Investors aren't worried about Moderna's (MRNA +1.41%) near-term revenue. And rightly so. The vaccine maker just reported quarterly revenue and profit that leaped past analysts' forecasts. And the biotech company says it expects $19 billion in revenue this year, according to orders already signed.
But there's one big unknown that has been a recent concern for investors. That's future vaccine revenue -- especially once the pandemic is over. And this shift from pandemic to endemic may happen as soon as this year, experts say. Here's the good news though. In Moderna's earnings call, CEO Stéphane Bancel offered us two clues about long-term vaccine revenue.
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Today's picture
First, let's take a look at today's picture. Moderna sells vaccine doses directly to countries and has priced its vaccine between $15 a dose and $37. This is according to various factors including order size and whether the buyer is a high-income or low-income country. Right now, Moderna negotiates directly with governments rather than selling vaccine doses through a private market system to pharmacies or healthcare facilities. As a result, Moderna has signed billions of dollars of advance purchase agreements with governments around the world.
Investors worry that once the coronavirus threat lessens, demand for vaccination will drop -- and, therefore, so will Moderna's revenue. The coronavirus vaccine is Moderna's only commercialized product. I've said in the past that I think this concern is overdone. Once the virus is endemic, we won't see the extreme peaks in infection rates and hospitalizations that we've seen during the pandemic. But the virus will continue to circulate. And that means at least the most vulnerable individuals will need protection. So, I don't expect vaccine demand to fall off a cliff. Still, the level of post-pandemic vaccine revenue remains unclear.
NASDAQ: MRNA
Key Data Points
Future pricing
So now let's take a look at the revenue clues Bancel offered during the recent earnings call. The first has to do with future pricing.
"Once this goes into normal private market, we do expect the pricing to be higher," Bancel said. Today's "price doesn't reflect the value of a vaccine from a pharmacoeconomic standpoint."
This means that even if there is a decline in number of doses sold in the future, the company may compensate -- to what degree we don't yet know -- through pricing. So, it's possible the coronavirus vaccine could continue to generate billions of dollars in revenue and profit for Moderna. And the company right now is laying the groundwork for future growth worldwide. Moderna already had commercial teams in 11 countries. Recently, the biotech added teams in an additional 10 countries.
Now, on to the second clue about vaccine revenue. Moderna is developing a new business model for the sales of an eventual pan-respiratory annual booster. This booster would include protection against the coronavirus, flu, and respiratory syncytial virus. Moderna is working on a subscription plan for governments worldwide. This is a 10-year agreement for doses of the eventual booster. Moderna already is involved in discussions with several countries -- and has even signed memoranda of understanding with Canada and Australia.
A key to recurrent revenue
This subscription plan may be yet another key to recurrent billion-dollar revenue. For two reasons. First, the potential booster itself could be a popular product since one jab protects against three viruses. Second, a subscription plan would guarantee a certain level of orders and revenue over a long period of time.
Right now, it's still impossible to predict exactly how much revenue coronavirus vaccine or booster products will generate for Moderna a few years down the road. But Bancel's comments are enough to make me optimistic about revenue ahead. The future won't be an exact replay of the past two years. But it could be just as exciting -- and deliver investors major gains.
