Moderna (NASDAQ:MRNA) not only posted its first profit this past quarter, but that first profit also totaled more than $1 billion. And this year promises to be a double-digit billion-dollar year in terms of revenue. The biotech company's advance purchase agreements for its coronavirus vaccine this year represent $19.2 billion in sales.
This isn't a surprise. Investors know this is going to be a good year for Moderna. One big question mark, though, is about the future. Many wonder if vaccine makers will see vaccine sales trail off even as soon as next year. What happens at that point could be crucial for Moderna. It will determine whether the vaccine is a one-time contributor -- or a product the company can count on for lasting revenue. Something CEO Stephane Bancel said during the recent earnings call gave investors a big clue about what's ahead.
Everyone needs vaccination
Since we're in the midst of a pandemic now and pretty much everyone needs a vaccination, it's logical to think peak vaccine sales would happen this year. Once the pandemic is over, fewer people might opt for vaccination. But Bancel paints a different scenario.
"As we look into 2022, we are investing to distribute and dose supply capacity because we believe the market need -- could be greater in 2022 than in 2021," Bancel said.
And if we look at the situation closely, Moderna likely is right. First of all, experts say the coronavirus will stick around. So once the pandemic ends, the virus still will circulate -- perhaps like the seasonal flu. That means countries still will aim to vaccinate their citizens. Moderna's experiences support this. The company says it is in supply discussions for 2022 with all of the countries that ordered the Moderna vaccine in 2021.
We also should keep in mind that new groups will become eligible for vaccines. For instance, right now Moderna is studying its vaccine in teens and kids. The company recently said an initial analysis showed 96% efficacy in teens. Now it's discussing a possible amendment to its Emergency Use Authorization with regulators to cover use in this age group. The kids study is ongoing. Use in these groups -- if authorized -- would broaden use of the vaccine next year and into the future.
Reporting more data
Demand for vaccines also may grow as Moderna reports more data -- and eventually wins full approval. Some people who hesitate to take an authorized vaccine may be less reticent about a fully approved one.
Another factor that will translate into more sales has to do with the need for a booster. Moderna is testing various booster candidates. And so far, the candidates are showing they can boost immunity against strains of concern. So, we can imagine each person may need three doses of vaccine. The initial two doses -- and then a booster down the road. In Moderna's current trials, participants are receiving the booster candidates six to eight months after having received the initial two vaccine doses.
It's still not clear how often people will need full vaccination. Moderna in the past has said its vaccine probably would protect for at least a year. Still, experts have said we may need coronavirus vaccines on an annual basis -- again, like the seasonal flu.
OK, so this shows us that countries will buy vaccine doses well into the future. But how do we know they'll go for Moderna's over those of rivals?
The vaccine's profile probably will help. The Moderna vaccine doesn't require on-site dilution. Rival Pfizer's mRNA vaccine does. And the Moderna vaccine doesn't require ultra-cold temperatures like the Pfizer vaccine. But Moderna isn't stopping here. Moderna asked the U.S. Food and Drug Administration to approve an update to its storage guidelines. Right now, the vaccine is authorized for storage at refrigerator temperatures for one month. But Moderna says it actually can be stored at those temperatures for three months. And Moderna is working on new formulations to further improve the product's shelf life.
Moderna said it's also in talks with governments that didn't order its vaccine this year -- but want it for 2022 due to its storage profile.
And all of this is why Moderna decided to invest some of its $8.2 billion in cash in a manufacturing ramp up. The company raised its capital investment forecast for this year to the range of $450 million to $550 million from the range of $350 million to $400 million. Moderna aims to produce as many as 1 billion doses this year and as many as 3 billion next year.
Bancel's statement may seem surprising at first. But as you can see in the points here, there are plenty of ways vaccine revenue can climb next year -- and beyond. If demand is indeed greater in 2022 than it is today, vaccine sales should be greater too. And that may equal strong long-term share performance.