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What Are Moderna's Risks?

By Keith Speights - Jan 24, 2021 at 5:10AM

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Three especially stand out.

Moderna (MRNA 0.70%) is a high-flying biotech stock with a big year ahead of it. The company should make billions of dollars in 2021 from sales of its COVID-19 vaccine mRNA-1273. 

In this Motley Fool Live video recorded on Jan. 13, 2021, Healthcare and Cannabis Bureau Chief Corinne Jurney Cardina and writer Keith Speights spoke about the risks that remain for Moderna even with the tremendous success of its coronavirus vaccine.

Corinne Cardina: Just to put a damper on things, are there any risks with this stock that investors should be aware of? Is it an mRNA technology sufficiently protected from any companies that might want to copy it? Any thoughts on that?

Keith Speights: Yeah, there are risks. Absolutely.

One of the biggest risks is just valuation risk. I think there are investors who are concerned that maybe Moderna has shot up too much, too quickly. Their market cap is approaching $50 billion. I haven't looked at it in the last hour and it could've changed, but certainly the 40s, in the upper 40s, and 40 billion plus.

Some investors might say that valuation already reflects a lot of their potential for their COVID vaccine and some of their pipeline candidates are going to be several years out before that could potentially reach the market. So maybe if they have any bumps in the road the stock, it's all, that could very well happen.

The other thing to remember with Moderna is there's competition. They're not the only player in the mRNA market. There are other companies, including one we talked about already, BioNTech (BNTX 1.32%), that are also mRNA pioneers.

Just because Moderna has this promising pipeline, it doesn't necessarily mean that they'll be the winner in any of those categories. There's always that possibility.

You always have to assume there is a risk of pipeline failures. Just because Moderna has had tremendous success with mRNA-1273, any of these other candidates could flop in clinical testing.

Cardina: Absolutely. I'll just throw out there, Moderna is actually using another company to do some of its manufacturing of this vaccine. It's called Catalent (CTLT 0.00%). So I'm going to toss that ticker in. If you're a little bit scared by Moderna, but you are looking for some exposure to some of the COVID vaccine manufacturing that might be interesting. I don't know that much about Catalent. Keith, are you familiar?

Speights: I've looked into Catalent a little bit, but I'm certainly no expert on that stock. But I know there has been a lot of interest in it. I've even had some maybe some email questions on it before, but I haven't delved into it deeply enough to speak knowledgeably on it.

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Stocks Mentioned

Moderna, Inc. Stock Quote
Moderna, Inc.
$144.27 (0.70%) $1.01
Catalent, Inc. Stock Quote
Catalent, Inc.
$109.61 (0.00%) $0.00
BioNTech SE Stock Quote
BioNTech SE
$134.04 (1.32%) $1.75

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