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Market Gains on Powell's Speech and Moderna's Vaccine

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Big news from the world of potential vaccines for COVID-19 this morning: Massachusetts-based Moderna (MRNA - Free Report) , a clinical-stage pharmaceutical developer, has released positive results on its phase 1 study for its COVID-19 vaccine candidate. All 8 subjects tested showed higher levels of antibodies than those typically found in a patient who had recovered from COVID-19 naturally. The vaccine is also considered well tolerated.

Phase 1 testing is not human-based; the test subjects thus far are mice. Pharmaceutical companies are required to pass their drug candidates through three separate trial phases, which at the very least take months to complete. But this news comes sooner and more positive than analysts had been expecting, and shares are up 35% in early trading this Monday. Shares of the Zacks Rank #2 (Buy)-rated company are up 330% year to date.

One week ago, Moderna shares shot up on news that the U.S. Food & Drug Administration (FDA) had given a Fast-Track designation to the vaccine candidate, and its shares rose to nearly $67 per share. Now near $90, MRNA is currently trading nearly 5x higher than its IPO price of $18.60 back in December 2018. Prior to this announcement, Moderna had a Value - Growth - Momentum score of F; certainly its current price will keep its Value score where it is, but perhaps this very good news about the vaccine candidate will bring the stock to a higher plateau.

That said, we would do well to keep in mind these pharmaceutical obstacle courses are routinely difficult to navigate. Consider news from the Oxford candidate for COVID-19 vaccine over the weekend: tests on rhesus monkeys were unsuccessful in registering immunity to the disease. The drug may yet show signs of efficacy in treating COVID-19, but appears to be less than “silver bullet” status.

The market is taking this Moderna news and running: the Dow is now racing ahead 660 points (which would bring it breakeven on the year), the Nasdaq +130 and the S&P 500 +70. We are still a ways out from a reliable vaccine for the coronavirus pandemic, but every positive step brings us closer to the light at the end of the tunnel.

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