Moderna, Inc. (MRNA) shares rallied to an all-time high above $200 in Friday's pre-market after Johnson & Johnson's (JNJ) Janssen vaccine candidate showed inferior results in combating the COVID-19 virus. Johnson & Johnson stock fell more than six points after the news, highlighting disappointment with the reported 66% effective rate and a confusing synopsis that sounded more like a game of Russian Roulette than a hopeful virus treatment.
- Johnson & Johnson reported weaker-than-expected Phase 3 vaccine data than rivals Moderna and Pfizer Inc. (PFE).
- The confusing release and mixed outcomes are likely to lower public acceptance of the compound.
- Moderna stock broke out to an all-time high after the news, while Pfizer rallied 3% and Johnson & Johnson sold off.
Statistics in the convoluted release pointed to 66%, 85%, and even total success, depending on how the data was sliced, unlikely to instill the confidence and trust of Americans stuck in their homes this winter. Food and Drug Administration (FDA) Emergency Use Authorization in the next few weeks could actually make matters worse, with an inferior vaccine shipped to states facing the prospect of angry citizens demanding superior vaccines from Moderna and Pfizer.
Johnson & Johnson surged to an all-time high earlier this week after beating fourth quarter top- and bottom-line estimates and raising first quarter 2021 guidance. It topped out at $173.65 on Tuesday and has now relinquished more than 10 points. Investors are clearly disappointed in the results, despite the positive spin now underway in the media and at health departments. More importantly, the decline is nearing support in the $150s, and a failed breakout is possible.
Moderna rallied more than 40 points in the pre-market to a new high above $218, breaking out above the December peak in the $170s. Wall Street analysts may need to play catch-up, with consensus on Moderna dropping to an "Overweight" rating in recent months, based upon eight "Buy," six "Hold," and two "Sell" recommendations. Price targets currently range from a low of $69 to a Street-high $185. Moderna stock has now blown past the high target by nearly $20, suggesting that many folks will actively avoid the Johnson & Johnson vaccine.
Clinical trials are scientific studies of the safety and efficacy of a new medical drug or other treatment, conducted on human volunteers. In the United States, the results of the studies are a key component of a pharmaceutical or biotechnology company's application for approval from the FDA to introduce the drug to the market.
Moderna Daily Chart (2018–2021)
Moderna came public at $22.00 in December 2018 and sold off into the mid-teens. It broke out to a new high in April 2019, but the rally failed quickly, yielding a slow-motion downtick that posted an all-time low at $11.54 in August. The stock surged to a new high in February 2020 after the COVID-19 outbreak and entered a volatile phase that carved an ascending triangle pattern into an April breakout.
The first rally wave stalled in the mid-$80s in May, while a July breakout attempt failed, giving way to quiet range-bound action into November, when the Pfizer compound triggered a breakout that posted impressive gains into the December high at $178.50. Moderna stock pulled back to the 50-day exponential moving average (EMA) and turned higher into January 2021, trading within 10 points or the prior high on Thursday. It has mounted that resistance level and is likely to test $200 for weeks or longer.
An ascending triangle is a chart pattern used in technical analysis. It is created by price moves that allow for a horizontal line to be drawn along the swing highs and a rising trendline to be drawn along the swing lows. The two lines form a triangle. Traders often watch for breakouts from triangle patterns. The breakout can occur to the upside or downside. Ascending triangles are often called continuation patterns since the price will typically break out in the same direction as the trend that was in place just prior to the triangle forming.
The Bottom Line
Johnson & Johnson's Phase 3 data for the Janssen vaccine showed inferior results compared to the Moderna and Pfizer compounds, triggering a decline in Johnson & Johnson shares while rivals are gaining ground.
Disclosure: The author held no positions in the aforementioned securities at the time of publication, but he has been sheltering in place for months.