What Will Moderna Look Like Post Covid-19?

Moderna’s stock (NASDAQ: MRNA) has rallied almost 4x since the beginning of this year, rising from levels of about $20 to near $75 currently. However, we believe the vaccine, if successful, is only likely to contribute meaningfully to Moderna’s earnings for about two years, after which the rest of the company’s pipeline will be crucial to driving growth. Below, we take a brief look at how Moderna’s business could shape up post the Covid-19 pandemic.

Covid Vaccine Earnings May Be Limited, But It’s Key To Validating Moderna’s Technology At Scale

Covid-19 has become a healthcare and economic crisis that is costing the global economy trillions of dollars and there is an urgent need to develop a vaccine to help end the pandemic. Although Moderna is seen as one of the leaders in the vaccine race, there’s a lot of competition, and going by the recent progress, it’s reasonable to expect that there will be multiple successful candidates by 2021. This means that sales for Moderna’s vaccine could top-off by as early as 2022, once a large percentage of the global population is vaccinated. For perspective, we estimate that Moderna’s Covid-19 vaccine will add less than $5 each year to Moderna’s EPS over 2021 and 2022, after which its contribution is likely to be limited, assuming that it doesn’t require multiple future doses. However, the vaccine is still crucial to validating Moderna’s technology.

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While the messenger RNA (mRNA) based platform that Moderna uses for its drug development could be more potent and easier to produce compared to traditional vaccines, it has never been used commercially to date. [1] Now Moderna’s rapid progress with its Covid vaccine, coupled with some positive data on efficacy is making investors more positive about the prospects of mRNA technology. The validation of the technology effectively reduces the risk surrounding the rest of Moderna’s sizable pipeline which is focused mostly on vaccines and rare diseases.

A Quick Look At Moderna’s Pipeline

The company has 22 programs underway, 12 of which are in the clinical stage. [2] Moderna’s Cytomegalovirus vaccine, which is currently in phase 2 studies and could move to phase 3 in 2021 is likely to be the company’s first candidate for approval after its Covid-19 vaccine. Moderna has projected annual peak sales in the range of $2 to $5 billion if approved. Moderna’s Personalized cancer vaccine, which is also currently in phase 2 trials could also be a driver of revenue in the next few years if it’s approved and adopted widely. The company is working with Merck on this project and has also been studying the use of the vaccine along with Merck’s blockbuster cancer drug KEYTRUDA for the treatment of high-risk adjuvant melanoma. The company is also working on therapeutics for Myocardial ischemia, commonly known as coronary heart disease. While the drug is in phase 2 trials and has been licensed to AstraZeneca, Moderna should stand to generate meaningful revenues from royalties if the drug is successful considering that the U.S. alone sees roughly 1.5 million cases of this disease each year. [3]

Larger pharma companies could offer better downside protection compared to Moderna if you’re looking to gain exposure to a Covid-19 vaccine stock. Should you pick Johnson & Johnson Or Pfizer For Better Returns?

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