Moderna (NASDAQ:MRNA) is a front runner in the race to develop a coronavirus vaccine, and for good reason. If you’re betting on a Covid-19 vaccine, bet on MRNA stock.
The Cambridge, Massachusetts-based biotechnology company was the first to test its Covid-19 vaccine (called mRNA-1273) in human clinical trials and is now in stage three clinical trials with 30,000 adult volunteers. Test results to date have been positive and encouraging, and recent analyst reports indicate that results from the phase three clinical trial could be known by Halloween.
The increased activity related to the development of a Covid-19 vaccine led to a fivefold increase in Moderna’s revenue during the second quarter. Revenue rose to $66.4 million during the quarter, more than five times the $13.1 million the company reported during the same quarter of 2019.
Moderna also reported that it narrowed its second-quarter loss to $116.7 million, or 31 cents a share, from $134.9 million, or 41 cents a share, during the same quarter last year. And, the company announced that it had received $400 million in deposits to supply its vaccine as of July 31 this year.
Jefferies equity analyst Michael Yee recently sent MRNA stock up 20% after he issued a report forecasting that Moderna could earn $20 billion in annual sales once its Covid-19 vaccine is approved. That kind of speculation has sent Moderna’s stock price up 395% this year to an all-time high of $95.21 a share.
The stock has fluctuated wildly in recent weeks depending on the vaccine news of the day but has settled down in a range of $73 to $82 a share. However, it likely won’t be long before the stock again has a big breakout on news of its mRNA-1273 vaccine or the wider race to develop a cure for Covid-19.
A Closer Look at MRNA Stock
Formed in 2010 by two professors at Harvard Medical School to commercialize their research, Moderna has, to date, never successfully brought a vaccine to market. Previous vaccine development and clinical trials have ended in failure for the company. But this time seems different for Moderna.
Not only is the company working around the clock to, hopefully, bring a vaccine against Covid-19 to market by January 2020, but the U.S. government has chosen to support Moderna financially as it embarks on its quest to cure the pandemic that has disabled the global economy.
As part of “Operation Warp Speed,” the federal government awarded Moderna $472 million to cover the development of mRNA-1273 through the regulatory approval process. The government has now provided Moderna with a total of $955 million to fund the vaccine’s development, including the current phase three clinical trial. That is a strong vote of confidence in Moderna’s vaccine and the company’s potential to bring it to the general population.
To be sure, the government has provided funding to other pharmaceutical companies that are hunting a Covid-19 vaccine, including AstraZeneca (NYSE:AZN), Johnson & Johnson (NYSE:JNJ) and Novavax (NASDAQ:NVAX). But it has been selective in picking vaccine makers to fund, especially when you consider that there are more than 100 Covid-19 vaccines at different stages of development around the world.
Moderna has as good a chance as any company of succeeding with a Covid-19 vaccine, and, with the government investments, it has the money needed to take its vaccine through to the conclusion of the development process.
Pricing and Production
Moderna is so far along in the development of its Covid-19 vaccine that analysts and industry observers are already debating the price at which the vaccine should be sold.
Widespread media reports state that Moderna is planning to price its vaccine at $50 to $60 per dose, and that each person will need at least two doses of the vaccine. That proposed pricing has drawn some criticism as being too high given that rival Pfizer (NYSE:PFE) is planning to sell its potential Covid-19 vaccine for about $20 a dose.
The aggressive pricing is part of the reason why Jeffries analyst Michael Yee forecasts a $20 billion market for Moderna’s mRNA-1273 vaccine. But some analysts expect the federal government to intervene on vaccine pricing and force Moderna to lower it to more affordable levels.
On August 5, the company announced that it will charge between $32 and $37 per vaccine dose for some customers under cheaper “pandemic pricing.” Final pricing is still to be determined.
Another issue for Moderna will be ramping up the mass production of its vaccine once it clears the final regulatory hurdles. To that end, the company has partnered with Bloomington, Indiana-based CDMO Catalent to help it quickly produce millions of doses of its Covid-19 vaccine within a few months.
Initial plans call for CDMO Catalent to produce 100 million doses of Moderna’s mRNA-1273 vaccine with production expected to run 24 hours a day, seven days a week. The vaccine could begin production as soon as the third quarter of this year, with vaccine vials filled and packaged for distribution in the U.S. before the vaccine receives final regulatory approvals.
MRNA Stock Momentum
By all accounts, MRNA stock is a buy. The company’s Covid-19 vaccine is too far advanced at this point for it to be discounted. The 14 analysts who have 12-month price forecasts on Moderna’s stock have a median target price of $92.00 a share, with a high estimate of $134.00 and a low estimate of $65.00 per share.
The median price is 17% higher than Moderna’s current share price of $78.46. The analysts also have a “buy” rating on MRNA stock, and there are no “sell” ratings on it. Clearly, there is a lot of upside potential for shareholders.
While not a done deal, Moderna is far enough along in the development of its Covid-19 vaccine that investors can feel confident in the company’s likelihood of success.
While Moderna’s mRNA-1273 may not be the only vaccine against Covid-19 available at this time next year, the company should benefit substantially once it has successfully commercialized and brought a vaccine to market. Investors may want to snap up shares of MRNA stock while they are still trading below $100 each.
As of this writing, Joel Baglole owned MRNA shares.
