Moderna (MRNA -7.82%) was a winning investment during the early days of the pandemic. The coronavirus vaccine leader climbed more than 400% in 2020. But as investors started worrying about Moderna's revenue post-pandemic, the stock performance story changed. This year, Moderna shares are heading for a 35% decline.
What's next for Moderna? The company expects to switch to selling vaccines directly to distributors and healthcare providers as of next year. That means the end of big contracts with governments. Annual vaccine revenue probably will decline from today's levels of around $18 billion. So, if you own Moderna shares, you may be thinking of selling right now. Before you do that, though, let's check out a very important chart.
The big uncertainty
First, let's consider the big uncertainty regarding Moderna right now. That's how many people will actually continue going for a coronavirus booster annually. Today, 78% of the U.S. adult population is fully vaccinated. But only 9.9% of adults have gone for the latest strain-specific booster. That's not a lot.
Still, we're early in the process of making the coronavirus booster an annual thing. Today, some people may feel their primary series is good enough for now since they completed it recently. Others may have received a booster a few months ago -- so they aren't rushing out for a strain-specific one right now.
This year may be a bit of a transition. I would expect next year and the following to offer us more of a picture of the real demand for a coronavirus booster.
This brings us to the subject of the chart. Moderna predicts coronavirus vaccination will follow in the path of annual flu vaccination. The flu market worldwide is about 500 million to 600 million doses.
The company presented the chart, below, during its recent earnings report. It shows various possibilities for the global coronavirus booster market in a post-pandemic world. Each scenario depends on the volume of booster doses administered and the price charged per dose.
Image source: Moderna.
In the chart, Moderna's lowest prediction for coronavirus market size is 400 million doses administered at a price of $20 per dose. That would equal a total market size of $8 billion. The highest estimate is 800 million doses at a price of $40 per dose. That would result in a $32 billion market.
Following the flu vaccine
If the COVID vaccine follows in the footsteps of the flu vaccine, it's likely the market could range from $12 billion to $24 billion, the chart shows.
The prices used in the chart are global average prices. They don't necessarily reflect what Moderna or rivals each would charge for a booster. Moderna has said it plans on setting its price at around $60 a dose.
So, what does this mean for Moderna and investors? It's still too early to say exactly how much revenue Moderna will generate over the long term from its coronavirus booster. But investors' worst fears of revenue completely dropping off probably won't come true.
The coronavirus vaccine market could settle into the same rhythm as the flu vaccine market. Those who aim to protect themselves from flu each season probably would want the same protection against the coronavirus. This could result in significant recurrent revenue for Moderna.
Even if the coronavirus vaccine market came in around Moderna's lower estimates, Moderna's recurrent revenue may still remain in blockbuster territory. That's positive for Moderna's ongoing development.
Recurrent revenue would help Moderna advance other potential blockbusters in its pipeline. For example, there's the company's combined flu and coronavirus vaccine candidate. It's in a phase 1 study right now. And it would help Moderna bring late-stage candidates to commercialization. The company also has three non-coronavirus candidates in phase 3 clinical trials today.
Finally, recurrent booster revenue and the progression of new potential products could drive Moderna's share price higher over time. Yes, Moderna may struggle as it transitions from a pandemic to a post-pandemic world. But the company has what it takes to win over the long term. From this angle, Moderna looks more like a buy today than a sell.
