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This Is What Will Drive Moderna's Growth Over the Next Decade

By Adria Cimino - Updated Jun 23, 2021 at 8:01AM

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Here's where Moderna is putting its money.

Moderna (MRNA 1.83%) progressed from a clinical stage company to one selling a billion dollar product -- the coronavirus vaccine -- in just a year. But there is a lot more on the horizon for the biotech company. In this Motley Fool Live video recorded on May 28, 2021, Healthcare and Cannabis Bureau Editor and Analyst Olivia Zitkus and contributor Adria Cimino discuss Moderna's investment strategy -- this year and into the future.

Olivia Zitkus: Let's talk a little bit about the rest of Moderna's pipeline. Their pipeline's got lots of interesting stuff, lots of exciting projects, they've got a vaccine for RSV (respiratory syncytial virus) and cytomegalovirus (CMV), Zika virus and some interesting personalized cancer vaccines to name a few. Could we talk a little bit about a strategy to reinvest the massive amounts of revenue it's expecting from it's COVID vaccine into the rest of it's pipeline? How's it doing there so far?

Adria Cimino: We already see that it's begun. The company has invested four times more in R&D in the first quarter of this year than it did in the first quarter of last year. So that's already a good start. It's not too surprising really because we see that now they have the vaccine out. In the first quarter of last year, it was before this whole beginning, so it's logical. Again, the CEO said that he plans on investing intensively in automation, digital, and artificial intelligence in the coming five to 10 years, so this is really a big plan. It's not just about the near term. This is a big investment plan for the long term. If we're talking about the near term, just to give us a taste of what's going on, the company plans to invest three times more in digital this year than it did last year. So that amounts to $170 million. They want artificial intelligence to become part of the DNA of the company, so to use that in all aspects. We're talking from anything from human resources to clinical trials. All of this, it really revolves around various parts of the company, it's not just R&D, it's everything, but in the end, it really amounts to an investment in R&D. Because what they are looking to, is to increase their efficacy as far as getting from point A to point B, to make things very smooth and to have a process so that everything in the pipeline can move through the clinic and we can have an as smooth as possible pathway. That's really what they're trying to do and it's really a long-term goal for the company. Moderna hasn't said exactly how much it will invest in all of this. But we do know, as you mentioned, that they have a lot of profit coming in. So that's a very good sign for that. And we also know that the company has a cash level of more than $8 billion. Between the profit and the cash level, we can see that they have what it takes to fulfill their goals. So, we'll see what they do from here, but it's looking positive.

Adria Cimino has no position in any of the stocks mentioned. Olivia Zitkus owns shares of Moderna Inc. The Motley Fool recommends Moderna Inc. The Motley Fool has a disclosure policy.

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