Moderna (MRNA 2.11%) today is known for its one and only product: the coronavirus vaccine now known as Spikevax. But the company has big goals, aiming to launch as many as 15 new products over the next five years. The biotech has a solid pipeline, with various late-stage candidates across multiple treatment areas. So the elements are in place for Moderna to become more than a one-product company -- if all goes well during clinical trials.
And in recent days, it took a step closer to its product launch goal, reporting positive new data from a trial of the personalized cancer vaccine mRNA-4157 it developed with collaborator Merck (MRK -0.49%). The candidate, in combination with Merck's Keytruda, cut the risk of relapse by half after three years. Moderna chief executive officer Stéphane Bancel told CNBC last week that some countries could approve the therapy as early as 2025. Does this make Moderna a stock to buy now?
Image source: Getty Images.
Why investors have avoided Moderna
First, let's talk about why investors have been avoiding Moderna recently. Its coronavirus vaccine has brought the company billions of dollars in earnings over the past couple of years. But now, considering the decline in demand as we head toward a post-pandemic situation, investors are concerned about Moderna's growth. As mentioned above, right now the company relies completely on its coronavirus vaccine for product revenue.
But the situation may be evolving -- and quickly. Right now, regulators are reviewing Moderna's respiratory syncytial virus (RSV) vaccine candidate, and aim to issue a decision early next year. Though two other RSV vaccines exist on the commercial market, Moderna's would be the only one available in a prefilled syringe; this ease of use could give it the upper hand. If all goes well during the regulatory review, Moderna may become a two-product company in a matter of months.
Now let's consider the personalized cancer vaccine candidate. The combination of mRNA-4157 and Keytruda cut the risk of recurrence or death by 49% in patients with high-risk stage 3/4 melanoma -- the most deadly type of skin cancer. This is over a period of about three years. The latest report follows two-year data reported earlier this year, that showed the treatment combination reduced risk by 44%.
Moderna and Merck advanced into a phase 3 trial in July, using the combination as an adjuvant treatment (one following primary treatment) in patients with high-risk melanoma. The companies also are studying the combination in a phase 3 trial in non-small cell lung cancer.
A personalized approach to treating cancer
Considering the candidate's progress in clinical trials and Moderna's additional work to prepare it for regulatory review, mRNA-4157 could become another near- to medium-term launch. The product may stand out because it's designed to specifically attack each patient's tumor type. So far, this personalized approach is clearly producing positive results; if this continues, the eventual product could be a game changer in the world of oncology.
Now, let's get back to our question. Is Moderna stock a buy now, thanks to the latest positive data? I wouldn't buy shares based on this data alone, but it definitely adds to the buy case for this beaten-down stock.
Moderna shares have declined more than 50% this year, leaving them trading at about 8.5 times forward earnings estimates, which is a steal -- even if Moderna only makes it part of the way to its product launch goal. And if it does attain its launch target and you buy the stock today, you may be setting yourself up for significant gains over time.
That said, Moderna's shares may not take off immediately. Declining coronavirus vaccine revenue is still weighing on earnings -- and on investor sentiment.
But, to win in investing, it's key to take a long-term view, and this often involves buying a stock when everyone else has turned their backs on it. So if you invest in Moderna now, it's important to be patient and imagine what the company will look like five years down the road. And from this angle, the picture looks very promising, making this biotech stock a great buy.
