Despite the current market turbulence, historical data suggests that equities still have a strong chance of delivering solid returns over the next five years. The key, as always, lies in stock selection. This article focuses on two healthcare companies—Moderna (MRNA) and Abivax (ABVX) —that are making significant clinical progress but carry above-average risk. For investors with a high tolerance for volatility, these two biotechs could be compelling “five-year” bets.
Moderna’s stock has already surged approximately 73% this year, driven by continued breakthroughs with its mRNA platform. Compared to traditional vaccines, mRNA vaccines offer key advantages, including faster production times and the ability to elicit stronger, more targeted immune responses. Beyond its well-known COVID-19 vaccine, the company is rapidly expanding its pipeline:
Risk Consideration: Moderna’s future hinges on clinical and regulatory success. Any setbacks, such as trial failures or approval delays for its key pipeline candidates, could trigger sharp price swings. This is a level of uncertainty that more conservative investors should be prepared for.
France-based Abivax is attempting to disrupt the highly competitive ulcerative colitis (UC) drug market. The differentiator for its lead candidate, obefazimod, lies in its mechanism of action. Unlike traditional immunosuppressants, obefazimod aims to deliver strong efficacy while avoiding the serious drawbacks of competitors, such as the “black box” warnings for cardiovascular risks associated with JAK inhibitors.
In a Phase 3 study, obefazimod met its primary endpoint of clinical remission in patients with moderate-to-severe UC. Notably, about 47.3% of enrolled patients had previously failed other treatments, including JAK inhibitors. If approved, obefazimod could challenge well-established drug franchises that currently generate billions in annual revenue.
Key Catalyst: The company is expected to release data from a maintenance study in UC patients during the second quarter of this year. A positive result could act as a major catalyst for the stock.
Risk Consideration: Abivax currently has no commercialized products, making its valuation almost entirely dependent on the clinical and regulatory success of obefazimod. Any disappointing data could lead to extreme stock price volatility.
Moderna and Abivax are both at pivotal stages in their clinical development, each with distinct and differentiated advantages in mRNA technology and immunology. If their respective clinical programs continue to deliver positive results, both companies have the potential to significantly outperform the broader market over the next five years. Conversely, they also face the risk of drawdowns well above the market average.
For investors who can tolerate high volatility and are willing to take a long-term view, both Moderna and Abivax warrant a spot on their watchlist.
