Evaluating Moderna’s Future Potential in the Biotech Sector
In the early stages of the COVID-19 pandemic, Moderna (NASDAQ: MRNA) emerged as a frontrunner, showcasing impressive performance both in share price and earnings. As a leading developer of a coronavirus vaccine, the biotech company generated billions in revenue, with its stock price skyrocketing by more than 2,300% from January 2020 to early August 2021. However, recent years have not yielded the same success, leading to disappointment among investors.
The decline in demand for COVID-19 vaccinations has hindered Moderna’s growth prospects. Additionally, its second approved product — a respiratory syncytial virus (RSV) vaccine — has not produced the expected revenue during its initial commercialization quarters.
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Despite these challenges, Moderna possesses a robust pipeline with numerous late-stage candidates poised for potential market entry. The question remains: Where will Moderna stand in five years? Let’s explore.
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Rapid Vaccine Development: A Key Achievement
To comprehend Moderna’s journey, it is essential to understand its core focus on messenger RNA technology. This innovative approach utilizes mRNA to instruct the body to produce proteins that combat diseases. Moderna’s pipeline spans a wide range of areas, including respiratory viruses, latent viruses, cancer, and rare diseases. Notably, in 2020, the company successfully accelerated its mRNA coronavirus vaccine from concept to market in under a year.
During the peak of the pandemic, the demand for this vaccine led to a massive revenue surge, peaking at over $19 billion in 2022. However, demand eventually dwindled, causing revenue to plummet to $3.2 billion last year.
The downward trajectory has had a significant impact on Moderna’s stock price, which has fallen more than 90% since its peak in 2021.
The Road Ahead: A Promising Pipeline
Looking ahead, Moderna has set an ambitious goal of introducing up to 10 new products by 2027. If successful in clinical trials and regulatory processes, the company could establish a diverse product portfolio across various therapeutic areas. Among the candidates currently in phase 3 trials are potential vaccines for cytomegalovirus (CMV), personalized cancer therapy, and norovirus.
Additionally, the company is advancing several candidates in phase 2 trials. These include treatments for the rare metabolic disorder propionic acidemia, along with vaccine candidates for Lyme disease and the Zika virus, which may come to market by 2030.
Positive Trajectory in Clinical Success Rates
While encountering setbacks is a possibility in drug development—a common challenge for biotech and pharmaceutical companies—Moderna’s future looks promising. The firm has maintained a higher-than-average success rate in clinical trials, with an 83% probability of success in phase 3 trials compared to the traditional biopharmaceutical industry’s average of 69%.
This suggests that by 2030, Moderna’s revenue stream could be transformative. Typically, products take about a year to scale significantly in sales following a market launch. However, anticipating future product introductions, Moderna forecasts a compound annual growth rate of 25%, potentially reaching $6 billion in revenue by 2028.
Furthermore, Moderna is refining its research and development (R&D) investments based on profitable opportunities. From 2024 to 2025, investment in respiratory vaccine research is expected to account for half of Moderna’s R&D spending, tapering to one-third from 2026 to 2028. Conversely, investments in oncology will expand significantly in this period, aiming to represent one-third of total R&D investment over the next three years.
Investment Consideration: Is Moderna a Good Buy?
Investors interested in Moderna should reflect on the following:
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Adria Cimino has no position in any stocks mentioned. The Motley Fool recommends Moderna. Please review the Motley Fool’s disclosure policy for more information.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
