The past three years have been fascinating for Moderna (MRNA 1.68%) and its shareholders. Early in the pandemic, the biotech quickly established itself as a leader in the hunt for an effective COVID-19 vaccine, a position it justified by creating and marketing one of the most successful coronavirus vaccines.
Moderna's shares are up by an impressive 731% since early 2020, although its coronavirus-related sales will start falling this year. At this point, it's fair to ask if Moderna can march on and continue delivering market-beating returns, or if the company won't be worth an investment in a post-pandemic world.
To decide, let's see what's going on with this biotech company.
Putting things in perspective
Moderna achieved tremendous success during a state of emergency -- a pandemic the likes of which the world had not seen in about 100 years. It's important not to judge what the company can accomplish in the future based on what it's done during this exceedingly unusual period. Moderna projects that it will record $18.4 billion in COVID-19 vaccine sales for the full fiscal year 2022.
In 2023, that number should drop to about $5 billion. In fairness, Moderna could generate more revenue than that if it signs more agreements, but its total vaccine sales this year won't even approach what it had in 2022. What's even more important, though, is how Moderna will perform from here on out in the COVID-19 vaccine market and elsewhere.
As far as the coronavirus vaccine space is concerned, Moderna should remain a leader, having marketed a highly successful option already, not to mention that it continues to develop versions of its COVID vaccine that targets various highly contagious variants of the disease. And although this landscape could remain uncertain, Moderna is inching away from coronavirus-related products, as some of its recent pipeline progress shows.
Expect a new product within 18 months
On Jan. 17, Moderna reported results from a phase 3 clinical trial for mRNA-1345, a potential vaccine against the respiratory syncytial virus (RSV). In the trial, the candidate proved 83.7% effective against lower respiratory tract disease caused by RSV, and it didn't raise any significant safety concerns. Moderna is planning to submit this candidate to regulatory authorities in the U.S. for review in the first half of the year.
The U.S. Food and Drug Administration (FDA) granted mRNA-1345 the Breakthrough Therapy designation, which the agency reserves for medicines or vaccines that target a serious condition, typically where there's an unmet need and where the product in question would be an improvement over existing competing options.
There are currently no approved RSV vaccines, although other companies are also very close to getting their respective candidates approved. Still, Moderna's mRNA-1345 seems to have an almost clear path to getting the nod from the FDA. If Moderna submits mRNA-1345 by the end of June and it doesn't encounter any regulatory troubles, it will have earned approval by the end of April 2024.
So, there's a good chance that the company will add at least one product to its lineup within the next 18 months. And in the meantime, we should see more pipeline progress from Moderna. The company's mRNA-1010 is a potential influenza vaccine currently undergoing a late-stage study. Moderna is planning a data readout in the first quarter of this year.
Furthermore, Moderna's potential vaccine for cytomegalovirus, mRNA-1647, is also in a late-stage study. The company estimates a market opportunity between $2 billion and $5 billion in this space, where there are no approved vaccines.
Moderna has many more pipeline candidates, including a potential personalized cancer vaccine that recently delivered solid results in a phase 2 clinical trial. All of these programs bode well for the biotech's future.
A solid option for long-term investors
Moderna's work in the COVID-19 vaccine market put it on the map for many investors, but the company has moved beyond that. It has plenty of cash on hand -- $6.2 billion in free cash flow -- and more than enough exciting pipeline programs to commercialize new products in the next few years.
The company's shares may suffer initially as its coronavirus-related sales drop. But in the long run, Moderna should be able to build a solid lineup that delivers strong and consistent financial results. That's what makes this biotech stock a buy.
