Some investors believe the ship was already sailing when it had to be invested Modern (NASDAQ: MRNA). With a market cap well above Moderna’s $ 50 billion, Moderna’s options for the mRNA-1273 COVID-19 vaccine appear to be largely included in its share price.
I definitely agree that the evaluation of Moderna a few months ago was much more attractive than it is now. However, I don’t think it’s necessarily too late to buy the biotechnology kit. There are three reasons for this.
1. Billions of dollars are expected on the go
I fully expect the U.S. Food and Drug Administration (FDA) Advisory Committee meeting today to vote overwhelmingly in favor of the recommendation for an Emergency Use Authorization (EUA) for mRNA-1273. I also fully expect the FDA to quickly provide the EUA with the Moderna COVID-19 vaccine.
Provided this actually happens, Moderna will soon receive a huge amount of cash. The company has entered into supply transactions with the United States, Canada, the United Kingdom, the European Commission, Israel, Japan and Singapore. How much money could Moderna make from mRNA-1273 in the near future? Bernstein Gal, an analyst at Bernstein, predicts that biotechnology will reach $ 11 billion next year.
I think the total amount could be even higher. The United States has already taken the opportunity to purchase an additional 100 million doses of mRNA-1273. If any of the companies with the late-stage coronavirus vaccine stumbles, Moderna could sell far more doses to the United States and other countries than is required by its current supply agreements.
Of course, many investors know intellectually that Moderna is about to generate huge revenues. However, I suspect that when the company announces its quarterly results next year, the full impact of Moderna’s financial strength will be worth the higher shares.
2. Long-term platform potential
In connection with this, Stephane Bancel, CEO of Moderna, has publicly stated that he will use his company’s new assets to invest significant sums in the expansion of the pipeline. Bancel even assumed that Moderna could become the world’s largest vaccine manufacturer in the next three to four years.
This is probably an overly expected expectation. However, I believe that Moderna has huge long-term potential for its mRNA platform. This platform is likely to grow much larger due to the cash produced by mRNA-1273.
I am looking for Moderna to have another megablockbuster over the next few years, with a cytomegalovirus (CMV) vaccine to be tested late next year. This is probably just the tip of the iceberg. In my opinion, some investors do not fully appreciate the opportunities that may arise for Moderna in the future with its mRNA vaccines and therapies.
3. Possibility of more frequent COVID-19 vaccinations
Finally, there’s a wild card that can really shake up the dynamics of Moderna. At this point, we do not really know how long mRNA-1273 or any other vaccine will protect against infection with the new coronavirus. Ronny Gal Bernstein said reminder shots will be needed every three years. Others expect annual vaccinations. But what if COVID-19 is needed more often – maybe every six months?
This could dramatically increase the annual market for coronavirus vaccines. If Moderna can realistically expect to sell 1 billion servings a year, $ 32 per serving, then the stock is an absolute theft according to its current valuation.
It is too early to know the actual duration of protection for mRNA-1273 and other COVID-19 vaccines. In my opinion, however, investors make the mistake of assuming that it is too late to buy shares in Moderna while the jury is not addressing this critical factor.