Moderna Stock (NASDAQ:MRNA)
Moderna, Inc. (NASDAQ:MRNA) soared to prominence with COVID-19 and its mRNA vaccine, only to fade away. Despite this drawback, the revolutionary nature of the business’s products, as well as a continuing R&D pipeline, make Moderna stock a desirable purchase at its current value in my opinion.
Moderna 1st Quarter 2023
Moderna made $1.9 billion in revenue and $80 billion in profit.
The corporation still has $16.4 billion in net cash and investments, giving it a net market valuation of $30 billion. The corporation continues to invest a significant portion of its sales in R&D. The company has continued to repurchase shares, recognizing that it cannot rush through an R&D pipeline that I do not believe is necessarily worth the price.
Pipeline Moderna 1Q 2023
The corporation has continued to make significant investments in its pipeline.
Multiple Phase 3 medications and numerous development drugs remain in the company’s pipeline. The business anticipates that the Covid-19 market will generate at least $5 billion in revenue in 2023. Simultaneously, the business is beginning to prepare for the prospective launch of its RSV vaccine next year.
Individualized therapeutic and 47 development programs are being developed by the firm. In my opinion, the company’s Phase 2/3 programs have enormous near-term earning potential.
The pipeline of the company is costly. With all of its COVID-19 income spent on R&D, 2023 is practically breakeven. The company’s R&D has climbed year on year, and I expect it to continue high as the number of Phase 3 programs increases. It shouldn’t be buying back shares right now because it has no post-COVID-19 revenue programs and 3.5 years of R&D as cash.
Short Term Moderna
The ability of the corporation to roll out its Phase 3 programs in the future years will determine its short-term prospects.
The company’s RSV Phase 3 findings demonstrated significant strength with little tolerability risk. RSV’s similarity to COVID-19, combined with its significant impact, makes it a compelling new candidate. Gardasil has demonstrated the potential influence of new vaccine revenue. The company has yet to experience any serious adverse effects (demyelinating events) such as GBS.
The company’s confidence here indicates that it is starting to plan a 2024 rollout campaign. The company’s estimated addressable market in this region is $7 billion per year. It anticipates that the COVID-19 market will be able to ramp back up to $15 billion, which would be valuable if the company could capture $5 billion of it.
If the corporation’s R&D program can be sustained, a successful launch here would be significant for the company.
Vaccine Continuance by Moderna
Although the business’s vaccination sales have decreased significantly, the corporation still needs to reach its $15 billion market target.
The company’s first-quarter sales were $1.8 billion, accounting for the majority of its $2 billion in 1H 2023 sales. However, the business expects US sales to begin in the second half of the year, which would enhance the company’s net revenue. The United States remains the world’s largest pharmaceutical market, and increased sales here might significantly benefit the corporation.
The most important thing for the corporation in the rest of 2023 is to demonstrate that COVID-19 revenue is sustainable at least to the end of the decade.
My Opinion
The company’s next quarter is predicted to be quite weak, yet it still has a lot of promise.
The company’s revenue forecast for 2023 remains at $5 billion. The company’s second quarter will be by far the weakest, with the cost of sales exceeding revenue. However, the company’s cost of sales objective for the year remains at 37-38% based on $5 billion in revenue. Full-year spending is estimated to be $6 billion, reducing the cash pile.
The company’s tax benefit and limited capital expenditures will assist offset the company’s extremely high R&D expenses. Negotiations with the United States, Japan, and the European Union may continue in 2023, but I have no idea where the corporation will be in 2024.
Thesis Peril
The ability of the company to, well, grow a firm is the greatest risk to my argument. The COVID-19 vaccine was revolutionary, saving hundreds of thousands of lives, but it was not enough to build a $30 billion firm on its own. To justify its valuation, the company must see success in its RSV pipeline and additional COVID sales.
Conclusion
Moderna is seeking to significantly increase its R&D spending as it expands its huge asset pipeline. The corporation is increasing R&D by 50% year over year, but with $5 billion in existing COVID-19 sales, it will be negative for the year. The corporation has a significant net cash position that will keep it going in the short term, but not forever.
Outside of its net cash, the corporation is valued at $30 billion. COVID-19 alone cannot carry that load, although the corporation does require further COVID-19 contracts in the near term. The next item to watch for is the release of an RSV next year. Whatever occurs, Moderna stock has the potential to create significant shareholder returns.
Featured Image: Megapixl
