Moderna (MRNA +4.19%) shot to stardom in the early days of the pandemic as it brought its coronavirus vaccine from drawing board to commercialization in less than a year -- and then went on to generate billions of dollars in earnings. The shares soared more than 2,000% in about a year and a half, and investors couldn't get enough of this vaccine innovator.
But as vaccine demand declined in later stages of the pandemic, Moderna's revenue followed, and investors worried about the company's earnings down the road. As a result, Moderna's stock suffered, and has lost more than 70% from its peak back in 2021.
Today, there are valid arguments for buying and selling this once red-hot biotech stock, and Motley Fool contributors Keith Speights and Adria Cimino explore them both.
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Bull case: The worst is over
Keith Speights: I'll readily admit that a lot has gone wrong for Moderna over the last couple of years. All you need to do is take a glance at the vaccine maker's stock chart to know that's the case. However, I firmly believe that the worst is over for Moderna.
Let's start with the company's Spikevax COVID-19 vaccine. Granted, sales of the vaccine are likely to sink another 40% or so this year. However, I predict that 2024 will be a trough year. Importantly, Moderna expects that its COVID-19 franchise will be profitable going forward.
The bigger story for Moderna, however, is that it should soon expand beyond COVID-19. The U.S. Food and Drug Administration (FDA) has set a PDUFA date of May 12, 2024, for its approval decision on the company's respiratory syncytial virus (RSV) vaccine mRNA-1345. Moderna is also seeking regulatory approvals for its RSV vaccine outside the U.S.
Although anything is possible with the regulatory approval process, I think that mRNA-1345 will win a thumbs-up. Moderna should begin marketing the vaccine in the U.S., Australia, and Germany later this year. It hopes to launch mRNA-1345 in additional markets beginning in 2025.
There's a big need for RSV vaccines. Even with two rivals already on the market, mRNA-1345 should be quite competitive, with its solid efficacy and prefilled syringe, which makes it easier for pharmacists and doctors.
Moderna also plans to file for FDA approval of its seasonal flu vaccine mRNA-1010 in 2024. It expects results from late-stage studies of combination flu/COVID-19 vaccine mRNA-1083 and cytomegalovirus vaccine mRNA-1647 later this year. The company intends to advance two experimental therapies targeting rare diseases proplonic academia and methylmalonic academia into pivotal studies over the next several months as well.
Meanwhile, Merck and Moderna continue to evaluate a combination of blockbuster immunotherapy Keytruda with Moderna's cancer vaccine mRNA-4157 in phase 3 studies.
With new products potentially on the way, Moderna should return to sales growth in 2025. It's time to again be bullish about this biotech stock.
NASDAQ: MRNA
Key Data Points
Bear case: Even positive news hasn't helped stock performance
Adria Cimino: It's true that the worst may be over for Moderna, but so far, even positive news about the company's progress on pipeline programs or forecasts of future sales have failed to kick-start stock performance.
Investors got accustomed to enormous growth from Moderna, with sales from one product, the coronavirus vaccine, topping $18 billion at its peak. So, it's been difficult for them to leave that performance in the past and get excited about Moderna's prospects in a post-pandemic world. The biotech company has predicted $15 billion in sales from its respiratory franchise in 2027 -- that's great, but it still doesn't match the sales from its once-star product.
The company also aims to launch as many as 15 new products over the coming five years. This news, announced last fall, didn't propel the shares higher, though. In some cases, investors may be waiting for Moderna to deliver on some of its promises before diving in.
Another concern could be that one of Moderna's programs on the horizon is a combined coronavirus and flu vaccine, but in this space, the company could face two rivals. Pfizer and Novavax also are working on combined candidates. And with the low vaccination rates we've seen so far -- the U.S. vaccination rate fell year over year this past season -- there's no guarantee this potential product will generate significant revenue.
Meanwhile, it's difficult to establish a valuation for Moderna shares because we really don't know what coronavirus vaccine demand and revenue will look like down the road. The company has a good shot at bringing other late-stage candidates to market in the coming years, but until a candidate actually wins a regulatory nod, risk remains. And all of this may prompt investors to stay on the sidelines rather than invest in this biotech stock today.
Should you favor the bull or bear case?
Moderna faces some uncertainties in the coming years, and coronavirus vaccine sales are unlikely to approach past levels. But the company has a solid late-stage pipeline, and its potential RSV vaccine could stand out from rivals and progressively carve out market share. And if even only a small portion of its late-stage candidates reach the finish line, Moderna can start growing once again.
It's true that the coronavirus vaccine, the product that made Moderna a star, now may be weighing on investor appetite for the stock. But if Moderna can reach its goals, investors might no longer see the company only as a coronavirus player -- and that means those who are bullish on Moderna today may win over the long haul.
