Intro: Monday May 18th the stock market rallied almost 1000 points due to a press release by Moderna that their vaccine mRNA-1273 had very promising results and as the leading vaccine candidate for coronavirus.
I will explain the May 18th Press Release for you:
Before we start, watch video above, you can skip straight to 1:28 for fundamentals on DNA, RNA, and how COVID 19 virus works for a primer that will greatly help you understand everything
The press release gave results on Phase 1 interim results
Clinical trials come after animal studies and are the human trials
Phase 1: First human studies on 10s of healthy people focusing on safety
Phase 2: Next phase on studies of 100s of not all healthy people focusing on safety
Phase 3: Next phase on 1000s of randomized people in general focusing whether or not results are effective
Phase 4: By now released to the public but is continued to be monitored
They tested 3 cohorts
15 people 2 doses of 25mcg injection separated by 30 days
15 people 2 doses of 100mcg injection separated by 30 days
15 people for 1 dose of 250mcg injection
Then checked the level of antibodies in the blood 2 weeks after 2nd dose
Only had results at press release 4 people of the 25mcg group and 4 people of the 100mcg group resulted
25mcg group had equivalent antibody response of someone who actually recovered from Covid 19
100mcg group had a stronger response than those who recovered indicating dose dependent antibody response
Side effects: Grade 3 reaction - Hospitalization for erythema, may just be for observation
Let’s talk a bit about Moderna
Moderna is a new pharmaceutical company that has a goal of utilizing mRNA to make vaccines by injecting you with the mRNA and having your body make just one part of the virus so that your body can mount an immune response
In Lay terms this means to give your body instructions on how to defeat the virus. As opposed to injecting you with actual virus particles because creation of virus particles is extremely labor intensive and has many legal restrictions. The reason they can do this is because RNA/DNA itself is by nature is almost like computer code, instead of 0’s and 1s it’s just 4 letters. They are leveraging digital technology such as IOT, AI, and Cloud computing (AWS) to create vaccines with dramatic efficiency. Everyone throw out these keywords, but just to give you an idea, the average vaccine takes from idea inception to phase 1 clinical trials is 5 years
Moderna went from RNA sequencing to human trials in 42 days. The average vaccine takes 10-15 years to develop, the goal for covid 19 is 1 year.
The white papers suggest that this new technology for vaccines is like what the internet did for information. I encourage you to read them:
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Why did they publish a press release with a 8 sample size? The same day they published it they also announced a public offering of more stock. Raised 1.25 billion dollars offering 17 million shares of new stock. Stock jumped 30% on that news release. This is ingenious, raise money when hype for your stock is at alltime highs
Moderna as a stock – should you invest?
Pros:
-True story of Moderna is not about coronavirus, it’s about the revolutionary new way of developing vaccines
-They use AWS by using cloud, IOT, automation, data analytics which is technology of the future
-Whenever I get asked about the future of something, anything, whether a job prospect or a business investment, I always ask “What are they doing to leverage cloud, artificial intelligence, and IOT technology?” If there is no goal in that direction I decline
-Imagine what happened with all retail businesses getting vaporized by amazon because they had no digital presence and everyone was playing catch up, this will be many orders of magnitude greater than that
-Balance sheet is very good
quick ratio is 7.9 based on March’s quarterly filings
this doesn’t even account for the 1.25 billion they raised
This means they have enough liquid assets to pay off their short term debt almost 8 times over before going bankrupt
debt to equity ratio of 0.25
Cons:
-Has already run up over 200% in the past year
-Has no income, just burning through cash until they actually make money
-Could be like remdesivir, where they just charitably give away the vaccine or at cost
-Has no track record, they have never made a successful vaccine
Investing in Moderna is investing in a dream, but dreams have dramatic pay outs if successful as you can see with tesla stock. This is not a company with a history of credibility like Johnson and Johnson or Bristol Meyers. If you weren’t familiar with the story of, then google Theranos and Elizabeth Holmes who basically taught us that if a result is too good to be true then you need to be super cautious.
