A lot can happen in 10 years, and that's good news for a struggling stock like Moderna (MRNA 4.01%). Once a stock market star generating billions of dollars in coronavirus vaccine revenue, Moderna in more recent times has faced declining demand for that product and therefore declining sales and stock performance. In fact, the shares have lost more than 90% since their peak back in 2021.
But before you give up on this biotech player, it's important to look at the reason behind today's troubles and consider the company's long-term potential. After all, you could pick up one share of Moderna for less than $30, making it easy to add a few to your portfolio.
Where will Moderna be in 10 years? Let's find out.
Image source: Getty Images.
The Moderna story so far
Let's first take a step back and catch up on the Moderna story so far. This biotech surged to center stage in early pandemic days as it brought its coronavirus vaccine to market and generated annual product revenue of as much as $18.4 billion at its highest. This also resulted in billions of dollars in profit for Moderna.
But as the pandemic evolved into its later stages, demand for vaccines waned, and that resulted in significant declines in sales for the company. Initially the coronavirus vaccine was Moderna's only product, but the company then won approval for a respiratory syncytial virus (RSV) vaccine last year. Unfortunately for Moderna, that vaccine's sales disappointed in its early days on the market.
NASDAQ: MRNA
Key Data Points
As a response to all of this, Moderna has launched a major cost realignment plan and is making progress on that. In the recent quarter, the biotech said it would reduce GAAP operating costs by as much as $1.7 billion by 2027. Meanwhile, the company also is making research and development a priority, and here, the excellent news is Moderna has a full late-stage pipeline. In fact, Moderna aims to launch as many as 10 new products within the next three years, though those launches are not guaranteed.
Now, let's look at the point I made above about the reason behind the company's poor performance in recent times. This is primarily due to the decline in coronavirus revenue and the fact that Moderna hasn't yet launched another big growth product.
Putting Moderna's declines into perspective
It's important to keep in mind that the coronavirus vaccine reached such huge sales figures because it addressed a pandemic situation. It's to be expected that sales declined as the crisis waned. And investors shouldn't focus on that when looking at Moderna today or considering the company's future prospects. As for new product launches, the development of candidates and the regulatory process take time; regulators acted quickly to approve vaccines during the pandemic but that was an exceptional situation.
Potential products outside of pandemic situations require years of development and often many months for regulatory consideration. So, it isn't surprising that Moderna hasn't yet launched a great number of additional products.
Moderna's future
With all of this in mind, let's look ahead to a decade from now. Where will Moderna be? Moderna expects many new products to launch in just a few years, so it's possible that in 10 years, Moderna could have about 10 products on the market. These may include several cancer vaccines, as right now candidates for melanoma, non-small cell lung cancer, bladder cancer, and renal cell carcinoma all are involved in late-stage trials. Moderna also may have launched its cytomegalovirus (CMV) vaccine, and many respiratory virus vaccines such as a combined coronavirus/flu shot.
Of course, there's the possibility of candidate failure even in late-stage trials, but Moderna so far has delivered a strong success rate. Its probability of success in phase 3 trials is 83% -- that's compared to the industry average of 69%.
Moderna also has predicted that by 2028, it will break even on an operating cash cost basis and generate $6 billion in revenue. In fact, new product launches from 2026 through 2028 should result in a compounded annual growth rate of 25% or more, the company says.
All of this suggests that, a decade from now, even if Moderna only partially meets its product launch goals, the company could have a significant number of products on the market, and might deliver double-digit revenue growth.
Moderna stock is indeed in the doldrums today, but this offers the opportunity to buy at a reasonable price, and, 10 years down the road, potentially benefit from a huge biotech growth story.
