Moderna (MRNA 1.84%) shares have dropped 70% since their record high of more than $450 last August. There are a couple of reasons. The first has to do with the general investment environment: Investors aren't flocking to vaccine stocks as they did earlier in the pandemic. The second reason has to do with Moderna specifically. The company's only commercialized product right now is the coronavirus vaccine, so investors worry about earnings if vaccine demand drops in a post-pandemic world.
Does this mean Moderna's shares never will take off again? Not necessarily -- Moderna stock could even top its record high. And here are three factors that could help that happen.
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1. A picture of the future vaccine market
The demand for vaccines isn't going away. We know that because experts predict the coronavirus will stick around. And that means at least the most vulnerable individuals will need protection -- and therefore, a vaccine or booster. Moderna estimates the number of at-risk individuals to be around 1.7 billion, so we can imagine the company and its rivals selling their vaccines well into the future.
But we still don't have a clear revenue picture beyond this year. The two questions are: Will vaccines be sold to governments -- or directly to customers such as pharmacies? And what will be the prices of these vaccines? Governments have ordered Moderna doses across a broad pricing range -- from about $15 to about $37 a dose.
The U.S. hasn't yet ordered booster doses from vaccine makers for the fall season. Lawmakers still are considering the budget and regulators are reviewing whether to shift from current shots to updated ones. Decisions could come early this summer. Still, Moderna has said its vaccine sales this year will total at least $21 billion, based on advance purchase agreements so far.
Once Moderna shifts to selling directly to customers -- whether that's this fall or at a later date -- the company has indicated that the price per dose will increase. At the same time, Moderna's expenses are likely to increase as well. That's as it shifts from selling to one U.S. customer -- the government -- to many. And we don't yet have an idea of how many people will actually go get a shot if it isn't provided by the government.
After Moderna and the government answer these questions and set up a plan, our visibility should improve. Of course we'll be looking at the landscape beyond the U.S., too. And if revenue levels and orders later this year and into next year look good, investors may return to Moderna shares.
2. Success of a combined vaccine
Now, let's move a bit farther into the future. Today, Moderna is working on two combined respiratory-virus vaccine candidates. One targets influenza and coronavirus. The other targets flu, coronavirus, and respiratory syncytial virus (RSV). Both candidates are in preclinical development.
Moderna has big plans for these candidates. The idea is that once they're commercialized, Moderna could update them to specifically suit the needs of various countries. For example, if the U.S. knows a particular strain of flu could be trouble in the upcoming season, Moderna could produce a combined vaccine including that strain. And it could include other strains for other countries according to their needs.
The advantage of a combined vaccine is that it could lead to better uptake. People are more likely to go for one vaccine that covers various viruses than to go back to a pharmacy several times for different shots. And the fact that Moderna could design a vaccine to suit a specific country's needs should result in stronger efficacy too.
This sort of product could be a game changer. Rival Novavax is developing a combined influenza-coronavirus vaccine candidate -- and it's actually ahead from a timeline perspective. But if the products are great, more than one company could win here.
This potential product is a few years from commercialization. So success could drive share growth down the road.
3. Commercialization of a non-coronavirus product
There's another future share-price catalyst: a potential product outside the coronavirus program. There's reason to be optimistic. Right now Moderna has both an RSV vaccine candidate and a cytomegalovirus (CMV) vaccine candidate in phase 3 trials. These are common viruses that can be particularly harmful to certain individuals. For example, CMV represents a danger for unborn babies, while RSV is a threat to infants. Today, vaccines to prevent RSV and CMV don't exist. Moderna could be first to market. That equals a first-mover advantage. And each potential product could be a blockbuster.
Success in one of these programs is particularly important. That's because it would show that Moderna isn't a coronavirus company only. And it would mean Moderna wouldn't be so dependent on its coronavirus vaccine -- or eventual booster -- alone. That clearly would reduce some risk associated with the stock.
When could Moderna reach $450?
Of course, there's no guarantee that Moderna shares will return to their record high. And I wouldn't expect the stock to soar to that level in a period of days or weeks. As I mentioned earlier, investors aren't rushing to get in on the vaccine story these days.
But, over time, the three elements I mentioned above represent tickets to lasting earnings growth. That could give Moderna stock the fuel it needs to advance -- and potentially even reach its former high.
