If you’re like me, penny stocks are something you root for. Many of these companies are in their development stages. So who doesn’t want to see the Cinderella story of turning something small into something much more significant than anticipated? The last few years have become some of the craziest for stocks and retail traders, specifically. We’ve seen the rise of the Apes, meme stocks, and NFTs emerge as new trends.
There’ve also been plenty of other popular discussion topics, including low float & short squeeze stocks. But you can’t ignore other big developments in the stock market. These are more fundamental or “old school” compared to what today’s traders are used to. With the Russell 2000 Small-Cap ETF (NYSE: IWM) surging right now, this story couldn’t have come at a better time, in my opinion; let me explain.
Moderna (NASDAQ: MRNA) Patent Problem
One industry that is full of speculation is biotech. FDA trial results aren’t even half of the catalysts to look at either. Patents are a big piece of the puzzle. If you’ve been a reader of ours for long enough, you’ve likely become familiar with this ongoing situation involving popular vaccine company Moderna (NASDAQ: MRNA) and one lesser-known small-cap company, Arbutus Biopharma (NASDAQ: ABUS).
We’ve discussed Arbutus countless times over the last year. Much of the attention lately come from a situation pitting Arbutus and Moderna at odds. The two conflicted over Arbutus’s lipid formulations for nucleic acid delivery. Earlier this year, the European Patent Office said that its 069 patent related to lipid formulations was “Inventive” (valid). The statement was in agreement with the US Patent and Trademark Office, which granted a notice of allowance.
Moderna ultimately moved forward with an appeal. If Arbutus was found to be in the right, it was seen as an opportunity that could open the doors for eligibility to receive royalties from Moderna’s COVID-19 vaccine sales. Arbutus, on the other hand, argued Moderna had no standing to appeal those decisions since Moderna suffered no adverse impacts in relation to the patents.
On October 7, the United States Court Of Appeals For The Federal Circuit heard arguments from Arbutus and Moderna, which began the flood of speculation surrounding both companies and what would transpire depending on how things were decided.
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Arbutus v. Moderna > Rocky v. Ivan Drago?
There are few instances where smaller companies have a fighting chance to go up against heavyweights in their respective industries. In many cases, things get thrown out, settled out of court, or mysteriously vanish into the deep abyss of small-cap space. However, in this instance, Arbutus has continued going the distance, with news this week appearing to have made it all worthwhile.
The U.S. Court of Appeals for the Federal Circuit confirmed that findings from a patent review board upheld parts of the 2 Arbutus patents on drug-delivery technology because “Moderna has no standing” to appeal.
With this latest bout of headlines, two significant moves were made in the stock market today. Shares of ABUS stock surged to fresh 2021 highs. Meanwhile, MRNA stock slipped lower for the second day in a row. So far this week, Moderna’s shares have dipped over 12%.
More Questions Than Answers For Moderna?
Unless you’ve been asleep for the last few weeks, you’ve seen the wild swings in the market. A mix of virus fears thanks to the new Omicron variant mixed with inflationary concerns have acted as the fuel for this fire. The former saw the heat turned up even higher on November 30 thanks, in part, to comments from Moderna’s CEO, Stéphane Bancel made comments that there could be a “material drop” in the effectiveness of current vaccines when it came to the Omicron variant. Bancel also warned it might be months before drugmakers could create new formulations to fight this new form of the virus.
“I just don’t know how much because we need to wait for the data. But all scientists I’ve talked to … are like ‘this is not going to be good.'”
These comments seemed to have sparked another sell-off in the markets as PTSD of global lockdowns struck speculative flights to safe havens and out of equities. In a complete 180 on December 1, officially from the World Health Organization (WHO) appeared to go entirely against this angle of fear of an even worse variant with markets fiercely bouncing back.
The organization called for calm as it measured the impact and side-effects of the Omicron variant. Officials have also stated that early indications appear to demonstrate that this “variant of concern” has resulted in mild cases without any sign of severe instances so far. Now, more questions than answers are apparent, with differing arguments from the WHO and Moderna.
ABUS Stock Forecast
The last few months have become very active for ABUS stock. This doesn’t only concern the situation with Moderna but also with the company’s current pipeline developments as well. During the third quarter, Arbutus achieved several key milestones. It dosed the first patient in a Phase 2a trial combining its AB-729, Peg-IFNα-2a, and nucleos(t)ide analog (NA) therapy in chronic HBV infection. The company also started an Investigational New Drug application enabling studies for its oral PD-L1 program, designed to “reawaken the immune system,” which it believes is an essential piece for curing HBV.
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Arbutus has also extended its reach via collaboration initiatives. Assembly Biosciences, Vaccitech, and Antios Therapeutics are evaluating AB-729 as an agent in combination treatment. With Assembly’s capsid inhibitor, Vaccitech’s T cell therapeutic, and Antios’ site polymerase inhibitor, AB-729 has several development processes underway. The most near-term event involves Antios, which is planning to add a cohort to its ongoing Phase 2 trial this quarter. The trial is evaluating AB-729 and Antios’ ATI-2173 and Viread.
With so much in the works, it’s not a bad idea to see what analysts think about ABUS stock right now. So if you’re looking for the ABUS stock forecast, here’s where firms most recently weighing in on the company sit:
- Chardan Capital: Buy
- HC Wainwright: Buy, $8 price target
- JMP Securities: Market Outperform, $9 price target
Will Arbutus Continue To Shine After This Moderna Beat?
Today was a big day for Arbutus, and with numerous upcoming events, this could remain one of the companies on the watch list. Thanks to this win against Moderna right now, we’ll see how more details unfold and emerge as chances are this is one piece of the larger saga to keep track of.
