Modern (NASDAQ: MRNA) is already on its way to billion-dollar revenue this year. The company said in February that pre-purchase agreements for its coronavirus vaccine translated into $ 18.4 billion in sales. And the number may have even increased since then. There is no doubt that Moderna’s vaccine will yield a return on the field this year.
However, some investors are worried about the income next year. This is because vaccine manufacturers have not yet determined how often people should be vaccinated. So will these billion-year-olds be a regular thing? Or is this year an exception? Moderna’s chief medical officer, Tal Zaks, presented an important clue during his presentation last week at The Economic Club in New York. Here are the six words that could mean billions for Moderna next year – and every year.
Image Source: Getty Images.
The billion dollar words
Zaks said the Moderna club are on course to have a booster shot ready by the end of this year. The booster is intended to better protect against new problems. And Moderna could possibly update such a product as new variants emerge.
The biotechnology company has aggressively moved into this area – although the two-dose vaccine against British and South African strains has been kept in vitro tests. Last month, Moderna launched a study to include 60 volunteers who have already received the vaccine. Researchers give some participants a strain-specific stimulation candidate aimed at the South African strain. And they give others a combination of a third vaccine dose plus the boost candidate.
According to Zaks, one of these candidates will probably be ready for use a year after the launch of the Moderna vaccine. The US Food and Drug Administration (FDA) granted emergency vaccination permission in December last year.
If the FDA also authorizes an enhancer, someone who has been fully vaccinated with the Moderna vaccine may return at some point for this new sting.
800 million doses
This is what it means for revenue in 2022. Let’s first look at Moderna’s orders for regular doses for vaccines. The company has agreed to deliver about 800 million doses to more than a dozen countries. It is reasonable to expect that the countries will follow this up by giving promotion to individuals who have already received the original two-dose regimen. This means that Moderna is possibly on track to deliver at least 400 million booster doses.
Let us now look at the potential for revenue. We do not know exactly how much Moderna charges each country for vaccine doses. This can vary according to the order size and other factors. But let’s look uniquely at the USA. Here we can use the price paid in the original supply agreement as a guideline. This is $ 15 per dose. The US has so far ordered 300 million doses of Moderna’s vaccine. If the government intends to provide a booster for each vaccine recipient, it will then order 150 million booster doses. And that could amount to about $ 2.3 billion.
We can imagine that these promotion commissions will come in early 2022, as countries want to fully protect their citizens. So, whether full vaccinations are needed annually or not, Moderna could bring in billions more in revenue next year and beyond.
What does this mean for investors?
Stephane Bancel, CEO of Moderna, said earlier this year that the two-dose vaccine could provide protection for several years. It is possible that this will be the case – and that amplifiers will be given between full vaccinations to deal with variants of concern. But Moderna is still collecting trial data. It is possible that the company will stipulate that complete vaccinations must take place once a year – and at a certain time in between.
I would not worry if Moderna would earn more revenue in certain years due to large vaccine orders, and less next year if governments did not have to order the full vaccination of their population. Over time, between full vaccinations and potential boosters, revenue generally needs to remain strong. This is good news for Moderna’s long-term income – and for long-term investors in this innovative biotechnology company.
This article represents the opinion of the author, who may not be in agreement with the ‘official’ recommendation position of a Motley Fool premium advisory service. We are furry! Questioning an investment thesis – even one of our own – helps us all to think critically about investments and to make decisions that help us become smarter, happier and richer.