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The US Department of Health and Human Services has said it is considering an investigation into whether Moderna Therapeutics [NASDAQ:MRNA] fully disclosed information on government funding in patent applications that relate to its COVID-19 vaccine candidate, as well as work on a Zika vaccine. A spokesperson from the HHS confirmed this with The Armchair Trader on Tuesday afternoon.

Moderna has received funding from multiple government agencies for its vaccine research, but has not been declaring this funding as part of its patent applications, according to Knowledge Ecology International, an NGO focused on better outcomes in the management of knowledge resources. This has already led to an investigation into patents filed by Moderna by the US Department of Defense research arm.

Moderna’s CEO, Stephane Bancel, has already told the market that the company was pausing its trial of its COVID vaccine to ensure ethnic diversity among participants.

Moderna accepted $2.5bn in US government funding for development and supply of the vaccine. It has also taken a $1.5bn order for 100m doses from the government, with the option for another 400m doses. This could equate to more than $8bn in sales to the US government alone, hence the heady $24bn valuation for the company.

Moderna stock trading among insiders has been unusually high recently. Over 70 insiders dumped more than 12m Moderna shares in the last three months, versus a single insider acquisition of 50,000 shares, according to NASDAQ data. This clearly points to a view among senior insiders that Moderna is cruising well above realistic valuation levels.

Moderna stock has dropped in price recently, from $72 on 10 August to $62 at market open on Tuesday. Its peak was $95 in July, but by the looks of things, the faith is being lost.

We are, however, living in a climate where there is plenty of money chasing biotech stocks on the trail of a viable COVID vaccine.

Vaccines face refrigeration challenge

One of the potential concerns arising with the Moderna vaccine could be how the vaccine is distributed, since if it requires ultra cold storage, this could raise some serious logistics issues. The US Centres for Disease Control (CDC) in known to be concerned that some of the leading candidates, including from Moderna and Pfizer, could require the sort of temperatures to store that would limit the ability of many US clinics to distribute them. This, according to leaked analysis from SVB Leerink, the specialist healthcare investment bank.

Pfizer has argued that its vaccine can be held at standard medical refrigerator temperatures for up to two days, and is also working on shipping containers that would employ dry ice to ship vaccine. Moderna has argued that its candidate can be stored at -4 F making it more competitive than the Pfizer vaccine. According to Moderna CTO Juan Andres, this puts it in the range of normal domestic freezers.

“Of course, industrial, well-monitored freezers for pharmaceuticals will be used for storage and shipment,” Andres told analysts in a call last week. “The point here is that the infrastructure is widely available, and we do not need specialist equipment to use our vaccine.”

Moderna has been issuing more shares as its stock price has climbed, fuelling the feeding frenzy with more issues. We have seen two separate equity offerings this year, which raised $1.84bn for the firm. Insiders continue to sell shares into the market, and this could be having an impact on the share price.

The ability to successfully distribute a vaccine is going to be critical, and is something investors looking at pharma stocks pursuing a COVID solution should be aware of, as there are other candidates that are employing what is called a protein sub-unit approach, that can use more robust storage conditions.


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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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