A Deep Dive On Coronavirus Vaccine Plays Moderna, Inovio

Among the six coronavirus vaccine candidates that have entered human trials, two belong to publicly listed U.S. companies: Moderna Inc MRNA and Inovio Pharmaceuticals Inc INO. Both stocks have rallied in reaction to updates on R&D and funding.

Moderna is up about 143% year-to-date and Inovio is higher by 265%.

Moderna, Inovio's Vaccine Candidates

Both Moderna and Inovio use a modern approach as opposed to conventional vaccines that employ a weakened form of the pathogen, a killed pathogen or specific pieces of pathogen such as its protein, sugar or capsid.

Moderna is developing mRNA-1273, an mRNA vaccine, against the new coronavirus in collaboration with the Vaccine Research Center at the NIH's National Institute of Allergy and Infectious Diseases. It is a vaccine against SARS-CoV-2 encoding for the spike, or S, protein.

Inovio's investigational vaccine candidate is a DNA vaccine codenamed INO-4800. DNA vaccines consist of bacterial DNA, aka plasmid, which are genetically engineered to produce a specific antigen/protein from the pathogen. Once injected into the host, an immune response is triggered.

See also: Moderna Gains More Than 40% This Week: What You Should Know

Moderna's Coronavirus Vaccine Timeline 

Moderna confirmed March 16 that it has dosed the first participant in the Phase 1 trial of mRNA-1273. The study is being conducted by the NIH under an investigational new drug application. Unveiling the study design, Moderna said about 45 healthy adults ages 18-55 are being administered a two-dose vaccination schedule, with the doses given 28 days apart. The participants are to be followed for 12 months after the second vaccination.

The study will test three dose levels, according to the company: 25, 100 and 250 micrograms.

The NIH subsequently altered the Phase 1 protocol to include six more cohorts, with three cohorts of older adults ages 56-70 and three cohorts of elderly adults ages 71 and above.

Moderna also said it has started manufacturing vaccine material for a planned Phase 2 trial in a larger population that's scheduled for the second quarter. The company said it hopes to conduct the study under its own IND. A late-stage study is planned for the fall of 2020.

The manufacturing of the first batch of the vaccine candidate was funded by the Coalition for Epidemic Preparedness Innovations. Last week, the company announced $483 million in funding from the federal Biomedical Advanced Research and Development Authority to accelerate development.

A commercially available vaccine is not likely for at least 12-18 months, although under emergency use, it could be made available for some people, including health care professionals, in fall 2020, the company said in a March 23 filing, citing Moderna President Dr. Stephen Hoge, who spoke on TV.

Inovio CEO Gives 12-18-Month Vaccine Timeline

Inovio commenced a Phase 1 trial in early April, with the company dosing the first patient April 6. The company enrolled 40 healthy volunteers for the study in Philadelphia and Kansas City.

Following administration of two doses of INO-4800 four weeks apart, initial immune responses and safety data are expected to be available by late summer. The company said additional preclinical studies, including challenge studies, will continue in parallel.

In mid-April, Inovio said it received $6.9 million in funding from the CEPI to run a Phase 1/2 study of INO-4800 in South Korea. The company has received funding from the Bill and Melinda Gates Foundation.

Inovio's CEO Joseph Kim said in a CNBC interview the company is on track to meet the 12-18-month timeline suggested by NIAID Director Dr. Anthony Fauci.

Others are not as optimistic. It will take the vaccines at least five years to clear full regulatory approval, Fierce Pharma reported, citing analytics firm Clarivate, which used a machine learning-driven approach to calculate the probability of success. 

Clarivate sees a low probability of success for the vaccine candidates, with Inovio better positioned with a 15% probability of success compared to Moderna's 5%, as the mRNA approach in vaccine development is unproven.

The estimated timeline could be cut short if the FDA chooses to authorize for emergency use, according to Fierce Pharma. 

Moderna, Inovio's Solid Pipeline Prospects, Strong Cash Positions

Moderna has a deep pipeline of assets, ranging from vaccines to secreted and cell surface therapeutics to immuno-oncology products, regenerative therapies and intracellular therapeutics.

For fiscal year 2019, the company reported revenue of $60.21 million, with $48.04 million coming from collaborations and $12.17 million from grants. As of Dec. 31, 2019, the company had cash, cash equivalents and investments of $1.26 billion.

Inovio's pipeline includes immunotherapies targeting multiple cancers.

"2020 could prove to be transformational as it is a year of multiple clinical readouts, including the P3 REVEAL-1 study of lead candidate VGX-3100 in cervical dysplasia and INO-4800 as a potential prophylactic vaccine for COVID-19," Cantor Fitzgerald analyst Charles Duncan said in a recent note. 

Inovio reported revenue of $4.1 million for the fourth quarter of 2019 and had cash, cash equivalents and short-term investments of $89.5 million as of Dec. 31.

Are Moderna, Inovio Trades Irrational Exuberance Or Prudent Bets?

Both Moderna and Inovio shares are actively traded, with average volumes of 15.94 million and 34.14 million, respectively, according to the Yahoo database.

Moderna's short interest has increased from 20.15 million as of Feb. 28 to 23.66 million as of March 31. Insiders hold about 23.95% of the stock and institutions 53.65%. The short percent of float is 9.97% and the short ratio is 1.31.

Short interest in Inovio has increased from 16.14 million as of Feb. 28 to 20.65 million as of March 31. The short percent of the float is also high at 14.49%, while the short ratio is a low 0.35.

Notwithstanding the investor exuberance, the sell-side is guarded in its reaction. Although the average analyst rating for both Moderna and Inovio is a Buy, the average price target is $41.56 for Moderna and $10.57 for Inovio, according to Yahoo. These represent discounts to the current levels at which the stocks trade. 

The skepticism apparently stems from the view that any COVID-19-related stock spikes are transitory.

Investments in treatments and vaccines would offer limited economic value to the developer, and therefore, many of the COVID-related moves in specific biotech stocks may be potentially short-term in nature, Nomura Instinet's Christopher Marai said.

MRNA, INO Price Action

Moderna shares were trading down 4% at $48.48 at the time of publication Monday, while Inovio shares were down 4.12% at $13.99. 

Related Link: BioNTech, Immunic Soar On COVID-19 Developmental Updates