After a solid run since starting at the sub-$20 levels at the start of the year, Moderna (NASDAQ:MRNA) continues to attract plenty of buying and selling activity. Ultimately, the direction of MRNA stock depends on the company’s developments in delivering a vaccine for the novel coronavirus. But even if that gets delayed, Moderna’s messenger RNA (mRNA) therapeutics is a potential platform for vaccines preventing other diseases.
Company Advantages May Lift MRNA Stock
Moderna’s advantage in mRNA medicines over the use of small-molecule drugs is its ease of design. More specifically, at its annual science day, highlighted “the ease of engineering their properties to achieve desired pharmacology.” As investors gain a better understanding of the results of its new research in mRNAs and encoded proteins, they will be more willing to bid the company’s market capitalization higher.
Aggressive investors are not asking many questions about the revenue potential in the near-term. But the importance of creating a vaccine to protect against the fast-spreading coronavirus suggests that the annual revenue potential is in the billions.
Moderna currently has 23 mRNA development candidates. 13 of them are in clinical studies. The COVID-19 vaccine gets all the attention. But mRNA-1647, whose program indication is Cytomegalovirus (CMV) vaccine, is at Phase 2. It has the highest chance of bringing in revenue the soonest if it reaches commercial development.
Higher Urgency for Vaccine
Surging cases of COVID-19 infections in California and Texas in the weeks following Memorial Day should concern the U.S. It also raises the urgency of successfully commercializing a vaccine. Another break-out in South Korea is another blow to those who thought that even under tight monitoring, the virus would be contained. Human behavior might explain the increased infection rates: some people refuse to wear face coverings due to ‘mask rage.’
Another frightening finding is the studies that report a rapid loss of COVID-19 antibodies. If people naturally infected with the virus lose immunity shortly afterward, why should Moderna and the scientific community believe that a vaccine is possible? The first study involved around 1,500 coronavirus patients in Wuhan China. Researchers found that around 90% of patients had antibodies to the virus. But 10% of patients had no detectable antibodies. The study inferred that “after SARS-CoV-2 infection, people are unlikely to produce long-lasting protective antibodies against this virus.”
Manufacturing Production Deal
On June 25, Moderna and Catalent (NYSE:CTLT) said it would collaborate on a large-scale for fill-finish manufacturing of Moderna’s COVID-19 vaccine candidate. This is a positive development because Catalent has expertise in manufacturing scale-up. If demand grows at a rapid pace, Catalent has the biologics facilities to undertake drug manufacturing. For example, its facility in Bloomington is 875,000 square feet. The facility is designed for drug product fill-finish in vials, cartridges, and prefilled syringes. It may even completely part of the packaging.
Moderna appears confident in the efficacy of its COVID-19 vaccine. It planned by anticipating the next steps following the fast-track testing and analysis of its clinical trials. This is all thanks to the National Institutes of Health (NIH).
Looking ahead, Moderna’s clinical data will continue to move its shares in either direction. For example, positive results may still send the stock lower on a “sell on the news” event. Conversely, the stock may rise sharply ahead of the NIH releasing peer-reviewed data.
Fair Value and Your Takeaway
Based on its enterprise value to sales ratio, Moderna could have a fair value of around $83.00 (per the insight report on Stockrover). This value is in line with analyst price targets, which averages $87.00 (according to Tipranks). Bottom fishers who missed the rare dip in Moderna would be hard-pressed buying shares at these levels. But if the stock were to fall further, they may get another chance.
Disclosure: As of this writing, the author did not hold a position in any of the aforementioned securities.