Investors have been cheering about Moderna's (MRNA -0.58%) ability to bring a coronavirus vaccine to market in less than a year -- and post more than a billion dollars in profit in the first full quarter of sales. The stock climbed 434% last year. And in the first half of 2021 it advanced 125%.
The one worry many have is this: Will the big-time revenue be recurrent? Or will it diminish in a post-pandemic world? Experts say the coronavirus is here to stay. Still, if the virus weakens or becomes less widespread, people may not rush out for an annual COVID-19 vaccination.
This scenario may not play out. But if it does, Moderna is still likely to generate billions of dollars in vaccine revenue. In fact, 19 words from Moderna's CEO offer us a clue about how that may happen.
Image source: Getty Images.
Today's situation
But first, a bit of background about today's situation. Right now, Moderna sells only a single coronavirus vaccine. Soon, it may add a booster shot to that; the company is investigating a booster candidate in clinical trials. And Moderna's CEO Stephane Bancel has said that a booster may be ready for the public by fall.
Moderna expects to generate $19.2 billion in sales this year from the vaccine, according to advance purchase agreements as of May 6. That figure could move even higher if regulators authorize a booster and Moderna wins new orders.
Governments today are spending billions of dollars on vaccine doses. However, if the virus becomes less of a problem in the future, vaccination rates could drop -- and so could the size of orders.
But Moderna doesn't plan on depending on one coronavirus product forever. The company just dosed the first participant in a phase 1/2 study of its quadrivalent seasonal influenza vaccine candidate. This type of vaccine is meant to protect against four strains of flu.
Here's what's most compelling -- Bancel's words in the press release: "We expect that our seasonal influenza vaccine candidates will be an important component of our future combination respiratory vaccines."
Moderna's goal is to develop one vaccine that protects against seasonal flu viruses, provides a COVID-19 variant booster, and offers protection from respiratory syncytial virus (RSV). RSV can be most problematic for babies and the elderly. Moderna is already on the way to a potential full approval of its coronavirus vaccine. The company's RSV candidate is in phase 1 trials. Now, a seasonal flu candidate has become the third key part of an eventual combination vaccine to enter the clinic. In the future, Moderna will have to combine these elements and try out the single vaccine candidate in clinical trials.
One instead of three
Some may argue that eventually selling one combination vaccine will bring in less revenue than selling three individual vaccines. That might be true if a great majority of the population actually got all three vaccines every year. But people likely would get tired of going for so many shots every year -- especially if the novel coronavirus is circulating less.
A combination vaccine could be a winning option for Moderna. The idea of one shot each fall to protect against three viruses is a much more attractive option -- and one that's easy to go for year after year. This could ensure Moderna billions of dollars in revenue annually.
We don't know the pricing of such a vaccine. But let's use the price the U.S. paid for Moderna's COVID-19 vaccine as a guide: about $15 a dose. If even half of the U.S. population opted for one combination shot, that would amount to nearly $2.5 billion in sales every year. And that only accounts for the U.S. market; approval internationally could boost that figure significantly.
Of course, Moderna isn't the only one aiming for a combined vaccine. Rival Novavax aims to bring a shot preventing both COVID and influenza to market by 2025. As we've seen with coronavirus vaccines, there is room for more than one player to generate billions of dollars in annual revenue.
So, if all goes well in clinical trials, Moderna may have the key to recurring billion-dollar revenue -- whether COVID remains a major threat or not.
