Few companies can legally claim to have had a profound impact on human history. Modern (NASDAQ: MRNA) is probably an exception. The rapid development of the biotechnology of an extremely effective COVID-19 vaccine could help put an end to the global pandemic.
It is no surprise that Moderna has been a big winner for investors, and that its shares have soared by almost 800% since the beginning of 2020. But is the Moderna share now a buy after this big profit?
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Short-term catalysts
Moderna has already obtained emergency permits (EUA) for COVID-19 vaccine mRNA-1273 in several countries, including the US and the European Union (EU). Millions of people have received the vaccine. So are there short-term catalysts left for the stock? Certainly.
Granted, the kinds of catalysts that would be on the way in 2021 are unlikely to move the needle, like Moderna’s exciting announcements about the effectiveness of mRNA-1273 last year. However, the company can continue to enter into additional supply transactions with governments. Countries with existing supply agreements may also increase the number of doses, as the US has done recently.
Moderna’s shares could move higher this year by beating Wall Street’s quarterly revenue estimates. One way to achieve this is by delivering more doses sooner than expected. Just this week, the company announced that it expects to complete its second delivery of 100 million doses to the US by the end of May instead of the end of June, as originally expected. It also plans to deliver the third shipment of 100 million doses to the US by the end of July – two months ahead of schedule.
Also remember that the pain of another vaccine manufacturer may be the benefit of Moderna. If one of its competitors stumbles to reach their delivery targets, or if other problems with competing COVID-19 vaccines are identified, Moderna’s share price is likely to rise.
Long-term prospects
There may be a better picture for the long-term prospects of Moderna. The company should generate about $ 15 billion from mRNA-1273 this year. Much of it could be recurring revenue if the COVID-19 market is like the seasonal flu vaccine market, and there is a good chance this will happen exactly.
But the bigger story focuses on the pipeline of Moderna. The biotechnology plans to study the cytomegalovirus (CMV) vaccine candidate mRNA-1647 at a late stage this year. There are currently no approved CMV vaccines. Modern thinks that mRNA-1647 could generate between $ 2 billion and $ 5 billion in annual sales if approved.
The company’s Zika vaccine candidate mRNA-1893 should move to Phase 2 testing in 2021. Moderna’s pipeline contains ten other experimental vaccinations against messenger RNA (mRNA) and therapies in phase 1 or phase 2 testing. Biotechnology plans to add at least six more vaccine candidates to the list at an early stage this year: an Epstein-Barr virus (EBV) vaccination, three flu vaccines and two HIV vaccines.
In 2019, the global vaccine market amounts to $ 35 billion. More than 80 new viruses have been discovered over the past four decades. Only 4% of these viruses have an approved vaccine on the market. Moderna’s long-term opportunity is to apply its mRNA technology to target both viruses with existing vaccines, and to develop better vaccines for vaccines with vaccines already on the market.
Still buying?
One view of Moderna is that it is too high. The company’s market capitalization of nearly $ 70 billion is much higher than the market capitalization of successful, established biotechnologies such as Biogen and Regeneron. There is no guarantee that Moderna’s recurring revenue will be as much as it is likely to make in 2021, and its candidates for the pipeline are still a few years from potential approval.
Another view focuses on the opportunity of Moderna to sharpen the vaccine market in the coming years. The company has shown what it can do with its COVID-19 vaccine and plans to follow a flush-and-repeat strategy targeting other viruses.
My view is that there are other biotechnology stocks that are likely to deliver a greater return in 2021 than Moderna will deliver. However, I still think Moderna is a good choice for long-term investors with the patience to wait until the company reaches the mRNA platform. its potential.