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3 Reasons Why Investing in Coronavirus Vaccine Stocks Is a Sucker’s Game

Last Updated September 23, 2020 1:54 PM
Mark Emem
Last Updated September 23, 2020 1:54 PM
  • Biotech firms developing coronavirus vaccines have surged in recent weeks as cases and deaths rise.
  • The history of vaccine development is riddled with failure.
  • None of the recent human coronavirus strains have a vaccine yet despite SARS appearing nearly two decades ago.

Global coronavirus cases are now over three million, while deaths have surpassed the 200,000  mark. The hit to the global economy has been severe, with the IMF expecting worldwide economic growth to decline to -3% in 2020 .

It seems reasonable to expect that the biotech firm(s) that successfully develops a coronavirus vaccine will make a killing. Some biotech firms working on a COVID-19 vaccine have already soared to record highs in the stock market.

Moderna Inc (NASDAQ:MRNA), which is developing the COVID-19 vaccine codenamed mRNA-1273, is up 115% year-to-date .

MRNA stock has skyrocketed in recent months. | Source: TradingView 

Inovio Pharmaceuticals (NASDAQ:INO) is up nearly 350%  since the year started. The biotech firm is developing a coronavirus vaccine tentatively named INO-4800.

MRNA has notably rallied in the past few days after announcing that its coronavirus vaccine candidate will proceed to the Phase II study in Q2 .

High Failure Rate Makes Coronavirus Vaccine Stocks a Gamble

On the surface, investing in these stocks looks like a no-brainer. But the rallies in these stocks is driven more by mere hope than anything else. Too many risks and unknowns could quickly turn these investments into duds.

Traditionally, vaccine candidates have a high failure rate. History shows that only 6% of vaccine candidates make it to the market . You only need to look at recent examples.

Over the last few years, some of the world’s most prominent outbreaks have been the Severe Acute Respiratory Syndrome (SARS), Middle East Respiratory Syndrome (MERS), Zika, and Ebola.

While numerous organizations devoted resources to developing vaccines for each of those epidemics, only an Ebola vaccine has been successful. The U.S. Food and Drug Administration approved the Ebola vaccine  last December.

Source: Twitter 

Ebola has been around since the 1970s, though. It took over four decades to successfully create a vaccine.

The Ebola disease has existed since 1976 | Source: Center for Disease Control and Prevention 

The Coronavirus Vaccine Space Is Too Crowded

There are dozens of coronavirus vaccines in various stages of development around the world.

Besides Moderna and Inovio, other biotech firms that are in the hunt for a vaccine include Johnson & Johnson (NYSE:JNJ) , Pfizer (NYSE:PFE), and Biocryst Pharmaceuticals (NASDAQ:BCRX) . Others include Sanofi, CanSino Biologics, and GlaxoSmithKline.

More than 100 coronavirus vaccine candidates are being developed around the world, according to some estimates. Simply put, the field is overcrowded with both private and public sector players.

Source: Twitter 

With such a high number of coronavirus vaccine candidates globally, the chances of multiple vaccines entering the market at or around the same time are high, if efforts are successful.

While everyone impacted by the pandemic would wish these efforts are fruitful, for the biotech firms, it will mean they will not enjoy exclusivity. They can forget about making super-profits.

Will COVID-19 Go the Way of SARS and MERS?

Epidemics are unpredictable, and COVID-19 could go away just like other human coronavirus strains of the last two decades. The novel coronavirus might not be any different from the (SARS) and (MERS), all of which died out, and efforts to develop a vaccine fell apart. The WHO estimates that a vaccine, if successful, is 18 months away. By then, the scene could have changed dramatically.

Additionally, vaccines take a long time to be approved by regulators. By some estimates, it could take up to half a decade before such a vaccine is approved .

Source: Twitter 

Again, a lot could change, including the novel coronavirus disappearing all by itself if containment measures succeed. SARS came under control after public health measures , including isolation, quarantine, and contact tracing were put in place.

Then there will be no urgency for the vaccine. Banking on vaccine hopes is not guaranteed to be a moneymaker.

Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.