Perhaps the best news of all related to vaccines against coronavirus is the amount of good news we have. The development of experimental vaccines has advanced incredibly fast in 2020. Two vaccines with high levels of effectiveness have gained emergency use authorization from the US Food and Drug Administration (FDA). Millions of Americans have already been vaccinated, with many more on the way.
There is more good news now. Here’s why you’ll love it Modernin (NASDAQ: MRNA) latest update of the COVID vaccine.
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A dream scenario instead of a nightmare
Moderna’s CEO, Stephane Bancel, alluded to a “nightmare scenario” in his comments at an event last week. In this scenario, COVID-19 vaccines provide protection against infection with the new coronavirus for a maximum of a few months.
Such a scenario would indeed be a nightmare for everyone who wants to end the pandemic quickly. The challenges of motivating individuals to receive vaccines every few months would be impressive. Vaccination rates are likely to be much lower than health professionals estimate to be necessary to achieve collective immunity.
However, Bancel now thinks that this nightmare scenario is “out of the window”. Because? He said that 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 just got better. There have been some concerns about the potential impact that the new, more communicable strains of the new coronavirus may have on vaccines. Bancel said Moderna should soon establish that mRNA-1273 is highly effective against variants of the coronavirus that have been found in the UK and South Africa.
Assessing the impact
If Moderna’s vaccine provides protection for up to two years, it will be much easier to achieve collective immunity. More people may want to be vaccinated if they know that their immunity will last.
There is also an important impact for Moderna as an investment option. Bernstein analyst Ronny Gal projects that the coronavirus vaccine market will approach $ 40 billion this year. The size of the market in subsequent years depends largely on the length of immunity offered by vaccines.
Gal believes Moderna will earn about $ 11 billion in 2021 with mRNA-1273. Biotechnology expects to produce at least 600 million doses of its coronavirus vaccine this year and sell everything it does.
If we assume that Moderna can generate similar revenues every two years, the company is on track to achieve an average annual revenue of more than $ 5 billion with mRNA-1273. This could make Moderna’s shares appear somewhat expensive for investors, with the company’s market capitalization currently around $ 47 billion. However, a price / sales ratio of 9.4 is not unprecedented for biotechnology stocks, especially considering that Moderna also has a promising pipeline.
Furthermore, this perspective for Moderna is better than what Ronny Gal expected. He modeled for the booster doses needed every three years, instead of every two years. Although a three-year vaccine would have been great for individuals, it would not have been as profitable for Moderna.
A key caveat
Don’t celebrate the impressive length of mRNA-1273 just yet. Stephane Bancel said: “We believe there will be protection potentially for a few years.” The word “potentially” is important. Moderna needs more data before it conclusively determines how long its COVID-19 vaccine protects against infection.
Still, it seems likely that mRNA-1273 (and perhaps other vaccines) will offer immunity against the new coronavirus for at least a year and perhaps even two years. Any duration of protection significantly shorter than this can be problematic for vaccine adoption. Any significantly longer duration would have harmed Moderna’s financial prospects. The one to two year interval is the ideal point for vaccine manufacturers. The good news keeps coming.