Scottish Mortgage Investment Trust (LSE: SMT) shares have found their groove again in recent months. They’re now up around 30% in 12 months. And in 2024 alone, they’ve advanced 10% to 890p (that’s better than the FTSE 100 year to date).
Clearly, Nvidia‘s staggering performance has helped, as has strong share price gains for Temu owner PDD Holdings over the last year.
Meta Platforms stock has also done well since it was reintroduced into the portfolio a few months ago.
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This is encouraging because these are large Scottish Mortgage holdings. The picture isn’t as pretty down the bottom of the portfolio, but that shouldn’t be a big negative long term. It’s the top end that really matters.
Here, I’ll consider one major holding that has also been surging higher recently. Given its heavy weighting, it could boost further returns for the trust if progress continues.
Bird flu outbreak
I’m talking about messenger RNA (mRNA) vaccine pioneer Moderna (NASDAQ: MRNA). The stock has been on a tear, doubling in value since November.
This is partly down to an outbreak of bird flu spreading among dairy cows. Moderna shares have risen 35% since 1 April, when the second known human case in the US was reported.
A third person recently tested positive after having contact with cattle carrying the H5N1 virus. And while no human-to-human transmission has been reported yet, the US government isn’t taking any chances.
Reports say federal funding could be heading the way of Moderna and vaccine rival Pfizer to test experimental shots against several strains of the virus (including the circulating one).
On 30 May, Moderna told Reuters that it had already completed dosing in an early-to-mid stage study of the vaccine, and it expects data from this soon.
A software firm in disguise
In a nutshell, we have here the reason why Scottish Mortgage managers believe Moderna could become a transformational growth company.
The speed at which its mRNA platform can tweak code to summon up effective vaccine candidates on demand is astonishing. This is why I’m invested in this stealthy software company.
Just as Nvidia’s GPUs have uses beyond computer graphics, mRNA technology offers a wide range of applications outside of Covid vaccines.
Already, we’re seeing very encouraging data from trials of a personalised mRNA skin cancer vaccine that activates the body’s immune system to identify cancerous cells and remove them.
There’s the potential this could work in indications outside melanoma, with trials for non-small cell lung cancer vaccines ongoing.
Above £10?
Naturally, there are risks with Moderna, as there are with Scottish Mortgage shares. One is a return of inflation, which could keep interest rates higher for longer and heap pressure on both share prices.
Plus, Moderna’s at the mercy of clinical trials, which can always go wrong at any stage. It has over 40 drugs in development, including a vaccine for AIDS. Crucially though, it has the wherewithal ($13.3bn at year-end) to fund these programmes.
On 31 May, the company had its second mRNA product approved for respiratory syncytial virus (RSV). It expects to return to sales growth in 2025 following a massive post-Covid drop-off in demand.
If more progress follows in the coming months, I expect excitement to build and potentially push Scottish Mortgage shares above £10.
