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Moderna is a biotech company that came to fame on the back of its mRNA technology that helped one of the world’s most important pharmaceutical companies produce a Covid vaccine at extraordinary speed.

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mRNA stands for “messenger Ribonucleic Acid” which is a molecule that carries genetic instructions telling a cell to produce a certain protein associated with its target. The immune system sees the protein and learns to attack cells or pathogens displaying it. When combined with AI, mRNA becomes a powerful medical tool – AI can sift through vast amounts of biological data and help decide what instructions to write, whilst mRNA delivers that instruction. The company has a diverse pipeline looking for the cures for the four “big killers”, heart disease, cancer, infectious diseases and autoimmune ones.

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So, what happened? At the beginning of 2020 their share price stood at around US$20 before rising by over 2000%* on the discovery of the vaccine.  It then fell by over 90%* as demand for the vaccine collapsed, revenues fell and the company returned to heavy losses. Healthcare is not a one-way bet. The sector benefits from powerful long-term trends, ageing populations, rising healthcare spending and scientific innovation, but those tailwinds do not translate automatically into investment returns.

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Covid was never meant to be the end of the mRNA story; it just happened to be the first that caught the public’s attention. The question was always, what comes next? We may now be getting the answer.

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Moderna and Merck, the American drug company, have been developing an individualised cancer treatment called ‘Intismeran’.  Instead of giving every patient the same vaccine, scientists analyse the mutations in an individual’s tumour and create an mRNA treatment specifically designed to teach that patient’s immune system what to attack. The latest results in high-risk melanoma are potentially significant, and the market reaction has been extraordinary with the shares up over 100%* this year alone.

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The attraction of mRNA is that it is essentially a platform technology. The ultimate promise of mRNA is not simply that Moderna discovers another blockbuster drug, it is that mRNA becomes a programmable platform from which many different medicines can be created and tailored to the individual patient.

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Since the beginning of 2020 the Investment Association Healthcare sector has significantly underperformed the MSCI World Index which is one reason we do not buy into the sector. We prefer instead to access companies such as Moderna via our active investment trust managers, such as Scottish Mortgage that have held the NASDAQ quoted company since 2020. Other healthcare related firms that Scottish Mortgage have within their stable are Tempus, who have built the world’s largest library of clinical and genomic data which will give physicians better insights and therefore better client outcomes, and KSQ Therapeutics that uses gene-editing technology to identify genes that appear to hold back the body’s T-cells from attacking tumours and effectively turns these off with the aim of making those cells more affective in attacking cancer.

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As investment managers we keep searching, questioning and listening to the specialist managers we select to ensure that new ideas and emerging opportunities are continually considered for the monies we manage on your behalf.

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*01/01/2020  to 19/08/2026

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Comments from James Scott-Hopkins, Founder of EXE Capital Management.

The views are those of the author only.

The above does not constitute a recommendation to buy specific funds or assets. The value of investments can fall as well as rise. Past performance is no guarantee of future returns.‍‍

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