Moderna (MRNA +1.41%) once was one of the stock market's biggest stars. The biotech stock surged more than 400% back in 2020 as it brought a coronavirus vaccine from drawing board to market in less than a year. And it continued to gain as it quickly generated billions of dollars in earnings, thanks to that vaccine.
In recent times, though, Moderna's top-selling vaccine has prompted investors to turn away from the stock. That's because, as we head toward a post-pandemic situation, they're worrying about the company's revenue-growth potential. With demand on the decline, vaccine sales have plummeted, and the vaccine is Moderna's only commercialized product right now.
But Moderna's growth story is far from over. In fact, three things, in particular, could help this 2023 stock market loser roar higher this year.
Image source: Getty Images.
1. RSV vaccine decision
Last year, GSK and Pfizer both won regulatory approval for their respiratory syncytial virus (RSV) vaccines, making them first to the finish line. But there's reason to believe Moderna may carve out significant share in this potentially $10 billion market, and this has to do with the vaccine-candidate's presentation.
Moderna is the only company to offer a pre-filled syringe format, which, at first glance, may not seem like a big deal. But a pre-filled syringe is a very big deal because it makes the vaccination process quicker -- and results in fewer administration errors. This could win over doctors and pharmacists and result in market-share gains for Moderna, especially since its investigational vaccine also has delivered strong clinical trial data, with efficacy of more than 82%.
Regulators now are reviewing Moderna's candidate, and the company expects regulatory decisions to start rolling in during the first half of this year. Any nods here could lift the shares, as an approval would represent a new revenue source for Moderna.
NASDAQ: MRNA
Key Data Points
2. Progress in a personalized cancer vaccine candidate
Moderna recently announced very encouraging results from its three-year follow-up of patients in a phase 2 trial of its personalized cancer vaccine, combined with Merck's Keytruda. This is in patients with melanoma, the most dangerous form of skin cancer.
The combination therapy cut the risk of recurrence or death by 49% and reduced the risk of distant metastasis or death by 62% -- compared to treatment with Keytruda alone.
Moderna and Merck continue to enroll patients in phase 3 trials for this potential treatment in melanoma and in non-small cell lung cancer. And the companies aim to expand into other tumor types this year.
Additional positive data and advancements along the clinical-trial path could lift Moderna shares because this news may reassure investors about the company's future revenue-generation potential. This program, along with RSV, may help shift investors' focus away from declines in coronavirus vaccine sales and to Moderna's billion-dollar prospects in other areas.
3. Valuation
Finally, an element that could help Moderna soar this year is the company's valuation. Right now, it trades for about 8x forward earnings estimates, which looks dirt cheap when considering the company's long-term prospects.
Moderna aims to launch as many as 15 new products over the coming five years -- and these products could bring in as much as $30 billion in revenue down the road.
This year, Moderna forecasts $4 billion in product sales -- considerably lower than the more than $18 billion it generated last year. But the company aims to return to sales growth next year, then break even in 2026. So the near term may not be fantastic, and that's why investors haven't piled into the stock, even at this tempting valuation.
But if investors see progress in areas such as the ones I've mentioned above, and then give the valuation a second look, they should gain confidence in this innovative biotech company -- and might decide to load up on shares while it's trading for a bargain to maximize their potential for gains down the road. After a difficult couple of years, all of this could help Moderna roar higher in 2024.
