High demand for coronavirus vaccines earlier in the pandemic pushed Moderna's (MRNA +0.57%) earnings into the stratosphere. Spikevax brought in billions of dollars in revenue and profits for the company, allowing it to build up a pile of cash more than sufficient to fund the development of its entire pipeline.
But the World Health Organization last week announced that the pandemic is no longer a "global emergency," and in line with the growing recognition of that shift, demand for Moderna's COVID-19 vaccine is declining. But that doesn't mean its blockbuster revenue opportunity is over. In fact, Moderna could continue to generate billions in revenues annually from its first -- and so far, only -- approved product. That could translate into solid earnings and ongoing support for the rest of its programs. Let's take a closer look at how Moderna plans on winning in this new vaccine market.
A changing situation
First, a quick look at how the situation is changing. So far, Moderna has sold its vaccine to governments. It priced those doses low considering the pandemic situation and the logistics of selling essentially to one client per country: the government. For example, Moderna sold its vaccine to the U.S. government for about $26 a dose.
As of now, Moderna is in talks with commercial buyers, preparing to sell Spikevax doses to pharmacy chains, hospital groups, government health providers like the Department of Veterans Affairs, and other potential customers. The logistics involved will become more costly and complex than when Moderna was selling directly to national governments. But the company plans on increasing the price of its vaccine to as much as $130 per dose.
"Our discussions with commercial buyers in the U.S. are positive," said Moderna Chief Commercial Officer Arpa Garay on the company's recent earnings call. "There continues to be a clear need to protect against severe COVID infections, and our customers recognize that need."
In the recently ended flu season that ran from October to mid-April, coronavirus hospitalizations in the U.S. were nearly three times more numerous than flu hospitalizations.
Moderna isn't only talking with potential customers right now. It also says its national distribution infrastructure and e-commerce site are operational. Its supply chain is ready for action too, and set to provide prefilled syringes and single-dose vials at the start of the next flu/coronavirus vaccine season.
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Getting doctors on board
But Moderna isn't stopping there. It's also working on how to get doctors and patients on board for fall vaccinations. The company plans on delivering tailor-made information to them and other healthcare decision-makers. Management didn't offer details, but it did say it aims to help streamline the vaccination process for those who want to get flu and coronavirus vaccines this fall.
And next month, the U.S. Food and Drug Administration will update Moderna and other vaccine makers on the strain they should tailor the fall shot to address. Moderna's mRNA technology means the company should easily be able to update its product in time for this autumn's boosters.
So, Moderna clearly is well-positioned for success in this new market -- but what will it represent in terms of revenue. Management predicts the total U.S. market this fall will be about 100 million doses. The company shares the market primarily with Pfizer. Of course, we don't know exactly how many doses each of them will sell. But if Moderna even sells 30 million at $130 a shot, that would amount to revenue of about $3.9 billion. And this is just the U.S. market. Moderna so far has contracts with governments worldwide for about $5 billion in vaccine sales this year.
A transition for Moderna
Of course, all of this anticipates lower vaccine sales than in 2022 or 2021. But it's unreasonable to compare a post-global-emergency market to the earlier pandemic situation. This year represents a transition for Moderna. And if a wave of demand for the vaccine as an annual booster shot translates into blockbuster revenue this fall and winter, that would be a good sign for the company's future.
What does all of this mean for investors? Moderna still represents a solid coronavirus buy -- and a lot more. Its coronavirus vaccine may become a recurrent source of blockbuster revenue. And its pipeline of candidates in other therapeutic areas should add to its growth, even if just a few candidates cross the finish line and earn regulatory approval.
That means Moderna's earnings growth and share price growth are far from over. And that makes the stock a great one to buy now and hold for the long term.
