Moderna (MRNA 1.04%) has been reporting quarterly billion-dollar revenue and profit since it started selling its coronavirus vaccine. CEO Stéphane Bancel even predicted the need for the vaccine this year could surpass that of last year. And Moderna already is forecasting $21 billion in vaccine sales according to advance purchase agreements so far. That's higher than last year's $18.5 billion in revenue.
So it won't be much of a surprise if the biotech delivers another billion-dollar quarter when it reports earnings this Wednesday. But there's likely to be a lot more of interest in the report than just the latest vaccine sales. In fact, there's one particular thing you'll want to look for this time around. It could give us important clues about future revenue. Let's check it out.
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A subscription model
I'll start out by what Moderna said during its previous earnings report, for the fourth quarter of 2021. The company spoke about its work on a subscription model for its coronavirus vaccine or an updated respiratory vaccine. These are 10-year agreements covering the delivery of vaccine doses to countries.
The idea is that a country will ask for a certain amount for a particular year; then Moderna can customize the order with the type of respiratory vaccine the country needs. For instance, it might be a vaccine to cover a certain strain of the coronavirus. And eventually it could be a particular strain of flu or a combined coronavirus and flu vaccine. Moderna is working on those programs right now.
In its last earnings report, the company said it already had signed memoranda of understanding with Canada and Australia. And just recently, it said it would build an mRNA vaccine production facility in Quebec. Moderna aims to break ground on the plant this year and finish construction in 2024. The facility is meant to ensure Canada's access to vaccines if another health emergency arises.
At the time of the fourth-quarter report, Moderna also was in discussions with other countries regarding the subscription program. Now, it will be important to see whether it has signed up additional countries. I'll also be on the lookout for further details about this program, and how it may work once vaccine makers start selling directly to pharmacies. Bancel has said he expects that shift to a private market to eventually happen -- and the price of his company's vaccine will go up.
A major element that's weighed on the stock
Now, you might be wondering: Why is this the point to watch in Moderna's upcoming report? That's because a major element that's weighed on the stock is uncertainty about the level of vaccine revenue in the coming years.
Many investors worry that the company's billion-dollar revenue will sink once we see fewer peaks in infection rates and hospitalizations. It's particularly a concern because the coronavirus vaccine is Moderna's only commercialized product. The company has two other candidates (outside of the coronavirus program) in phase 3 studies. They are potential blockbusters: vaccine candidates for cytomegalovirus (CMV) and respiratory syncytial virus (RSV). But even if all goes smoothly in those trials, commercialization may be a few years away.
So right now, any clues about Moderna's vaccine revenue picture over the next couple of years might reassure investors. Could this offer the stock a lift? It's possible. But I don't expect shares to skyrocket, even though they're trading at a bargain. By this, I mean at 4.8 times forward earnings. Some investors might wait until the company actually shows it can continue generating significant revenue in a post-pandemic world before piling in once again.
But that doesn't mean it's best to wait to buy Moderna shares. Instead, it's important to look for clues about future revenue today, such as the subscription plan. And -- if the message is positive -- for investors who plan to buy and hold for the long term, now could be the right moment to get in on this biotech stock.
