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Moderna was the biotech darling of the Covid era. But with Covid revenues declining and new products still in development, does Moderna have what it takes to transform itself into an ominpresent biopharma player for the 21st century? 


By Nathan Suryabudi, Equity Analyst 

Moderna is a biotechnology company that has gained significant attention and success in recent years, particularly due to its groundbreaking COVID-19 vaccine. The company was founded in 2010 by a group of scientists, including Dr. Derrick Rossi, Dr. Kenneth Chien, and Noubar Afeyan, with the goal of leveraging messenger RNA (mRNA) technology to develop new therapeutics and vaccines.

Moderna’s mRNA technology is based on the idea of using synthetic mRNA molecules to instruct cells in the body to produce specific proteins. This approach has the potential to revolutionize the field of medicine by enabling the production of a wide range of therapeutic proteins within the patient’s body. This approach has the potential to treat a wide range of diseases by harnessing the body’s own cellular machinery to produce therapeutic proteins.

The company’s initial focus was on using mRNA technology to develop personalized cancer vaccines and therapies.

However, when the COVID-19 pandemic emerged in early 2020, Moderna quickly shifted its resources and expertise towards developing a vaccine against the novel coronavirus. They were able to leverage their mRNA technology platform to develop a highly effective vaccine in record time. Moderna’s COVID-19 vaccine, known as the mRNA-1273, received emergency use authorization in several countries and played a crucial role in the global vaccination efforts.

Moderna’s COVID-19 vaccine was developed in collaboration with the National Institute of Allergy and Infectious Diseases (NIAID) and the Biomedical Advanced Research and Development Authority (BARDA). The vaccine utilizes a small piece of the coronavirus’s genetic material, its mRNA, to instruct cells to produce the spike protein found on the surface of the virus. This spike protein triggers an immune response in the body, priming it to recognize and fight against the actual virus if encountered.

The success of Moderna’s COVID-19 vaccine has been extraordinary. Clinical trials demonstrated high efficacy rates in preventing COVID-19 infection, leading to widespread adoption of the vaccine worldwide. The company ramped up production and distribution to meet the global demand, which contributed to their financial success during the pandemic.

Due to the urgent need for COVID-19 vaccines, Moderna secured numerous supply agreements with governments and organizations, which boosted its revenues significantly. The company also benefited from collaborations with other pharmaceutical companies, such as Lonza Group, for large-scale manufacturing of the vaccine.

The success of Moderna’s COVID-19 vaccine has not only contributed to the company’s financial success but has also solidified its position as a leader in mRNA technology. The vaccine’s efficacy and safety profile have generated confidence in the broader application of mRNA therapeutics and vaccines for future diseases.

Moderna’s Revenue

Although Moderna has experienced a remarkable journey of growth, investors are becoming uneasy as to whether to invest in Moderna as vaccination campaigns progress and the global population reaches higher levels of immunization. The demand for Covid vaccines has begun to plateau. This saturation in the vaccine market has created uncertainty regarding Moderna’s ability to sustain its exceptional revenue growth. In 2020, Moderna reported annual revenue of $0.803 billion, marking a substantial increase of 1238.33% compared to the previous year. This surge was primarily driven by the development and production of its mRNA-based COVID-19 vaccine, which gained global attention and demand.

The following year, in 2021, Moderna’s annual revenue skyrocketed to $18.471 billion, representing a remarkable 2200.25% increase from the previous year. This surge was primarily due to the global distribution and sales of its COVID-19 vaccine, as it played a crucial role in combating the pandemic.

However, in the first quarter of 2023, Moderna experienced a decline in revenue compared to the same period the previous year. For the quarter ending March 31, 2023, Moderna’s revenue was $1.862 billion, reflecting a 69.3% decrease year-over-year. It’s important to note that this decline could be attributed to a variety of factors, such as changes in vaccine demand or competition from other pharmaceutical companies.

Looking at the twelve-month period ending March 31, 2023, Moderna’s revenue stood at $15.059 billion, representing a 33.37% decline compared to the same period the previous year. This decline indicates a reduction in revenue growth compared to the previous years, which can be expected as the initial surge in demand for COVID-19 vaccines may have subsided. The company’s stock price has declined precipitously along with the falling revenue.

Looking Ahead

Moderna’s future prospects appear promising, as the company looks to expand its focus beyond COVID-19 vaccines and delve into rare disease therapeutics. With its groundbreaking mRNA technology, which has already proven successful in the development of COVID-19 vaccines, Moderna is now aiming to leverage its programmable messenger molecule to address rare genetic conditions. 

The recent early-stage study results of Moderna’s therapy for children with a metabolic disease showed encouraging outcomes. The mRNA therapy enabled these children to produce a crucial enzyme that their bodies were previously missing, resulting in a significant reduction in dangerous metabolic crises. This positive clinical signal has prompted Moderna’s CEO, Stéphane Bancel, to express enthusiasm and commitment towards rare diseases, stating that “Moderna will be a rare disease company.

Moderna’s push into rare diseases comes at a time when several other companies have scaled back their efforts in this area. With a substantial cash reserve of approximately $16.4 billion as of March 31, Moderna has the financial capability to invest in this new therapeutic domain. The company has already increased its R&D budget to $4.5 billion and plans to hire additional employees to expand its pipeline and strengthen its capabilities. 

However, Moderna has experienced a significant increase in its long-term debt over the past few years. Starting in 2020, Moderna Experienced a notable increase of 184.32% in its long-term debt, bringing it to $0.11 billion. In 2021, Moderna’s long-term debt reached $0.599B, which is a 444.55% increase from 2020. This steep increase likely reflects the company’s efforts in scaling up its operations to meet the demand for its COVID-19 vaccine, as well as continued investments in its pipeline of mRNA-based therapies and vaccines. Moving forward to 2022, Moderna’s long-term debt continued to rise, with a 52.25% increase compared to the previous year. The debt reached $0.912 billion, indicating ongoing investments in research and development, manufacturing capabilities, and global distribution infrastructure.

By the quarter ending on March 31, 2023, Moderna’s long-term debt amounted to $0.831 billion, representing a 28.64% increase year-over-year. This suggests that the company is still actively leveraging debt to fund its growth initiatives and expand its product portfolio.

The potential for success in rare diseases is significant, as it offers lucrative market opportunities. The pricing for rare disease treatments can be substantially higher than traditional medicines, with some rare disease medications charging $1,000,000 or more. In addition, many of these kinds of medicines are so specialized, that they enter a market with little or no competition.

By creating a pipeline of mRNA-based therapies for rare diseases, Moderna aims to tap into this market and potentially become a leader in the field, drawing comparisons to renowned biotech companies like Genzyme.

Moderna’s mRNA technology’s programmability is a key advantage, enabling the company to apply the same formulation and targeting strategies to multiple diseases by simply tinkering with the genetic sequence. This versatility has been exemplified in Moderna’s extensive vaccine pipeline, which includes candidates for various infectious diseases.

Moderna Vs. Cancer 

In addition to rare disease therapeutics, Moderna is also exploring personalized cancer vaccines in collaboration with Merck. This indicates the company’s ambition to expand into other therapeutic areas and maximize the potential of its mRNA technology. 

The collaborative effort between Moderna and Merck in developing an experimental cancer vaccine shows promising results in the fight against melanoma, the most deadly form of skin cancer. The mid stage trial results, published recently, indicate that the vaccine, when used in combination with Merck’s Keytruda immunotherapy treatment, reduced the risk of melanoma spreading to other parts of the body or causing death by 65% in patients with stage 3 or 4 of the disease. This finding highlights the potential of this novel vaccine as an effective strategy to combat advanced melanoma. In the United States alone, there are almost 100,000 cases of Melanoma diagnosed each and every year. 

The experimental cancer vaccine developed by Moderna and Merck represents an innovative approach to all kinds of cancer treatment. Unlike traditional vaccines that target infectious diseases, this vaccine is designed to activate the patient’s immune system specifically against cancer cells. By utilizing messenger RNA (mRNA) technology, Moderna has developed a vaccine that instructs cells in the body to produce specific antigens found on melanoma cells. These antigens then trigger an immune response, enabling the immune system to recognize and target the cancer cells more effectively. The company is conducting extensive research to determine if this approach will work for a panopoly of different cancers. 

The combination of the experimental cancer vaccine with Merck’s Keytruda, an immune checkpoint inhibitor, has shown promising synergy in the clinical trial. Keytruda works by blocking the mechanisms that prevent the immune system from attacking cancer cells. When used in conjunction with the vaccine, it appears to enhance the immune response against melanoma, leading to a significant reduction in the risk of disease progression and improved patient outcomes. 

Should I Invest? 

Analysts and investors have shown cautious optimism about Moderna’s future prospects. The positive interim data from the early-stage studies, along with the company’s robust financial position, have instilled confidence in its ability to succeed in the rare disease space. Moderna has received FDA Breakthrough Therapy Designation for its investigational respiratory syncytial virus (RSV) vaccine candidate, mRNA-1345. This designation recognizes the potential of the vaccine to provide a significant improvement over existing treatments for RSV, a common respiratory infection that can be severe, particularly in infants and older adults. In addition, Moderna has other promising medications in the pipeline with four drugs in stage 3 trials and eight drugs in stage 2 trials. If Moderna continues to demonstrate safety and efficacy in its ongoing trials and obtains positive data in its rare disease programs, it could pave the way for a significant influx of therapies advancing from the laboratory to the clinic.

The rare disease market is already a large market, and it is projected to experience significant growth in the coming years. Based on Yahoo Finance, the market is estimated to increase from $161.4 billion in 2020 to $547.5 billion by 2030. If Moderna can capture just 10% market share they could earn around $54 billion in annual revenue. Established companies in this market typically trade for 5 times revenue, so that would be $$270 billion for Moderna. They are currently valued at just $47.81 billion as of June 20, 2023. 

However Moderna may find it difficult to rise to the top and gain an acceptable market share. With established companies like Pfizer,Roche, Abbott, Sanofi and Eli Lilly as competitors, Moderna needs to identify unmet needs within specific rare diseases, leverage their unique strengths, and differentiate themselves from competitors to succeed in the rare disease market.

Moderna’s stock has the potential to be a valuable addition to one’s investment portfolio, particularly in the long term, given the prospects of their innovative mRNA technology and a strong pipeline. Moderna has demonstrated its capabilities during the COVID-19 pandemic, but its potential extends beyond that as well. Moderna has already proven they can be a leader in a market, and few would be surprised if they can do it again in rare diseases or cancer vaccines. 

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