As the stock market attempts to reverse the recent pullback this month, Moderna shares climbed higher on Thursday after the company announced that it’s creating a dual-purpose vaccine booster shot that offers protection against both the coronavirus and the seasonal flu.
The new vaccine booster, which the biotech company calls mRNA-1073, combines Moderna’s current coronavirus vaccine with a flu shot that’s also being refined, according to a press release. Shares of Moderna surged more than 7.25% since the announcement.
“Today we are announcing the first step in our novel respiratory vaccine program with the development of a single dose vaccine that combines a booster against COVID-19 and a booster against flu,” CEO Stephane Bancel said in a statement Thursday. “We are making progress on enrolling patients in our rare disease programs, and we are fully enrolled in our personalized cancer vaccine trial. We believe this is just the beginning of a new age of information-based medicines.”
The communication arrives following Moderna’s auspicious launch of its mRNA-based two-dose COVID-19 vaccine, which was authorized for emergency use by the Food and Drug Administration late last year. Since that time, over 147 million of the Moderna shots have been disseminated in the U.S., according to data compiled by the Centers for Disease Control and Prevention.
Moderna’s and Pfizer’s vaccines are the first examples of mRNA vaccines being officially approved for use in humans, but mRNA technology has been under development for years. The mRNA-based COVID-19 vaccines function by triggering the body to generate a harmless piece of the virus, which in turn propagates an immune response. The whole process is rumored to be less tedious than traditional vaccines, which typically employ killed or weakened virus particles to induce an immune response.
Bancel had previously told CNBC that the company had wanted to generate a booster shot that would offer protection against both COVID-19 and influenza.
“What we’re trying to do at Moderna actually is to get a flu vaccine in the clinic this year and then combine our flu vaccine to our Covid vaccine so you only have to get one boost at your local CVS store … every year that would protect you to the variant of concern against Covid and the seasonal flu strain,” Bancel said in April.
“I want to make sure there are boost vaccines available in the fall so that we protect people as we go into the next fall and winter season in the U.S.,” he said at the time while appearing on CNBC’s “Squawk Box.”
Financial experts were invigorated by Moderna’s news as well, with some, like Morgan Stanley analyst Matthew Harrison, adding nearly $150 to his price target on an raised outlook for the biotechnology company’s coronavirus vaccine sales. Harrison raised his price target on Moderna’s stock by about 77%, to $337 from $190.
“We continue to see COVID-19 revenues declining over time, but we do not see that starting to happen until 2023/2024 versus our prior estimate of 2022,” Harrison wrote in a note to clients. “We have also added in the potential for a combination COVID/respiratory vaccine.”
“While we believe there is long-term upside for Moderna, we believe the significant valuation increase associated with the success of the COVID-19 vaccine limits the near-term upside,” Harrison added.
Moderna also announced Thursday that it is developing a pediatric vaccine, called mRNA-1365, which would combine vaccines for respiratory syncytial virus and human metapneumovirus.
Although the U.S. seems prepared to begin administering coronavirus booster shots, there is still some hesitancy from global leaders, who note that a number of lower and middle-income countries continue to have issues administering the vaccines for their people.
To that end, Tedros Adhanom Ghebreyesus, Director-general of the World Health Organization (WHO), requested a moratorium on booster shots until 2022.
“We have been calling for vaccine equity from the beginning, not after the richest countries have been taken care of,” Tedros said at a Wednesday news conference. “I will not stay silent when companies and countries that control the global supply of vaccines think the world’s poor should be satisfied with leftovers.”
Meanwhile, for ETF investors, the Moderna booster shot news could be especially significant for biotech ETFs as well.
The Defiance Nasdaq Junior Biotechnology ETF (IBBJ) is up almost 2% on Thursday, for example.
BBJ follows the Nasdaq Junior Biotechnology Index (NBIJR), the small-cap offshoot of the widely tracked Nasdaq Biotechnology Index (NBI). The junior index limits components’ market values to $5 billion when those names are admitted. That cap can bear fruit for investors.
Meanwhile, the ProShares Ultra Nasdaq Biotechnology ETF (BIB) gained a similar amount Thursday.
BIB is a leveraged option for investors looking for exposure to biotechnology and pharmaceuticals during bullish times for the industry. The fund captures twice the daily return of the underlying Nasdaq Biotechnology Index before fees and taxes. The exposure resets daily, and as such does not provide a simple 2x multiplier on the return of the underlying index.
Finally, the Invesco Dynamic Biotechnology & Genome ETF (PBE) is another ETF to consider.
PBE is part of the suite of Dynamic ETFs from PowerShares, using quant-based screening to identify component companies that may be poised for outperformance relative to a broad-based universe. It is a bit more expensive, however.
For investors looking to trade biotech stocks using ETFs, there is some support from analysts as well.
“Biopharma is still trading at a low multiple (15.5x 2021 P/E, 14.0x 2022 P/E); we think the entire group could benefit from an improving political/regulatory backdrop and a resurgence of M&A in 2H21/2022,” explained Bank of America recently.
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