As we near the five-year anniversary of the COVID-19 pandemic, it's a good time to revisit the drugmaker stock that was top of mind back then. A few years ago, Moderna (MRNA +4.29%) stock soared on the back of the highly successful vaccine it developed in record time.
At its peak in 2021, Moderna traded for over $450 per share. But the good times didn't last. When the market closed on March 11 of this year, the vaccine maker was trading below $34 per share.
NASDAQ: MRNA
Key Data Points
Is it time to average down on a Moderna holding or begin a new position? Let's look at the company's recent performance and some catalysts that could push the stock higher to see if it deserves a place in your portfolio.
Why Moderna stock is way down
Investor interest in the biotechnology industry hit a fever pitch in 2021 around the time Moderna launched Spikevax, its COVID-19 vaccine. The company's sales surged to $18.5 billion in 2021 from practically nothing the year before. This year management expects sales between $1.5 billion and $2.5 billion.
In early 2021, individual investors and institutions hurled money at Moderna stock as if future growth were unlimited. Disappointment with sales growth that tapered off, then collapsed much earlier than expected has pushed the stock down about 93% from its all-time high.
Reasons to buy Moderna stock now
Spikevax sales probably won't reach their previous peak again but they weren't completely wiped out. Last May, the Food and Drug Administration (FDA) approved the company's second product, a vaccine for respiratory syncytial virus (RSV) called mRESVIA.
With combined sales of its products expected to reach $2 billion this year, at the midpoint of management's guided range, this stock appears underappreciated. One reason is that it finished 2024 with about $7 billion in cash and investments on its books.
Moderna sports a $13 billion market cap but all the cash on its books lowers its enterprise value to just $6 billion. This is a low valuation for a drugmaker with two commercial-stage vaccines that you can expect to produce roughly $2 billion in annual revenue.
Moderna's low valuation completely ignores its progress toward delivering up to 10 product approvals by 2027. The FDA is reviewing an application that could expand mRESVIA's approval from folks 60 and over to include all high-risk adults regardless of age.
In addition to vaccines it markets now, shots to prevent flu, cytomegalovirus, and norovirus are in late-stage development. The company has already sent the FDA an application for a seasonal flu vaccine, but the agency will probably wait for upcoming data from an ongoing phase 3 study before it issues a decision.
In addition to the sorts of vaccines you're probably familiar with, Moderna is developing an individualized cancer vaccine called mRNA-4157 in collaboration with Merck. Adding the vaccine to treatment with Merck's Keytruda lowered melanoma patients' risk of recurrence following surgery in a phase 2 study reported in December of 2023.
A phase 3 trial with mRNA-4157 for melanoma patients in the adjuvant setting is fully enrolled. Moderna is also enrolling patients into a phase 3 lung cancer trial with the personalized vaccine.
Reasons to remain cautious
Using vaccines that teach the immune system to attack tumors is a decades-old idea with a checkered history. The data Moderna has reported so far is encouraging, but it's probably best to wait for results from larger ongoing phase 3 studies before placing significant value on mRNA-4157.
With the exception of the COVID-19 pandemic, developing vaccines has been a relatively unattractive corner of the biopharmaceutical market for investors. For example, Pfizer (PFE +1.19%) launched its RSV vaccine, Abrysvo, in 2023. It's currently approved to prevent infections for high-risk adults of any age, and for infants through injections given to their mothers while pregnant.
Despite being launched by one of the largest pharmaceutical sales forces in the business, Abrysvo sales fell to an annualized $792 million in the fourth quarter last year. With Abrysvo already entrenched, expanding mRESVIA's indication to include a larger population probably won't lead to an enormous sales bump.
My biggest concern regarding Moderna is that it's limited. Human immune systems go berserk when they notice a free-floating mRNA strand. This is why all of Moderna's commercial-stage drugs and late-clinical-stage candidates are vaccines and not more lucrative treatments that folks buy from a pharmacist month after month.
Finally, this could be a lousy time to invest in a dedicated vaccine maker. Robert F. Kennedy, a well-documented vaccine skeptic, is leading the U.S. Department of Health and Human Services, which oversees the FDA. In February, the FDA's Vaccine and Related Biological Products Advisory Committee cancelled a meeting to discuss which flu strains the next round of seasonal vaccines should protect against. No reason for the cancellation was given, and there's been no indication that it will be rescheduled.
A buy now?
Moderna's shockingly low valuation and robust pipeline are attractive features. An enterprise value of around $6 billion puts it in the crosshairs for a potential acquisition by a larger pharmaceutical company like its collaboration partner, Merck.
If we had more data for Moderna's cancer vaccine candidate, I might call this stock a buy now. With the future for run-of-the-mill vaccinations in the U.S. so cloudy, it's probably best to watch it from a safe distance for at least the next several months.
