Moderna (MRNA 1.01%) is about to make a boatload of money from its COVID-19 vaccine. The main question, though, is: Just how big is the boat? In this Motley Fool Live video recorded on Jan. 13, 2021, healthcare and cannabis bureau chief Corinne Cardina and Fool.com writer Keith Speights discuss how big the market for Moderna's coronavirus vaccine could be.
Corinne Cardina: Now, we are going to pivot into some deeper dives, into the three stocks that have a vaccine authorized in the U.S. Let's start with Moderna.
They were not the first one to be authorized in the US. They were actually the second, but I want to talk about this company. They're based in Cambridge, Massachusetts. They are only 10 years old and they have really been a pioneer in mRNA. Its ticker is actually mRNA.
They've been working on this technology long before mRNA was in our lexicon due to the coronavirus. The COVID vaccine is its first product on the market, but it does have a nice, extensive pipeline. It was a huge performer in 2020, up 434 percent. Today, it is a $46-billion market cap company, which is not nothing for a company that just got its first commercialized product.
Keith, can you walk us through what you think Moderna's biggest growth prospects are, and a little bit more about its total addressable market with the COVID-19 vaccine? Obviously, the world is its total addressable market, but in terms of what it can manufacture.
Keith Speights: Yeah. Moderna came out, I think it was last week, Corinne, and said that they are expecting to be able to manufacture at least 600 million or so doses in 2021 of their vaccine. They're hoping to up that number. They're hoping to get up to one billion, but right now, as it stands, its around 600 million. They'll sell all of those doses. They already have supply deals in place that basically absorb everything they can make. Right now, capacity is their limiting factor.
Bernstein analyst Ronny Gal did some calculations and he thinks that Moderna could make about $11 billion this year on sales of its COVID vaccine. I think that could be on the low side, because like I said, I think Moderna is going to work very hard to try to expand their production capacity. If they're able to do that, I think they will find a market for those additional doses. I would say that Ronny Gal's estimate of $11 billion is a minimum. I think that's at least what Moderna will do this year.
Then, the big question is, "What about 2022 and going forward?" The answer to that hinges on how long the duration of protection will be for these vaccines? Actually, Ronny Gal was factoring in his model that booster shots would only be needed every three years. He was thinking the market would really drop off quite a bit after 2021.
However, Moderna has come out recently -- based on what they're seeing in their studies thus far, they're thinking that their vaccine will provide protection for at least a year, and maybe up to two years. Even if you go with the two years, that will mean more frequent vaccinations than what the Bernstein analyst was modeling for.
We really don't know exactly at this point what the addressable market will be on a go-forward basis for Moderna. But if you said that they can make $11 billion at least this year, and let's say the vaccine does provide protection for two years, every couple of years, people would have to get more vaccines. Realistically, Moderna could be looking at five or six billion dollars a year from their COVID vaccine.
Now, there are other factors at play, Corinne, that could change that significantly, either upward or downward, but I don't think that's out of the question at all that the ballpark of five or 6 billion a year on an annualized basis is very possible for Moderna.
Corinne Cardina: It totally is. I know we started this segment by saying, "Beware of false precision." That's exactly what this is.
I think there's several instances of false precision to be aware of here. One is that estimate about immunity duration. They're getting to that number by looking at their trial participants and how their antibody levels have changed over three, four months, and they're extrapolating. They're saying, "If your antibody level falls x percent over this many months, a year is this many months." We actually don't know at what level that those antibodies would not be effective against the coronavirus. That's another big question mark. The CEO has come out and made these projections, but it's by no means a sure thing and we're still learning a lot about how this virus behaves. That's something to be aware of.
Keith Speights: Yeah. I've all along just anticipated. This was just a hunch. This is a false precision. This is just a hunch that we'll probably looking at having booster shots perhaps annually and probably no less frequently than every two years. I don't think we're going to be lucky enough to have a vaccine, get protection for three years.