Few companies can legitimately claim that they have had a profound impact on human history. Modern (NASDAQ: MRNA) it is undoubtedly an exception. The rapid development by biotechnology of a highly effective COVID-19 vaccine could help end the global pandemic.
It is no surprise that Moderna has been a big winner for investors, with its shares skyrocketing almost 800% since the beginning of 2020. But are Moderna’s shares a buyout now, after this big gain?
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Short-term catalysts
Moderna has already obtained emergency use authorization (USA) for COVID-19 vaccine mRNA-1273 in several countries, including the USA and the European Union (EU). Millions of people received the vaccine. So, is there any short-term catalyst left for the stock? Right.
It is true that the types of catalysts that could be on the way in 2021 are unlikely to move the needle like Moderna’s exciting announcements about mRNA-1273’s effectiveness last year. However, the company can continue to secure additional supply agreements with governments. Countries with existing supply agreements can also increase the number of doses ordered, as the United States has recently done.
Moderna’s shares may rise this year, exceeding Wall Street’s quarterly earnings estimates. One way to achieve this is to administer more doses ahead of schedule. Just this week, the company announced that it expects to fulfill its second delivery of 100 million doses to the United States by the end of May, instead of the end of June, as originally planned. It also plans to deliver the third shipment of 100 million doses to the United States by the end of July – two months ahead of schedule.
Also remember that the pain of another vaccine manufacturer may be Moderna’s gain. If any of its rivals stumble to meet its delivery targets, or if other problems are identified with competing COVID-19 vaccines, Moderna’s stock price would likely rise.
Long-term perspectives
There could be an even better picture for Moderna’s long-term prospects. The company is expected to generate about $ 15 billion with mRNA-1273 this year. Much of this revenue could be recurring if the COVID-19 market were like the seasonal flu vaccine market, and there is a good chance that this will happen exactly.
But the biggest story revolves around Moderna’s pipeline. Biotechnology plans to advance the cytomegalovirus (CMV) vaccine, mRNA-1647, for a final stage study this year. There are currently no vaccines approved for CMV. Moderna believes that mRNA-1647 could generate peak annual sales between $ 2 billion and $ 5 billion if approved.
The company’s mRNA-1893 candidate for Zika vaccine is expected to pass phase 2 testing in 2021. Moderna’s pipeline includes 10 other experimental messenger RNA (mRNA) vaccines and therapies in phase 1 or phase 2 tests. Biotechnology plans to add at least six more vaccine candidates to the list this year, in the initial testing stage: one Epstein-Barr virus (EBV) vaccine, three flu vaccines and two HIV vaccines.
In 2019, the global vaccine market totaled $ 35 billion. More than 80 new viruses have been discovered during the past four decades. Only 4% of these viruses have an approved vaccine on the market in the USA. Moderna’s long-term opportunity is to apply its mRNA technology to target both viruses with existing vaccines, as well as to develop better vaccines for viruses with vaccines already on the market.
Is it still a purchase?
A view of Moderna is that it is overvalued. The company’s market value of around $ 70 billion is much higher than the market value of successful biotechnology companies, such as Biogen and Regeneron. There is no guarantee that Moderna’s recurring revenue will be as likely as it will be in 2021, and its pipeline candidates are still several years away from possible approval.
Another vision focuses on Moderna’s opportunity to shake up 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 rinse and repeat strategy for other viruses.
My view is that there are other biotechnology stocks that are likely to deliver greater returns than Moderna in 2021. However, I continue to think that Moderna is a solid choice for long-term investors with the patience to wait for the company’s mRNA platform fulfill your potential.