Five of the most promising stocks
Many companies are trying to establish a foothold in mRNA technology, but few have yet to achieve the necessary scale, or the capabilities in research and development, of front-runners such as Moderna or BioNTech, says Andy Acker of Janus Henderson. Of the two, Moderna (Nasdaq:
MRNA) is probably the purest play as it is actively developing treatments for everything from flu jabs and vaccines for RSV to cancer therapies and treatments for rare diseases. Covid jab fatigue has hit sales, plunging the company into losses, but Moderna’s profits during the pandemic mean that it has more than enough money to tide it over until its drugs are approved. Moderna’s main rival, BioNTech
(Nasdaq: BNTX), has a slightly different model. Rather than just focusing on treatments that involve mRNA, it also focuses on cancer, using a range of additional approaches, including cell therapies and protein-based therapeutics. Still, most of its work is based on mRNA and it has no less than 20 mRNA therapies undergoing clinical trials at the moment. Of these, seven are in phase II and two in phase-III trials, meaning that they may be approved in the next year or two. Like Moderna, BioNTech is losing money at the moment, but has a strong balance sheet thanks to the success of its Covid vaccine during the pandemic. It has more than $16bn worth of net cash, which should last it for several years until some of its treatments start to reach the market.
Another firm that is a key part of the mRNA revolution is Arcturus Therapeutics Holdings (Nasdaq: ARCT). It currently has a Covid vaccine approved, with two others in late-stage trials. But its most interesting treatments in the pipeline are for cystic fibrosis and ornithine transcarbamylase deficiency, which can cause liver failure and death. It is losing money, but is expected to return to profitability in 2025 and is currently trading at 2.48 times 2025 earnings. CureVac (Nasdaq: CVAC) is another biotechnology company with a large number of mRNA treatments in the pipeline, which it is developing in conjunction with drug company GSK. In CureVac’s case these mainly focus on infectious diseases, ranging from a Covid jab aimed at new variants, to other conditions, such as rabies and flu. Earlier this month it announced positive interim data from the second-stage trial of its flu jab, and is also working on a host of genebased cancer treatments.
mRNA therapies, like other genetic treatments, are underpinned by the ability to screen genomes quickly in order to find mutations. Pacific Biosciences (Nasdaq:
PACB) is one of the global leaders in developing and building the technology that allow such screening to take place quickly. Like other companies in the field, this is a high-risk investment given that it is still losing money. However, the fact that sales have doubled since 2020, and are expected to nearly double again over the next two years, suggests it is a bet that is worth taking.