Moderna Sees a Brighter Future Post-Pandemic

Moderna MRNA 3.21% is a rare example of a company in recent history.

At the beginning of 2020, Moderna was a small biotech firm with uncertain prospects and a novel technology - messenger RNA - that seemed to be far from producing any products. This was recently documented by Wall Street Journal journalist Peter Loftus in his book "The Messenger".

The emergence of Covid-19 brought about a drastic shift in our lives.

Moderna has become a major contributor to the fight against the pandemic, having developed one of the first Covid-19 vaccines. Their sales skyrocketed from nearly nothing in 2019 to approximately $19 billion in 2020. The company is expected to release their full year results in the near future.

Despite the success of Moderna due to its Covid-19 vaccine, the discussion on Wall Street regarding its future remains contentious. Analysts are uncertain how to evaluate a business with a single approved vaccine for a pandemic that could soon be over. Data from FactSet suggests that the company's revenue from the vaccine is expected to decrease significantly in the years ahead.

Stéphane Bancel, the Chief Executive Officer of Moderna, has been vocal about the potential of the mRNA platform for treating other illnesses. However, investors became apprehensive during the bear market of 2021, causing Moderna's stock to plummet from nearly $500 in August 2021 to a low of $115 in 2022.

Moderna is now entering a new stage of development, and investors are paying attention.

On Tuesday, Moderna announced the top-line results of its respiratory syncytial virus (RSV) vaccine, which demonstrated an 83.7% effectiveness rate against lower-respiratory diseases caused by RSV. This news means that the vaccine will now enter a competitive market for RSV shots, which includes GSK and Pfizer.

Respiratory Syncytial Virus (RSV) is a major contributor to hospitalizations in the United States for both infants and elderly individuals. According to UBS analysts, the market for RSV vaccines could be worth more than $5 billion, with Moderna's peak sales estimated at $1.3 billion. On Wednesday, Moderna's stock rose by 3% in response to the announcement made the day before.

The RSV results were revealed after Moderna declared that their experimental cancer vaccine, which is being developed in collaboration with Merck, was successful in preventing the reoccurrence of melanoma in a mid-stage trial. Although some questioned the statistical analysis of the study, the companies are planning to conduct a larger melanoma study to give the medical community a clearer understanding of the vaccine's impact.

The potential of personalized cancer vaccines, which are created to generate a response specific to a patient's tumor mutation, could be immense. If the vaccine is successful in treating melanoma and other types of cancer, Michael Yee, an analyst from Jefferies, estimates that it could become a multi-billion dollar business, with annual revenues ranging from $5 to $10 billion.

Analysts, including Mr. Yee, are becoming increasingly optimistic about the possibility of combination vaccines from Moderna. The company is currently testing a Covid and Flu shot, as well as a Covid-Flu-RSV shot. This could be seen as a major convenience for many, as it would provide protection against multiple respiratory illnesses in one shot.

The Covid-19 pandemic has been a major boon for Moderna. As the potential of mRNA technology becomes more evident, the company's future looks brighter. Investors no longer need to worry about its sustainability when the virus is no longer a threat.