Sing along to the tune of “Rudolph the Red-Nosed Reindeer”:
“You know Pfizer and BioNTech, Modern, Astra Zeneca. But do you remember…the most promising COVID-19 vaccine maker of them all?
Many investors may not know which company this admittedly awkward COVID-19 carol is referring to. However, this is one that I think deserves attention: Therapeutic Arcturus ( ARCT -2.11% ). Here’s why you might want to buy this potentially game-changing coronavirus stock right now.
Potentially revolutionary vaccine
Let’s unpack that statement, starting with the claim that Arcturus may have a breakthrough coronavirus vaccine. Is this an exaggeration? I do not think so.
For one, Arcturus’ COVID-19 vaccine candidate, ARCT-021, uses a messenger RNA (mRNA) approach. This is particularly promising given the very high levels of efficacy already reported for the mRNA coronavirus vaccines from Pfizer and Moderna. These other mRNA vaccines also appear to be safe, which bodes well for ARCT-021.
However, Arcturus might find slim choices if its only advantage is the mRNA technology used. With ARCT-021 only in phase 1/2 testing, it will be well behind other leading coronavirus vaccine candidates for its market launch, even if all goes well.
But Arcturus has another advantage, and it’s a big one: all of the major coronavirus candidates, with the notable exception of Johnson & Johnson‘s experimental vaccine, require two doses. ARCT-021, on the other hand, appears to be quite effective with a single dose.
Additionally, Arcturus is developing a freeze-dried (freeze-dried) version of its COVID-19 vaccine candidate to advance to late-stage testing. This version will fit in standard refrigerators, eliminating the need for expensive ultra-cold storage equipment.
Why buy now?
I suspect most investors would agree that a single-dose mRNA vaccine that can be stored in a regular refrigerator could be a game-changer. But why buy Arcturus shares now?
First, phase 2 is historically the watershed phase for experimental vaccines. Fewer than 1 in 4 candidate vaccines that make it to phase 2 clinical studies go on to gain Food and Drug Administration approval, based on data collected by industry trade group BIO. However, nearly three-quarters of candidate vaccines that advance to Phase 3 testing eventually gain approval.
Granted, ARCT-021 hasn’t quite entered Phase 3. However, Arcturus is already in talks with regulators in Singapore to move forward with late-stage testing. I suspect there’s a very good chance that biotechnology will be given the green light to do so.
Second, Arcturus is now cheaper thanks to the company’s announcement of a $150 million stock public offering this week. The biotech stock fell almost 20% on the announcement of the secondary offering. But the company’s outlook has not changed at all. Arcturus’ market capitalization of around $2.4 billion falls far short of its potential if ARCT-021 proves to be a success.
The operative word
Don’t overlook the key word in my statement that you might want to buy this potentially game-changing COVID-19 stock right now. This keyword is could.
Arcturus Therapeutics is not suitable for all investors. This is clinical-stage biotechnology with no approved product (and therefore no consistent source of revenue). The company continues to lose a lot of money. If you are cautious, Arcturus is definitely not a good choice for you.
But the word “could” is a double-edged sword. Some investors might really like Arcturus. The company’s experimental COVID-19 vaccine definitely shows promise, though it still has a long way to go. Arcturus also has another potential pipeline winner with experimental mRNA therapy ARCT-810, which targets the genetic disorder of ornithine transcarbamylase deficiency.
You will need to assess your own risk tolerance to decide if Arcturus is right for you. If so, you might not be more likely to buy that stockpile of coronavirus vaccines than you are right now.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.