When Moderna (MRNA -1.11%) provided its fourth-quarter update in February, the biotech stated that it expected $18.4 billion in sales for its COVID-19 vaccine. However, that outlook was based on advanced purchase agreements in place at that time. Since then, Moderna has lined up more supply deals.

It won't be surprising if the company raises its sales projection to more than $20 billion when it announces first-quarter results Thursday. But there's a good reason to think that whatever its vaccine makes this year could be just the tip of the iceberg. Here's why Moderna just might be able to triple its COVID vaccine sales next year.

Three lines with arrows and dollar signs trending upward.

Image source: Getty Images.

Cranking up capacity

Moderna stated in February that it would be able to produce at least 700 million doses of its COVID-19 vaccine this year. However, the company was shooting to be able to manufacture up to 1 billion doses. It still thinks the high end of that range is possible but announced on April 29 that it anticipates producing a minimum of 800 million doses. 

The even bigger story with Moderna's recent update is that it's funding a massive ramp-up in production capacity for its COVID-19 vaccine that will triple its production beginning next year. The company expects to increase its global capacity for 2022 to up to 3 billion doses.

One key step toward achieving this goal is the expansion of the Moderna Technology Center (MTC) in Norwood, Massachusetts. Moderna plans to increase the production and lab space at the MTC from around 300,000 square feet to close to 650,000 square feet. This expansion will enable the company to increase production of its COVID-19 vaccine by 50% at the site. 

Moderna is also teaming up with key suppliers to boost capacity. Lonza's facility in Switzerland will double its drug substance production for Moderna's vaccine. Rovi's facility in Spain will more than double its capacity related to the COVID-19 vaccine.

You might wonder how a 50% increase at the MTC facility and doubling production at key supplier facilities will allow Moderna to triple its capacity in 2022. Those numbers don't seem to add up. The answer is that Moderna expects to shift significantly to lower-dose COVID-19 vaccines, including potential variant booster vaccines and pediatric vaccines.

Higher demand

Moderna wouldn't be making these investments in increasing its production capacity if it didn't expect higher demand for its COVID-19 vaccine. There are two main reasons why the biotech is so confident.

First, Moderna anticipates that coronavirus variants will fuel demand for booster vaccines. Several variants are spreading rapidly. It's possible, if not probable, that more variants could emerge in the future. Moderna has developed several variant-specific booster vaccine candidates.

Second, the company knows that governments around the world recognize the advantages of messenger RNA (mRNA) vaccines. Moderna CEO Stephane Bancel stated in the company's press release announcing its capacity expansion, "We are hearing from governments that there is no technology that provides the high efficacy of mRNA vaccines and the speed necessary to adapt to variants, while allowing reliable scalability of manufacturing."

Moderna has already lined up one key supply agreement for 2022. Israel plans to buy 7.2 million doses of the company's COVID-19 vaccine. More deals will almost certainly be on the way.

3 times sales in 2022?

There are a few assumptions that must be made to project that Moderna will indeed triple its COVID-19 vaccine sales in 2022. The company must achieve its production goals, of course. It must sell all of the doses that it produces. Also, the price tag for Moderna's vaccine can't decline. 

Are those assumptions reasonable? Probably so. The biggest risk might be with the company's pricing of its vaccine. However, Moderna recently announced a deal with GAVI, the Vaccine Alliance, to supply up to 500 million doses for use in low-income countries. The company said that these doses will be sold at its "lowest tiered price," which indicates that its existing pricing structure remained in place. 

Why hasn't the biotech stock skyrocketed over the last few days with a realistic potential for COVID-19 vaccine sales to soar next year? Investors still don't appear to be convinced that the demand for Moderna's vaccine will be sustainable over the long run. However, the evidence continues to build for the case that Moderna should be able to generate strong recurring revenue for years to come.