The best news of coronavirus vaccines is perhaps just how much good news there was. The development of experimental vaccines was remarkably rapid in 2020. Two vaccines with high efficacy levels have been approved by the US Food and Drug Administration (FDA) for emergency use. Millions of Americans have already been vaccinated, with many more on the way.
Now there is more good news. Here’s why you’ll love Modernsay (NASDAQ: MRNA) latest update of the COVID vaccine.
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A dream scenario instead of a nightmare
Moderna CEO Stephane Bancel referred to an event last week in a “nightmare scenario” in his comments. In that scenario, COVID-19 vaccines provide protection against infection by the new coronavirus for only a few months.
Such a scenario would be a nightmare for anyone hoping to end the pandemic quickly. The challenges of motivating individuals to receive vaccines every few months would be staggering. Vaccination rates are likely to be much lower than what health workers estimate is needed to achieve herd immunity.
However, Bancel now thinks this nightmare scenario is “out the window.” Why? He stated that the antibodies generated by Moderna’s mRNA-1273 vaccine decay very slowly. Based on the data analyzed so far, Moderna believes that its vaccine can provide protection for up to two years.
The news got even better. Concerns have been raised about the potential impact that the new, more transmissible strains of the new coronavirus could have on vaccines. Bancel said that Moderna should soon establish that mRNA-1273 is very effective against variants of the coronavirus found in the United Kingdom and South Africa.
Evaluating the impact
If Moderna’s vaccine provides protection for up to two years, it will become much easier to achieve herd immunity. More individuals may want to be vaccinated if they know that their immunity will be prolonged.
There is also a significant impact on Moderna as an investment option. Bernstein analyst Ronny Gal estimates that the coronavirus vaccine market will approach $ 40 billion this year. How large the market will be in the following years depends largely on the duration of the immunity offered by the vaccines.
Gal thinks that in 2021, Moderna will earn about $ 11 billion from mRNA-1273. The biotechnology expects to produce at least 600 million doses of its coronavirus vaccine this year and sell everything it produces.
Assuming that Moderna can generate similar revenue every two years, the company is on track to catch up with the average annual revenue of more than $ 5 billion from mRNA-1273. This could make Moderna’s shares seem somewhat expensive to investors, with the company’s market capitalization currently around $ 47 billion. However, a price-to-sales ratio of 9.4 is not unheard of for biotechnology stocks, especially considering that Moderna also has a promising pipeline.
These prospects for Moderna are also better than Ronny Gal expected. He modeled that every three years farm booster shots are needed instead of every two years. Although a three-year vaccine would have been good for individuals, it would not have been as profitable for Moderna.
An important reservation
Do not celebrate the impressive duration of mRNA-1273 yet. Stephane Bancel said: “We believe there may be some years of protection.” The word ‘potential’ is important. Modern needs more information before it can finally determine how long the COVID-19 vaccine will protect against infection.
Yet it seems likely that mRNA-1273 (and perhaps other vaccines) will provide immunity to the new coronavirus for at least one year and perhaps up to two years. Any protection period that is significantly lower than that can be problematic for the acceptance of the vaccines. Any significant duration would have harmed Moderna’s financial prospects. The range of one to two years is the sweet spot for vaccine makers. The good news is just coming.