If you're a lucky Moderna (MRNA 3.06%) shareholder, congratulations. Now that the stock has reached a sky-high valuation, though, you're probably wondering if it's time to sell. After all, U.S. pharmaceutical giant Merck (MRK -0.15%) recently disclosed its sale of a stake in Moderna it had held since 2015.

Blindly following others in an attempt to time short-term stock price movements isn't a winning investment strategy. Still, it's probably a good time to consider what Moderna's underlying business needs to accomplish to meet the stock market's growing expectations.

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What the market expects from Moderna

Moderna's market cap has swollen to around $57 billion at recent prices. To put that in perspective, Regeneron (REGN 1.73%) -- a commercial-stage biotechnology company with a long track record of producing successful new drugs -- has a market cap of around $54 billion.

Moderna still doesn't have any approved products to sell, so the stock's inflated price now won't last unless it's on a path to produce Regeneron-sized cash flows.

Regeneron's operations earned $3.1 billion from successful products that generated $9.2 billion in top-line revenue over the past year. Investors can reasonably expect significantly more in the foreseeable future.

What investors can expect from Moderna

If Moderna's coronavirus vaccine candidate, mRNA-1273, is authorized for emergency use, it will likely generate a great deal of revenue in 2021. Yet those cash flows probably won't last very long. A bottomless well of government funding for potential coronavirus vaccines means mRNA-1273 will face an unprecedented level of pressure from competing vaccines on the way.

The next candidate in Moderna's pipeline, mRNA-1647, could become the first widely available vaccination for cytomegalovirus (CMV). There's much less competition in the CMV arena, so a successful launch could eventually lead to annual sales above $1 billion. That figure could remain high for quite a while as competition for this overlooked infectious disease slowly catches up.

Unfortunately, Moderna's programs that don't relate to the pandemic aren't progressing at the same pace as mRNA-1273. The company doesn't plan to begin a years-long phase 3 study to support an upcoming application for mRNA-1647 until next year.

Without a source of revenue beyond mRNA-1273, Moderna will most likely begin reporting significant losses again in 2022. The company will likely enjoy just a brief moment of profitability fueled by temporary coronavirus vaccine sales.

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Pipeline limitations

Vaccine production can be a lucrative business, but it's an uphill slog compared to developing drugs meant to be taken repeatedly for long periods. Among the 20 top-selling drugs this year, 19 are intended for repeat dosing. A pneumonia vaccine from Pfizer (PFE 0.11%) called Prevnar 13 was the only single-dose drug on the list.

All of the drugs Moderna's developing deliver genetic instructions in the form of messenger RNA (mRNA) to produce therapeutic proteins. For example, mRNA-1273 delivers instructions for the spike protein found on the surface of the virus responsible for COVID-19. 

When Moderna began collecting significant capital in 2015, the company intended to produce repeat-use medicines. Yet there's a huge problem with mRNA technology. Immune systems can't differentiate between therapeutic strands of mRNA and RNA that viruses have been using to hijack cellular processes since life began. 

Moderna and its mRNA peers have made impressive progress that allows safe delivery of therapeutic mRNA strands once or twice. Unfortunately, it doesn't look like there will be any use for Moderna's drug development platform beyond vaccines.

Time to sell

If Moderna were the only company developing mRNA vaccines, it could have a chance to produce several top-selling drugs over the next decade. Unfortunately, increased demand for Moderna's mRNA vaccines will only spur competition from BioNTech, CureVacArcturusTranslate Bio, and dozens of smaller biotechs that are also depending on mRNA-based discovery platforms.

Without an apparent path to produce the cash flows investors are expecting, Moderna's going to have a hard time convincing shareholders not to run for the hills. That could happen tomorrow, next month, or next year, but you don't want to be holding the bag when it does.