Moderna (MRNA +1.97%) shares have dropped about 40% this year for one big reason. Investors are concerned about future revenue once the coronavirus threat eases around the world. In fact, I would say it's investors' biggest worry when it comes to Moderna right now. The coronavirus vaccine is Moderna's only commercialized product. Moderna continues to report billions of dollars in revenue and profit now -- but that hasn't helped the shares.
In this week's first-quarter report, Moderna reported that total revenue more than tripled to $6 billion. And profit almost tripled to $3.6 billion. The company even reiterated its forecast for full-year vaccine revenue of $21 billion -- and said that number could go higher as more orders come in. But here's what's even better: Moderna's CEO said something that gives us visibility about future revenue. Let's check it out.
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Relying on the vaccine
It's true Moderna relies on its vaccine for revenue at the moment. In the first quarter, $5.9 billion came from vaccine sales. Only $126 million came from grants and $15 million came from collaborations. It's clear that without the coronavirus vaccine Moderna's situation would look a lot different. And even a significant drop in vaccine sales could mean trouble for the company, some investors might say.
But before chalking up Moderna to a one-hit wonder in the world of biotech, consider Moderna's pipeline. The company has 46 programs in development, and 29 of those are in clinical trials. Still, some might argue that it takes years to bring programs through development. So, many programs doesn't necessarily mean revenue right away.
Now let's get to the comment that caught my attention. Moderna's CEO, Stéphane Bancel, spoke about the company's late-stage programs in a company statement.
"Our robust phase 3 pipeline could lead to three respiratory commercial launches over the next two to three years," Bancel said.
Why this is a big deal
First, we know coronavirus vaccine sales will be strong this year. And I wouldn't expect demand for the vaccine to suddenly drop off a cliff next year. The company is working on a booster candidate to more specifically target the variants of the moment. The first booster of this kind could launch this fall. The idea is to update this shot as needed, and people would go for the jab annually, much like the flu shot. In my most pessimistic scenario, I would expect governments and people to at least give this a try over the next year or two.
By this time, Moderna may have other candidates close to market or ready to launch. Bancel's comment shows us Moderna probably won't end up in the situation some investors fear: a sharp drop in revenue and no other products to compensate.
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Key Data Points
Let's take a look at the programs that might keep Moderna's sales soaring. Moderna is studying vaccine candidates for two common viruses in phase 3 trials. They are cytomegalovirus (CMV) and respiratory syncytial virus (RSV). They each can be particularly dangerous to certain groups -- such as those with weakened immune systems. Right now, vaccines don't exist to prevent CMV or RSV. These opportunities can be blockbuster ones for Moderna -- especially if it makes it to the finish line first.
Moderna also plans on launching a phase 3 trial for its flu vaccine candidate during the second quarter. Of course, many flu vaccines already exist. But Moderna's mRNA technology could help it stand out from others. More than 76 million Americans got Moderna's coronavirus vaccine. Those who were happy with the shot's performance may want to give a Moderna flu shot a try, too.
Resources and technology
And, importantly, Moderna has the resources and technology to move these programs forward as quickly as possible. The company has a mind-boggling $19.3 billion in cash. As for technology, Moderna's mRNA can be made quickly in a lab -- making Moderna mRNA products faster to produce than traditional vaccines. And all of the company's vaccine candidates use the same manufacturing platform. So Moderna can use what it's built for the coronavirus vaccine to help along other candidates.
Will Moderna's shares recover now that investors have more clues about future revenue possibilities? It might take a while. Investors may want to see the vaccine candidates move even closer to commercialization. But, if Bancel's prediction is right, investors who held onto Moderna and believed in the long-term story may reap the rewards.
