Investors who have held shares of Moderna (MRNA 1.69%) for a while have had a difficult year. The company's stock is down by 48% year to date. But it's often helpful to zoom out, and in the past three years, the vaccine maker has performed splendidly, rising by a whopping 737% in this period.
Still, Moderna's showing this year is a bit scary, and some investors may fear the sell-off may get worse and, eventually, wipe out all of the biotech's gains in recent years. By contrast, if Moderna can turn things around, it is worthwhile to hold its shares through these challenging times.
Hence the question, is it too late to get in on Moderna?
Moderna's hopes in the coronavirus vaccine market
Since Moderna's recent meteoric rise is intimately tied to its success in the COVID-19 vaccine market, it makes sense to consider how much longer the company can keep up its momentum in this space. On the one hand, nearly 80% of the U.S. population has received at least one dose of a vaccine. Other developed nations also have relatively high vaccination rates.
As a result, many investors are not optimistic regarding Moderna's ability to continue recording impressive financial results. That largely explains the company's underperformance on the market this year. On the other hand, COVID-19 is still with us, and in my view, it is here to stay. True, the primary vaccination market is saturated in the U.S., but many patients, especially those at high risk for severe COVID-19, will continue to get boosted.
Moderna recently earned yet another authorization in the U.S. and Canada, this time for a booster option that targets the omicron variant of the virus that causes COVID-19. The company has several more candidates targeting other variants of the virus in the pipeline. I think Moderna's coronavirus-related sales over the past year and a half are unsustainable.
The company has reported $22.3 billion in revenue in the trailing-12-month period. With a declining need for vaccines, it is unlikely to keep up this pace beyond another year. However, the company's revenue won't drop to zero either, or anything close to that.
Moderna's coronavirus lineup will continue to contribute meaningfully to its top line, helping it generate valuable funds and push other pipeline programs through the grueling clinical and regulatory obstacles they face.
What's next for Moderna?
Moderna does have plenty of non-coronavirus related candidates. The goal for the company is obviously to earn approvals for these products and expand its lineup. This plan is likely to work considering the sheer number of products (more than 20) in Moderna's pipeline and the fact that it has the funds necessary to run its operations without relying on dilutive financing methods.
Consider, also, that it is targeting viruses for which there are no approved vaccines. These include the Zika virus, the cytomegalovirus (CMV), and the respiratory syncytial virus (RSV). Moderna's potential vaccine targeting the Zika virus is in phase 2 trials, while the two others are in phase 3 studies.
The company also boasts a flu vaccine in late-stage trials. Many of Moderna's programs are ambitious. For instance, it is working on a combined vaccine for the flu and the coronavirus. Imagine having to make just one trip and take just one shot instead of two to be inoculated against both infectious diseases. Moderna also has an HIV vaccine in the works and several others targeting various cancers.
With all of these programs bear fruit? That seems unlikely at best. Still, Moderna has the tools to be successful over the long run: A portfolio of approved products that are generating solid revenue and will continue doing so for a bit longer, pipeline programs that look very exciting, and the funds to pour into its current candidates and research and development efforts as well.
Patience required
The next 12 months are difficult to predict for Moderna. Even beyond marketwide issues that could affect the company, we are still finding out just how much vaccines will continue to be needed after 2022 ends. But the good news is, within a year, we will know much more about the post-pandemic COVID market.
These developments will impact Moderna's stock in unpredictable ways in the short run. But for investors with a long-term mindset, Moderna remains a buy due to the company's promising mRNA vaccine platform and its already demonstrated success with its coronavirus vaccine. In short, it isn't too late to get in on this biotech stock.
