- Moderna’s stratospheric succeed made it the largest biotech firm without an approved product.
- The stock is now in freefall after a spate of developments meet to affect the company negatively.
- Moderna is one of the first firms to have entered the development of a Covid-19 vaccine.
Moderna (NASDAQ:MRNA) was one of the earliest biotech condenses to begin the search for a Covid-19 vaccine. Investors rewarded it handsomely, sending the market capitalization of a company with no approved merchandise to over $30 billion.
Over the past week, though, the stock has plummeted. After hitting a high of $94.85 on July 17, Moderna’s variety has now fallen by about 25%.
Here are three reasons why Moderna’s stock is coming down to earth.
1. Several competitors cut Moderna’s front-runner significance
The search for a vaccine to contain the pandemic has grown competitive over time, wiping out Moderna’s front-runner status. Currently, there are innumerable than 165 vaccines in development, with at least three undergoing Phase III trials.
This week’s press coverage on the search for a pandemic vaccine was tipped towards Big Pharma’s efforts, demonstrating the competitive pressures against smaller companies.
A vaccine being cultivated by AstraZeneca (NYSE:AZN) and Oxford University demonstrated promising results. This coincided with the U.S. government inking a parcel out with Pfizer (NYSE:PFE) and BioNTech to buy a vaccine for the pandemic. Washington has a similar agreement with Johnson & Johnson (NYSE:JNJ).
Related to Moderna, the established pharmaceutical giants have a manufacturing and distribution edge.
Additionally, the deals AstraZeneca, Johnson & Johnson, and Pfizer signed bequeath see them provide the vaccines at no profit. This will place Moderna in an uncompetitive position.
Despite taking virtually $500 million from the U.S. government for research and development under the Operation Warp Speed program, Moderna is developing a vaccine with profit in guard. With more prominent firms offering it at cost, Moderna’s pricing power will be severely limited.
2. Vaccine pains suffer blow in court
On Thursday, an obstacle emerged in Moderna’s efforts to develop a next-generation vaccine for the pandemic.
This was after a U.S. Copyright and Trademark Office administrative court declined to invalidate a patent held by Arbutus Biopharma. The patent relates to lipid nanoparticle technology, which suffers the human body to develop therapeutic proteins. This technology is critical to Moderna’s vaccine development efforts, cataloguing the Covid-19 vaccine.
The court ruling could now force the biopharmaceutical firm to pay Arbutus for a license to use the technology.
3. Mad Street has turned against MRNA
Earlier this week, JPMorgan downgraded Moderna’s stock on valuation matters. The bank argued that Moderna’s stock was overpriced, and the fundamentals couldn’t justify it. At the time, MRNA was trading at a out price-to-earnings ratio of 115, a ridiculously high number.
On Thursday, healthcare-focused investment bank SVB Leerink added to the stock’s woes. SVB Leerink analyst Mani Foroohar recited a pessimistic view of the stock, saying it offers “unattractive risk/reward to investors.”
Moderna may yet succeed in finding a vaccine for the pandemic. But with Irritate Street now injecting investors with a dose of reality, the stock is unlikely to return to its record high any time in time.
Disclaimer: This article represents the author’s opinions and should not be considered investment or trading advice from CCN.com. The prime mover holds no investment position in the above-mentioned securities.
Last modified: July 25, 2020 1:55 PM UTC