Moderna (MRNA 2.37%) has gone through its share of ups and downs in recent years, from posting soaring coronavirus vaccine revenue a few years ago to seeing demand for that product sink in the later stages of the coronavirus pandemic. Now, the biotech is trying to show the world that it can expand beyond coronavirus prevention as it has a full pipeline of programs ranging from latent viruses and rare diseases to cancer. In fact, its cancer vaccine is in late-stage development and has generated positive clinical data.
Still, investors haven't yet jumped on board in great numbers as can be seen in the share performance -- the stock has plummeted 74% over the past year. Recently, major shifts at the U.S. Food and Drug Administration (FDA), the agency overseeing the review of potential new drugs, hasn't helped matters. Just days ago, Peter Marks, a key vaccine official at the agency, resigned, sending Moderna shares lower once again.
Is Moderna stock now one to avoid or a bad-news buy?
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From billions in earnings to a loss
As mentioned, Moderna reached stardom in the early pandemic days, generating billions of dollars in earnings, thanks to its coronavirus vaccine. And the stock price followed, advancing more than 2,200% from the start of 2020 through early August of 2021.
However, in the later stages of the pandemic, demand for the product declined, and Moderna shifted to a loss. For example, last year, the company brought in $3.2 billion in revenue, compared to more than $19 billion at its peak in 2022 and a loss of $3.6 billion on a GAAP basis.
Moderna now has a second product on the market -- its respiratory syncytial virus (RSV) vaccine -- but sales have been lower than expected. Meanwhile, on a brighter note, the company has a full pipeline of potential products harnessing its mRNA vaccine technology and expects to launch as many as 10 through 2027. If this happens, it could be transformational for the biotech player.
Now I'm going to turn to the recent news that's weighed on Moderna, and that's Marks' departure from the FDA. Marks unexpectedly left his position as head of the Center for Biologics Evaluation and Research, a role overseeing the review of vaccines and other biological products, such as gene therapies. His resignation letter suggested he and new Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. weren't in agreement on the path forward.
"It has become clear that truth and transparency are not desired by the secretary, but rather he wishes subservient confirmation of his misinformation and lies," Marks wrote in the letter.
Moderna stock fell more than 8% in one trading session following the news.
NASDAQ: MRNA
Key Data Points
Kennedy's vaccine skepticism
Kennedy has drawn media attention for his skepticism regarding vaccination, though he's said he isn't anti-vaccine and simply wants vaccines to be thoroughly tested. Still, Kennedy's past comments on vaccination have sparked concerns among the scientific community regarding research funding and the regulatory environment for vaccines with him at the helm of HHS. Kennedy also just began a major overhaul of the department, cutting jobs across agencies to save $1.8 billion annually.
Marks' official departure is set for April 5, and it's unclear who will replace him. On top of this, investors don't know if the environment for vaccine funding and development will change, so a lot of uncertainty exists right now. It's clear this isn't the ideal backdrop for Moderna, a company that's heavily involved in vaccine research and is set to launch a series of vaccine approval requests.
Should you buy Moderna?
Now I'll return to the question: Is this biotech a stock to avoid or a bad-news buy?
Considering this environment of uncertainty, I wouldn't expect Moderna shares to immediately soar and deliver lasting gains in the near future. I think investors have plenty of time to watch and wait and still get in on Moderna for a reasonable price.
I'm still optimistic about the biotech's candidates and their potential to drive significant revenue gains down the road, so it's a great stock to hold if you already own it. And if you're an aggressive investor, you may consider picking up a few shares right now. Even if the regulatory situation becomes difficult, I wouldn't expect headwinds to last forever, so a buy and hold-for-several-years strategy could be a winning one.
In light of today's uncertainty, however, cautious investors should take a different approach. They're better off waiting on the sidelines and avoiding this biotech stock until there's a clearer understanding of the regulatory environment ahead.
