The past four years have been a roller-coaster ride for Moderna (MRNA 1.69%). The mRNA-focused vaccine maker rose to prominence following a successful attempt at developing a coronavirus vaccine.
However, the stock fell out of favor once sales of the company's only product on the market started moving in the wrong direction. Moderna's shares are down by 30% in the past year, but their total return over the past four years is 230%, and there remain good reasons to invest in the company.
MRNA Total Return Level data by YCharts.
1. Gaining market share
Though the coronavirus vaccine market is no longer as lucrative as it once was, it isn't going away completely. COVID-19 was one of the leading causes of death in the U.S. in 2023. Millions of people, particularly those who have underlying conditions that make them more at risk of hospitalization and death, will continue to get inoculated every year.
So Moderna should continue to generate sales from this market. Things are looking good on that front: The numbers show that Moderna is improving its position in the coronavirus vaccine space. The biotech had a 48% share of the U.S. market in the fall of 2023, compared to 37% in the comparable period of 2022.
Moderna has substantially closed the gap on its biggest rival, Pfizer. In 2022, Moderna had sales of $18.4 billion, compared to $37.8 billion for Pfizer. Last year, it was $6.7 billion to $11.2 billion in sales, still in favor of Pfizer. But that's a much smaller difference than in 2022.
Things are a bit more complicated for 2024. Moderna expects $4 billion in sales for the year, but that won't be solely from its COVID-19 franchise. At least $3 billion should be from coronavirus-related sales. And even if you take the lower end of that COVID franchise guidance, the company would still gain ground on Pfizer's estimated $5 billion in coronavirus vaccine revenue this year.
Even though the coronavirus vaccine market won't be as important for Moderna in future years, the company's success in gaining ground against its most notable competitor is great.
2. A potential catalyst
Moderna seems close to launching a non-coronavirus product. Last year, the company's investigational vaccine for respiratory syncytial virus (RSV), mRNA-1345, reported positive results in a phase 3 clinical trial. The biotech submitted applications to various regulatory authorities, including in the U.S., and expects a response from the U.S. Food and Drug Administration (FDA) in May.
The RSV market is still new; the first vaccines earned approval just last year. But RSV is especially dangerous for seniors and Moderna estimates this market could hit peak sales of $10 billion. It was worth just $2.5 billion in 2023.
As CEO Stéphane Bancel pointed out in an earnings call this month with analysts, "This is quite impressive given it was the first year the RSV vaccines were available. They were not even available for a full year, and the products were not approved in many countries." In other words, Moderna isn't too late to the party. The company's RSV vaccine could contribute meaningfully to its top line and help it decrease its reliance on its coronavirus franchise.
3. A deep pipeline
Beyond mRNA-1345, Moderna has several products in its late-stage pipeline that could hit the market within the next three years. It is running a phase 3 study for a vaccine for cytomegalovirus, an area where there are no approved options yet. Moderna is also developing a combination COVID-influenza vaccine that's in late-stage studies.
The biotech teamed up with another major player in the industry, Merck, to test its cancer vaccine, mRNA-4157, in a phase 3 study. In a midstage study, mRNA-4157, in combination with Merck's famous cancer drug Keytruda, was able to decrease the risk of recurrence or death in melanoma patients.
There is significant potential in Moderna's late-stage pipeline and the biotech has many programs in phase 2 studies that should make substantial progress in the years ahead. In total, Moderna has more than two dozen candidates in the works. That's one more reason why, despite recent struggles, Moderna looks like an excellent biotech stock to buy and hold.
