Moderna (MRNA 0.94%) has been one of the most talked-about stocks over the past year. The biotech company became the first to bring a coronavirus vaccine candidate into clinical testing -- and the second to bring a vaccine to market -- and using a new technology, to boot. That's why the company's shares also have been big movers over the past year and have climbed more than 140% during that time.
But there's more to Moderna than one-time vaccine sales and a quick share gain. Let's take a look at the three things about Moderna that the smartest investors know. (And that's why they're holding onto the shares.)
Image source: Getty Images.
1. The coronavirus vaccine story has just started
Moderna's product has fully vaccinated 47 million Americans since its launch in late December. By the end of July, the company will have delivered 300 million vaccine doses to the U.S.
It's the leading vaccine provider in the U.S., along with Pfizer. And the company has many contracts beyond the U.S., including one for more than 300 million doses with the European Commission. All of this equals $19.2 billion in product sales this year.
But the important thing to note is that this is just the beginning for coronavirus vaccine sales. Experts expect the coronavirus to be around well into the future, and that means more vaccines. Moderna is working on strain-specific boosters to deal with the coronavirus of the future and aims to make the first one available this fall. This represents an additional revenue opportunity.
Companies haven't yet said for sure how often we'll need to vaccinate populations. But Pfizer's CEO recently said an annual vaccine is likely.
All of this means Moderna can count on its vaccine as a recurring source of revenue. And this revenue will probably be in the billions as countries stock up on enough doses to vaccinate at least most of their citizens.
2. mRNA goes beyond COVID-19
Everyone's been talking about Moderna's coronavirus vaccine, but the company's working on many other exciting programs -- all involving the same mRNA technology. Moderna uses messenger RNA to teach the body how to produce proteins that can prevent or treat disease.
Moderna's closest-to-market candidate is a cytomegalovirus (CMV) vaccine. The investigational vaccine produced positive seven-month phase 2 data and is heading into phase 3 later this year. CMV is a common virus that's a concern for pregnant individuals or those with compromised immune systems. Moderna also has two cancer candidates and a heart disease candidate in phase 2 trials.
Farther down the road, the following two programs could represent significant revenue opportunities: I'm talking about Moderna's HIV and seasonal flu programs. The company plans on starting phase 1 trials for those candidates this year. Seasonal flu represents another possibility for annual sales, and an HIV vaccine could be a major breakthrough. Today, there's no cure for the virus that leads to the potentially deadly acquired immunodeficiency syndrome (AIDS).
3. The shares trade at a bargain
Some investors may think Moderna shares look expensive due to their increase over the past year. But when we take a look at earnings to come, they actually are a bargain. Right now, Moderna is trading at only six times forward earnings estimates.
MRNA PE Ratio (Forward) data by YCharts.
It's important to keep in mind that, as mentioned above, Moderna probably will generate recurrent coronavirus vaccine revenue. And this is the company's first and only product. So in the coming years, we can expect at least one or two other products to reach commercialization and add to revenue. All of this isn't priced in at the current level, in my opinion.
Of course, there will be dips in the stock price here and there. And it's impossible to predict the future with 100% accuracy. But investors who hold onto shares of this innovative biotech company likely will benefit in the long term because Moderna is in a good position to produce stellar revenue, profit, and share-price growth in the years to come.
