A few years ago, investors rushed to buy Moderna (MRNA 4.54%) stock. The biotech company had brought its coronavirus vaccine to market in less than a year and quickly saw earnings take off. The stock soared more than 700% through 2020 and into the first weeks of 2021, and peak vaccine sales reached more than $18 billion for the 2022 full year.
But, as demand for coronavirus vaccines waned during later stages of the pandemic, Moderna's growth didn't last. The company embarked on cost cuts and realigned its pipeline to build out a seasonal vaccines portfolio and focus on big opportunities, such as oncology and rare disease therapeutics.
Though Moderna has made progress along this new path, it's also reached some bumps. And the latest happened just this week, when the U.S. Food and Drug Administration said it wouldn't review Moderna's flu vaccine application. The flu candidate, mRNA-1010, represents an integral part of Moderna's seasonal vaccine portfolio. Moderna stock fell more than 3% in one trading session following the news.
Against this backdrop, is Moderna a stock to avoid, or a bad news buy? Let's find out.
Image source: Getty Images.
Moderna's ups and downs
Before jumping in, we'll first take a quick look at Moderna's recent ups and downs. As mentioned, the company exploded onto the scene during early pandemic days thanks to the strength of its mRNA technology -- and its ability to use this to develop a coronavirus vaccine. The mRNA technique involves teaching the body to produce a particular protein to protect against or fight disease.
Moderna uses this technology across its pipeline, and currently sells two coronavirus vaccines, Spikevax and mNEXSPIKE -- the latter is a lower-dose version, and both are adapted to the 2025-2026 season. The biotech company also sells a respiratory syncytial virus (RSV) vaccine. Moderna has been counting on this portfolio, which is expected to include a flu vaccine, to drive growth over the next few years. Earlier this year, Moderna said it aims for mRNA-1010 to enter the global market for the 2027-2028 flu season.
At the same time, Moderna has been working on candidates in other treatment areas. It faced disappointment a few months ago when its cytomegalovirus (CMV) vaccine candidate -- one that could have solved an unmet need -- failed in a phase 3 trial. But the company continues to make progress with oncology candidates, in phase 3 trials and earlier studies, and is also advancing candidates in early studies for rare diseases. Moderna aims to invest cash from sales of seasonal vaccines to support these programs that may become significant revenue drivers down the road.
NASDAQ: MRNA
Key Data Points
The latest bad news
Now, let's look at Moderna's most recent news. U.S. regulators refused to consider the mRNA-1010 application, citing trial design. The FDA letter said the study wasn't "adequate and well-controlled," with a control arm that "does not reflect the best-available standard of care." The agency didn't mention any safety or efficacy concerns.
Moderna said the message regarding trial design wasn't in line with previous communications it had received from the FDA. Companies discuss trial design with regulators well before submitting applications -- in this case, Moderna submitted the study protocol in April 2024.
The biotech company said it has requested a meeting with regulators "to understand the path forward as quickly as possible."
Any delays in this potential product won't impact Moderna's revenue expectations this year, but if a delay is prolonged, this could weigh on the pace of the company's growth as of 2027. And it's important to note that current U.S. vaccine policy and investment aren't working in Moderna's favor. For example, the government last year cut $500 million in mRNA research investments and has made moves to toughen approval standards.
Is Moderna a buy?
Now let's return to our question: With all of this in mind, is Moderna a stock to avoid or a bad news buy? It's clear that Moderna could face headwinds in the near term, considering this setback and the general regulatory environment.
But, if we take a long-term view, the picture looks brighter. Moderna has a promising pipeline based on a proven technology -- if the company even brings a few of these products to market by the end of the decade, it could embark on a whole new era of growth. And, over time, this biotech could see its products and treatment areas multiply, resulting in significant revenue gains.
Risks aren't over for Moderna, but for investors who don't mind the near-term bumps, the stock isn't one to avoid. Instead, now, while the stock is down, is a great time to buy and hold -- it may pay off in a big way over the long run.
