After soaring to success in the early days of the COVID-19 pandemic, Moderna (MRNA 1.76%) experienced a reversal of fortune. The coronavirus vaccine maker has seen revenue plummet as demand for this flagship product -- Moderna's first to be approved -- has slipped. As a result, the stock fell out of favor with investors, leading to a decline of about 80% over the past three years.
Since that time, the biotech company has delivered positive news, from the approval of a second product -- its respiratory syncytial virus (RSV) vaccine -- to the approval of updated coronavirus vaccines and progress on cost cuts. Moderna also has an impressive late-stage pipeline and goals for potential product launches on the horizon. Yet none of these elements has been enough to pull the stock out of the doldrums.
Considering this, is it time to dump your shares of Moderna? Let's find out.
Image source: Getty Images.
A robust late-stage pipeline
First, let's back up a bit and take a look at the Moderna story, from the glory days of a few years ago to its troubles today. As mentioned, Moderna sprang to the forefront in 2021 to 2022, bringing its messenger RNA vaccine candidate to market and generating billions of dollars in revenue and profit.
Meanwhile, the biotech continued to apply this mRNA technology across its pipeline, advancing candidates for latent viruses such as cytomegalovirus (CMV), and making progress in the area of cancer vaccines. And these are just a couple of the company's late-stage programs.
But investors focused primarily on Moderna's coronavirus vaccine, which at its peak in 2022 brought in a mind-boggling $18.4 billion in annual revenue.
More recently, though, demand for coronavirus vaccination dropped, and Moderna's RSV vaccine delivered lackluster sales during its first "season" on the market -- respiratory vaccines generally see most uptake later in the year, during the cold and flu season.
Moderna has progressively cut costs and refocused resources to support its goals of bringing many vaccines to market -- across multiple treatment areas -- over the next several years. In its most recent earnings report, the biotech said it expects to reduce GAAP operating costs by between $1.4 billion and $1.7 billion by 2027.
The goal: 10 product approvals
The company continues to aim for as many as 10 product approvals within the next few years. And this includes "multiple" cancer vaccines, it says -- this is an area that Moderna has prioritized.
Its pipeline currently has seven cancer-vaccine candidates -- for a range of indications including melanoma and bladder cancer -- in phase 2 or phase 3 studies. The product-approval goal, even if only partially reached this decade, could be a game changer for Moderna, offering it multiple revenue streams -- and eventually sources of revenue at blockbuster levels.
NASDAQ: MRNA
Key Data Points
However, as I said earlier, these positive points haven't yet led to lasting gains for the stock. Does this mean it's time to dump your Moderna shares?
First, it's important to note that Moderna's difficult times may not be over. Investors continue to focus on the decline in coronavirus vaccine sales, and to a lesser degree, the early disappointment in the RSV market. And this subject takes the spotlight as each new flu season rolls around.
On top of this, uncertainty about the Trump Administration's vaccine policies may prove to be a headwind. Most recently, Health and Human Services secretary Robert F. Kennedy Jr. let go a full panel of advisors who guide the government's vaccine decisions, saying that he would appoint new panel members.
Looking into the future
These issues could continue to weigh on Moderna's stock performance. But even considering this, and the fact that its pipeline hasn't yet pushed it onto investors' buy lists, I still wouldn't dump shares of Moderna right now.
Why? Because the company has what it takes to succeed from a product and earnings angle, as I mentioned above. Often investors reward this ahead of time by piling into a stock as a company announces long-term prospects, but in Moderna's case, investors haven't followed that pattern.
But eventually, as Moderna approaches the product-approval finish line with key candidates, including those in the field of oncology, the revenue picture may brighten significantly. If it does, the stock could finally soar. That's why long-term investors should hold on through the tough times and get ready for Moderna's next wave of growth -- even if it takes a while for the biotech to get there.
