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Moderna (MRNA) is expected to join the S&P 500 index on Wednesday, replacing Alexion Pharmaceuticals Inc. (ALXN). The stock has skyrocketed amid the pandemic after its vaccine became essential in the fight against the coronavirus.
Moderna stock has “taken on a life of its own,” Jefferies managing director and senior research analyst Michael Yee told Yahoo Finance (video above). “It’s embedded in a huge amount of assumptions over the next ten years that have yet to materialize. People believe it is the Tesla of biotechnology.
That the biotech company was so well recognized and valued at over $ 113 billion was not a safe bet. For those who invested early in the business, this bet paid off.
“Think how quickly they didn’t find anything a year ago, and all of a sudden they’re making $ 21 billion and injecting their drugs into hundreds and hundreds of millions of people safely. “Yee said. “It’s a pretty big achievement.”
Moderna’s rise to recognition
The Cambridge, Massachusetts-based biotech company was founded in 2010 and spent its first two years in stealth mode developing drugs using messenger RNA (mRNA).
The promise of mRNA – what Moderna calls “the software of life” – in pharmaceuticals has been enormous. Modified mRNA teaches cells how to make the proteins needed to fight and prevent infection. By altering the four letters of an mRNA sequence, this new class of drugs can, in theory, target a wide range of diseases. The mRNA platform also promises to speed up the time needed to select, develop and manufacture vaccines.
On those high expectations, Moderna reached a valuation of $ 1 billion in two years. Initially, the company focused its efforts on treatments for cancer, cardiovascular problems and certain rare diseases. However, the developers were faced with the problem of delivering mRNA to cells – too high doses pitted the body’s immune system against the drug while too low doses proved ineffective in fighting the disease.
Over time, the company turned to researching vaccines, which CEO Stéphane Bancel said would demonstrate the viability of the technology. Moderna had nine vaccines that went into clinical trials, although none managed to take off.
That changed when a deadly global pandemic struck, starting a vaccine race in the United States between Moderna and pharmaceutical titans like Pfizer (which also developed an mRNA vaccine in partnership with BioNTech) and Johnson & Johnson.
The company’s decade of research into the basic science behind mRNA has been instrumental in its success in developing a vaccine for the coronavirus in record time. On January 11, 2020, Chinese scientists revealed the genetic sequence of SARS-CoV-2. On February 24, 2020, Moderna shipped the first doses of its mRNA coronavirus vaccine to NIAID to begin phase I trials. And in December 2020, phase III trials demonstrated 94.1% efficacy against Symptomatic COVID-19. The FDA then approved Moderna’s vaccine for emergency use in the United States, Canada, and the European Union.
Moderna’s COVID-19 vaccine is its first and only commercially available product. Thanks to strong demand for the vaccine, the company recorded its profitable first quarter in the first quarter.
The company currently has 23 other vaccines and therapeutics in its pipeline, including vaccines against influenza, HIV, and cytomegalovirus (CMV), which causes birth defects in newborns, all using the same mRNA technology. which has been validated since the deployment of COVID. -19 vaccine.
“I think based on your long-term perspective on what this company might do and all of the drugs in development that could theoretically come up over the next 10 years, based on that perspective, it could and should be one. of the world’s largest biotech companies, ”Yee said.
A bull market in biotechnology
The biotech industry has accelerated tremendously over the past few years, and any setbacks over the past six months must be seen in that context, Yee also noted.
“This is one of the biggest biotechnology bull markets in the past three years,” he said, citing high valuations along with a record number of financings, investments and introductions. in stock exchange.
Going forward, Yee expects more M&A activity. “Some of the big companies that are more mature, I think, are having a hard time. And the way they have solved that problem is often by buying smaller companies,” he said. “Overall, things have always been very good for biotechnology.”
Grace is Associate Editor for Yahoo Finance and UX Editor for Yahoo Products.
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