A Look At Moderna’s Pipeline Beyond The COVID Vaccine

Moderna stock (NASDAQ:MRNA) is up by about 270% year-to-date, driven largely by the positive news surrounding the company’s COVID-19 vaccine, which is moving to phase 2 clinical trials. The company’s market cap has risen from roughly $7 billion earlier this year to close to $27 billion currently, – a $20 billion gain largely due to the experimental vaccine that still has a reasonable chance of failure. Considering that Moderna is a clinical-stage biotech, without substantial revenues at the moment (sales stood at just $60 million in 2019) investors will need to look closely at the other vaccines and drugs in the company’s pipeline, to asses what downside risk that the company faces. In this analysis, we provide a quick overview of Moderna’s development platform and pipeline, excluding COVID-19.

Our indicative list of 7 U.S. listed companies working on Coronavirus vaccines, which includes Moderna, Inovio, and others, have gained a  270% YTD return on an equally weighted basis. For more details on these stocks and their financials, view Trefis Theme: Coronavirus Vaccine Portfolio

Moderna’s Has 12 Core Developments, Besides COVID

Moderna is focused on a messenger RNA-based platform for its drug development. Simply put, mRNA molecules provide a temporary set of instructions for cells to generate a protein that can bring about therapeutic or preventive effects, making them a “software” of sorts to fight a variety of diseases.  This technology enables the company to develop vaccines and therapeutics relatively quickly, with scalable production.

The company’s core developments at the moment include 8 vaccines (excluding the mRNA-1273 for COVID), the majority of which are in phase 1 or pre-clinical stage. One of the company’s most promising vaccines is for cytomegalovirus (CMV) and the development is currently in late phase 2 trials. Moderna indicated that this could have peak sales of between $2 to $5 billion, with a very high probability of launch. The company also has three vaccine candidates for the respiratory syncytial virus (RSV) which could offer multi-billion-dollar peak sales opportunities. Separately, the company’s Zika candidate, which is at the end of phase 1 trials, could also offer several hundred-million-dollar annual peak sales opportunities. The company also has four therapeutics under its core development, for areas that include heart failure and Chikungunya. The company’s experimental modalities include personalized cancer vaccines in partnership with Merck as well as 8 other candidates targeted at rare diseases and tumors. Overall, considering the company’s platform and progress with its pipeline, it may not be a stretch to assume that it could have multiple revenue-generating drugs over the next few years.

Moderna is also well funded, with over $1.7 billion in cash as of March 2020. The company also raised another $1.3 billion in equity capital this week. Considering the company’s total operating expenses of about $600 million over 2019, it should have significant cash to execute on its pipeline, even if revenues remain low for the next few years.

Johnson & Johnson is also working on COVID-19 vaccines & could offer still better downside protection compared to Moderna. Find out more about J&J’s valuation in our analysis Why Johnson & Johnson Looks Undervalued At $145

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