When Dr. Stephen Hoge speaks, people listen. Hoge is president of Moderna (MRNA -0.81%), a drugmaker that's been one of the biggest winners in the COVID-19 vaccine market. He heads up the company's research and development and has been with Moderna since 2012.
Last week, the Associated Press talked with Hoge about Moderna's messenger RNA (mRNA) technology platform and what might happen next in the fight against COVID-19. There was one statement that he made that was especially important for investors. These 11 words spoken by Moderna's president could mean billions of dollars for the company.
A $10.4 billion answer
The first question that the AP asked Hoge pertained to whether or not COVID-19 booster shots will be required in the future. He responded: "I believe that there's going to be a chronic booster need."
In his capacity as Moderna's president and overseeing the biotech's research, Hoge should have access to the data needed to form a good opinion on this matter. If his take is right, Moderna is likely in a great position to make billions of additional dollars going forward.
Just how much could the company make if recurring COVID-19 booster shots are needed? We can't know exactly how much, but we can make a pretty good guess.
Moderna has secured supply agreements for 2021 for well over 900 million doses. This total doesn't include commitments to supply vaccine doses for the lowest-income countries. The company set different price tags for each deal, but the average price per dose is around $23 (skewed by an especially low price for the U.S. government, which helped fund the development of Moderna's vaccine.)
Let's assume that one booster dose will be needed annually and that Moderna can renew its existing supply deals at similar pricing. If this is the case, Moderna could make more than $10.4 billion each year from booster shots.
A different take
Not everyone agrees with Hoge's view, though. Sara Oliver of the Centers for Disease Control and Prevention (CDC) told an advisory committee last week that data doesn't support the need for COVID-19 booster shots at this point. The CDC would need to see evidence that current vaccines aren't as effective before it would recommend booster shots.
Results from a study published earlier this week in Nature could throw cold water on Hoge's opinion as well. The study's findings appear to indicate that the mRNA vaccines developed by Moderna and Pfizer-BioNTech could provide immunity from COVID-19 for years.
However, it's possible that new coronavirus variants could change the game. The CDC's presentation last week noted that a "variant of concern substantially impacting vaccine protection" could make booster shots necessary.
Variants seemed to be at the top of Hoge's mind in his discussion with the AP last week as well. After mentioning that he thinks booster shots will be needed, Hoge immediately talked about Moderna's efforts to develop a variant-specific booster shot.
Hoge's focus on variants isn't surprising. Moderna chief scientific officer Melissa Moore recently warned about rapid coronavirus mutations, stating: "We already know that some of these new strains are less susceptible to neutralization by our current vaccine."
A pivotal question
How long Moderna's vaccine will provide immunity against COVID-19 is a pivotal question for the company. It's also a critical one for investors.
If Moderna won't be able to count on strong recurring revenue from its COVID-19 vaccine, the biotech stock is arguably way overvalued with a market cap of more than $90 billion. On the other hand, if the company stands to make $10 billion or more year in and year out from its COVID-19 vaccine, the opportunities for its pipeline programs combined with this revenue could mean that the stock has even more room to run.