despite the positive technological outlook, Moderna still has a couple of issues as an investment. It does not sell any commercial products at the moment, and it has reported quarterly losses for several years. This by itself is significant enough for investors to take a second look before investing, regardless of investor hype.
Inovio Pharmaceuticals is a contender due to its results for a phase one study. However, they are quite behind compared to Moderna. Inovio focuses on DNA instead of mRNA. The company's vaccine uses strands of DNA, which are called plasmids, and inserts them directly into the cells. It uses a quick electrical pulse that opens tiny pores in the cells allowing the plasmids to enter (a process called electroporation). While the research is sound, investors are not as confident in Inovio as of late. Shares of Inovio are down almost 7% today after hitting a high point in late June. While they seem to be slower than Moderna with the testing of its COVID-19 vaccine, the results from its phase one study are promising. A staggering 94% of participants aged 18 to 50 demonstrated immune responses six weeks after two doses of the vaccine were given.
Like Moderna, Inovio is a risky investment due to the lack of strong operations irrespective of the technological advances in producing the vaccine.
While Moderna seems to be leading the race with its efficient testing and groundbreaking research, betting on a single company in a volatile race could spell disaster for investors riding the wave. If something goes wrong with the clinical trial's final stage, it may lose a significant portion of its value. Investors who invest in this stock should be ready for volatility and the probability of losing money in exchange with an outsized return likelihood. I'm not confident that any of these two stocks are fit for a beginner investor.