Biotech stocks tied to coronavirus vaccine development have been soaring lately, but buying stocks just because they’ve been going up is a good way to quickly lose a lot of hard-earned money. While all three of these biotech stocks could fly much higher if the SARS-CoV-2 vaccines they’re developing are quickly proved effective, this is a big step that we can’t reasonably expect either of these companies to take…
Here’s why investors want to watch their stories play out from a safe distance.
|Company (Symbol)||Year of Incorporation||Accumulated Deficit||Trailing 12-Month Net Loss||Market Cap|
|Inovio Pharmaceuticals (NASDAQ:INO)||2001||$772 million||$123 million||$4.1 billion|
|Moderna (NASDAQ:MRNA)||2016||$1.62 billion||$506 million||$22.3 billion|
1. Inovio: Not a closer
This year, shares of Inovio have soared around 760% because investors are highly encouraged by the company’s swift COVID-19 pandemic response. Within hours of receiving access to the novel coronavirus’ genetic sequence, Inovio had a DNA vaccine candidate, INO-4800, ready for pre-clinical testing. By April, Inovio quickly moved INO-4800 into a clinical trial and injected the vaccine candidate into the arms of 40 healthy volunteers.
Inovio’s ability to produce clinical-stage DNA vaccine candidates in response to infectious disease outbreaks is remarkable, but investors should know this company’s never actually produced any evidence its DNA vaccine technology actually works. Inovio’s been developing DNA medicines since 2001, but the company doesn’t have anything to show for it except $772 million worth of accumulated losses and a scrap heap for new drug candidates that lose their fizzle in mid-stage clinical trials.
Expecting a vaccine candidate Inovio threw together in a few hours to go the distance after the same company failed to get anywhere with previous candidates targeting Zika, Ebola, HIV, MERS, and more doesn’t make any sense. That hasn’t stopped the stock market from driving Inovio’s market cap to $4.1 billion at recent prices. While there’s an outside chance that Inovio finally got it right with INO-4800, uninspiring mid-stage data leading to heavy losses is a more likely scenario.
2. Moderna: Concept unproven
Compared to Inovio, this company’s just getting started in the vaccine development business, but it’s already a champion at raising capital without showing investors anything to get excited about. Injecting people with strands of messenger RNA (mRNA) that contain instructions for the production of therapeutic proteins is an old idea that Moderna and a growing number of mRNA-focused peers have chased at great expense without any remarkable successes to date.
Moderna began injecting patients with its SARS-CoV-2 vaccine candidate, mRNA-1273, in a phase 2 clinical trial in May. This isn’t the first mRNA candidate from Moderna to begin a phase 2 trial, but it could be the first phase 2 study we see any data from.
In February 2018, Moderna’s collaboration partner, AstraZeneca (NYSE:AZN) began a…
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