Investors itching for an extra booster shot of vaccine-themed equities have a new exchange-traded fund (ETF) to inject into their portfolio.
YieldMax has struck again, this time sticking its single-stock synthetic covered call strategy to lead Covid-19 vaccine producer Moderna, Inc (“MRNA”).
On Monday, October 23, the YieldMax MRNA Option Income Strategy ETF launched on the New York Stock Exchange, Arca, under the ticker “MRNY.”
Zega Financial will not hold Moderna stock directly like the other ETFs in its signature suite of covered call funds. Instead, it will try to generate monthly income for investors by selling/writing call options on MRNA. The YieldMax fund seeks to bring in strong yields while giving investors capped participation in MRNA’s price gains.
“With earnings season upon us, investors are turning to potentially faster-growing companies,” VettaFi’s Todd Rosenbluth commented on the fund. “This new ETF provides exposure but with the potential benefit of income generation.”
The pandemic offered Moderna a once-in-a-lifetime growth opportunity. Starting out 2020 priced under $20, the biotech company’s stock soared to its all-time high just shy of $450 in September 2021 – an eye-popping 2,200 percent growth spurt. Even if investors had not timed the peak perfectly and purchased $5,000 worth of the stock in March 2020, that sum would still be worth over $26,000 in March 2023 – a handsome return for just a three-year investment.
Yet, nothing lasts forever, not even Covid. With the health crisis firmly in the rearview mirror, the biotech firm has experienced an almost inevitable sell-off as demand for its primary product wanes.
October hasn’t been kind to Moderna’s stock price. The company lost almost $7 billion in market value last week after rival Pfizer slashed its profit expectations, heralding a deepening decline in demand for Covid-related vaccines and products. Moderna, which started the year near the $200 mark, is now trading under $80.
Yet, there are areas for new growth on the horizon.
Moderna is collaborating with a host of companies on a range of new cancer vaccine vaccines. Chief among them is its work with fellow biotech firm Merck. The two companies are already running a Phase 3 study of the drug candidate (which uses the same messenger RNA platform as Moderna’s blockbuster Covid vax) in patients with lung cancer. They also are developing bespoke alternatives to Merck’s Keytruda drug, which is typically administered in melanoma patients after surgery. They are trialing a vaccine that has been found to reduce the likelihood for cancer spreading or leading to death in melanoma patients by 65% vs. Keytruda alone.
In addition to its program with Merck, Modena is also readying to work with small biotech firm Immatics (IMTX) and China’s Carsgen on new cancer regimens.
Investors will want to consider the long-term prospects for further growth for Moderna, along with the management cost of the YieldMax fund.
The MRNY comes with an expense ratio of 99 basis points.