Moderna (MRNA 12.68%) saw its shares jump in 2021 and 2022 on the back of strong sales of its COVID-19 vaccine Spikevax. Now that those sales are slumping, the biotech company's shares have fallen more than 27% this year.
For long-term-minded investors, this provides an opportunity to buy an up-and-coming company on the dip -- and at a price that is only eight times forward earnings.
Its core technology is fast and nimble
Spikevax helped prove to the world the effectiveness of messenger RNA (mRNA) technology. The company advanced three COVID-19 vaccines from phase 1 to commercial status in a year. It has two other promising vaccine candidates -- mRNA-1345 for respiratory syncytial virus (RSV) and mRNA-1010 for the flu -- that have traveled from phase 1 to phase 3 in two years and could soon be approved by the Food and Drug Administration (FDA).
Moderna's large pipeline uses mRNA technologies in a variety of therapies to fight infectious diseases, immuno-oncology, rare diseases, and autoimmune diseases.
Ultimately, mRNA's biggest use might be in immuno-oncology vaccines and other therapies, where the technology could help solve a riddle that has befuddled cancer researchers: how to avoid killing healthy cells alongside cancer cells. Moderna is working on several therapies that could help the immune system better distinguish cancer cells from normal ones.
The company's lead oncology therapy is mRNA-4157, a personalized cancer vaccine it is collaborating on with Merck that is in phase 2 trials. The company also has mRNA-5671 in a phase 1 trial as a KRAS vaccine. KRAS (Kirsten rat sarcoma) is the most commonly overexpressed oncogene in various cancers, especially colon cancer, pancreatic cancer, and non-small cell lung cancer.
The company also has MEDI-1191 in a phase 1 trial as a targeted therapy to treat solid tumors. Another potential oncology therapy, mRNA-4359, is a checkpoint inhibitor vaccine that is in a phase 1 trial. The therapy aims to stimulate T-cells to target and kill suppressive immune and cancer cells that express high levels of target checkpoint antigens, such as in non-small-cell lung cancer and melanomas. Another therapy, mRNA-2752, is in a phase 1 trial as a targeted therapy to fight solid tumors and certain lymphomas.
Its COVID-19 vaccine will still generate revenue
In the first quarter, Moderna's revenue fell 69% year over year to $1.9 billion because sales of its COVID-19 vaccine were way down. However, COVID-19 has become endemic in the U.S., so there will remain a need for effective COVID-19 vaccines.
Moderna said in the quarterly report that it expects a minimum of $5 billion in 2023 COVID vaccine sales due to advance purchase agreements, and that number could grow. The company said its list price for the vaccine will be between $110 and $130 a shot.
Buy Moderna stock for the company, not one product
In its first-quarter report, Moderna said it was preparing six major vaccine launches to treat respiratory diseases (COVID-19, RSV, flu, and combinations), with the group of therapies expected to deliver annual sales of $8 billion to $15 billion by 2027.
Moderna's RSV vaccine could be its next approved therapy, but there's competition. Arexvy, made by GSK, received approval on May 3 from the FDA, and Pfizer's RSV vaccine is likely to be next. Still, this is a marathon, not a sprint. RSV is a common virus that causes an estimated 14,000 deaths annually for older adults in the U.S.
In Arexvy's case, one of the patients in the study contracted the rare immune system disorder Guillain-Barré syndrome (GBS). Two other patients contracted acute disseminated encephalomyelitis (ADEM), which causes attacks of inflammation in the brain and spinal cord. One of the patients who contracted ADEM died. Pfizer's RSV vaccine also had two adults who developed GBS.
One key advantage for Moderna's RSV vaccine is that it appears to have a high level of safety, with no cases of Guillain-Barré syndrome or ADEM reported in its studies, and it has shown a 83.7% efficacy rate in treating adults 60 and older.
Built for financial success
Moderna has come a long way in a short time. It was founded just 13 years ago, and last year had $19 billion in revenue, so I like the company's chances going forward. Yes, the company will likely see less revenue this year and next because of declining COVID-19 revenue.
However, it is still a profitable company, and it has plenty of flexibility with $3.4 billion in cash and very little debt. It also has 31 programs in its pipeline, including several in late-stage trials. With all of its cash, the company can afford to be patient in developing future blockbusters.
