Before the COVID-19 pandemic, most investors likely hadn't heard of Moderna (MRNA 3.38%). At the end of 2019, it was a relatively small biotech company with only collaboration and grant revenue and no commercially available products.
What followed was a wild ride in which Moderna burst into the public consciousness as it developed and began selling one of the COVID-19 vaccines, putting the company and its mRNA technology at the forefront of investors' minds. Nearly four years later, the company is in a curious spot as it still has only one commercially available product.
However, Moderna is developing a robust pipeline that could propel the company for the foreseeable future. Is that pipeline strong enough to warrant buying the stock now, or should investors sit on the sidelines and wait? Let's dig in and see.
What does Moderna do?
Moderna approaches the development of vaccines and therapeutics using Messenger RNA (mRNA) technology. Put very simply, a vaccine utilizing mRNA technology teaches the body to make its own medicine. This is different than traditional vaccines where a harmless version of a virus or bacteria is used to trigger an immune response. Moderna had been working on this technology for nearly a decade before the pandemic broke out, putting the company in a position to get a vaccine to market very quickly.
Moderna is not the only company working on mRNA, but it is the company's focus, and therefore it can put all its resources toward that technology. Moderna is working in other areas as well, including respiratory vaccines, oncology therapeutics, and rare disease therapeutics.
What comes after the COVID vaccine?
As of this writing, the only commercially available product Moderna has is its COVID-19 vaccine. While this revenue stream has slowed drastically, it should continue into the foreseeable future. The company will develop updated versions as the virus continues to change over time. What is important for the future of the business, and for current and potential investors, is the pipeline of future products.
Over this year and 2025, Moderna expects to have more products come to market. In addition to the updated versions of the COVID vaccine, Moderna expects approval of a flu/COVID combination vaccine, as well as a vaccine for Respiratory Syncytial Virus (RSV). Beyond 2025, the company is projecting that several more products will come to market, pending the appropriate regulatory approvals.
The launch of the RSV vaccine is already being planned for by the company, which believes there is a $10 billion global market for this drug. In 2023, other companies sold approximately $2.3 billion in RSV vaccines, demonstrating the opportunity Moderna has in this market.
Is Moderna a buy, sell, or hold?
There's no doubt that the success of the COVID-19 vaccine was proof that mRNA technology is a viable path to pursue for Moderna, which took a lot of the risk out of an investment in the company. That said, it's worth remembering that this is a very difficult and capital-intensive business, with binary outcomes for the drugs that take millions of dollars to develop.
If Moderna can replicate its COVID-19 success with other respiratory viruses like the flu and RSV, there's a case to be made that shareholders will be rewarded over time. Further down the road are therapeutics for cancer and other diseases that could be additional catalysts for growth.
For investors who make Moderna a reasonably sized part of a diversified portfolio, I think the stock is a buy today. As Moderna brings more products to the market, there will be additional opportunities to add to the position over time.
