Moderna's (MRNA -3.00%) vaccine is successfully helping people avoid the coronavirus. The billion-dollar product has demonstrated more than 90% efficacy in adults. And new data show it's 100% effective in teens. But Moderna faces one big challenge that could wreak havoc on how well its vaccine protects the population. And that's the rapid emergence of variants.

The vaccine has handled them so far. Moderna even says one of its booster candidates may be ready by fall. One of the candidates specifically targets the South African variant. But the biotech company realizes it can't constantly chase the next variant. It has to stay a step ahead. Let's take a closer look at how Moderna plans to do that -- and what it means for investors.

A person operates digital interface technology.

Image source: Getty Images.

Investing "intensively"

Moderna gave us a hint a few weeks ago. During the company's earnings call, CEO Stephane Bancel emphasized Moderna's commitment to artificial intelligence (AI). He said the company planned on investing "intensively" in AI, automation, and digital over the coming five to 10 years.

Fast forward a few weeks to the company's annual Science Day. Here, Moderna said one major way to stay ahead of variants involves AI and machine learning. They help predict strains that may "escape" protection provided by current vaccines. Based on this, Moderna will be able to create next-generation vaccines and boosters before need becomes critical.

Researchers worldwide have made available on a database more than one million genome sequences of SARS-CoV-2 since the virus emerged. Moderna uses a special app to quickly review sequences as soon as they appear. The company then selects variants to explore in depth.

From here, Moderna examines the situation from various angles and using various tools. Researchers look at the prevalence of particular variants over time by location. They use structural mapping of neutralizing antibody contact sites to determine where "escape" from protection is likely to happen. And they perform deep mutational scanning on a library of mutations. This helps scientists understand the possible mutations available to a virus so that it may continue to progress and infect. Moderna also examines sequencing information from coronavirus infections that may occur in its clinical trials or out in the real world.

Tomorrow's coronavirus

All of this is key for one big reason: The coronavirus we're fighting today may not be the same as the one we'll fight a year from now. We've seen a steady emergence in variants over the past several months. It's possible that will continue. To maintain leadership, companies must be able to address new variants before they gain ground.

Moderna is a leader now. The company is set to generate $19.2 billion in product revenue this year according to advance purchase agreements. And the potential availability of a booster this fall may get the ball rolling when it comes to handling variants. But what makes me even more confident about Moderna's prospects in the coronavirus space are the efforts to stay ahead of the variants rather than chase them.

Of course, rivals are working to handle variants too. Pfizer is testing a variant-specific vaccine and expects to report data this summer. Smaller rival Inovio Pharmaceuticals is investigating a "pan-COVID" vaccine to handle all variants -- the company expects to start a clinical trial this year.

But here are two reasons why that shouldn't worry Moderna investors. First, considering the worldwide need for vaccination, there is room for more than one player to generate billions annually in this space. And second, from a timeline and technology perspective, Moderna seems to be ahead of the pack right now. So, Moderna has a good chance of becoming a leader when it comes to handling variants.

All of this means Moderna's nearly 180% share price gain over the past year isn't the end of the story. It's probably just the beginning. It's important to remember that the stock is trading at only seven times forward earnings estimates. And it's trading at 26 times sales.

MRNA PE Ratio (Forward) Chart

MRNA PE Ratio (Forward) data by YCharts

Considering these numbers and the points I mention above, Moderna shares aren't expensive at these levels. The good news for Moderna investors and potential investors? It's not too late to get in on shares of this biotech company -- and reap rewards over the long term.