While all eyes are on Moderna (NASDAQ:MRNA) again at the virtual research and development day on Sept. 17, the biotechnology firm has strong intermediate prospects. Its Phase 3 clinical trial investigating a vaccine for Covid-19 is the last major step before mass production. Yet Moderna stock peaked in July for different reasons: fading hype.
Biotech investors should continue watching MRNA stock trading in the critical next few weeks. Ahead of the U.S. elections, the parties will want a vaccine on market soon. The good news for society is that safety comes first.
MRNA Stock Hype Fades
MRNA stock peaked at $95.21 in mid-July at the height of the euphoria for a Moderna Covid-19 vaccine. Since then, positive clinical results have failed to lift the stock. And at the start of the month, bearishness in stock markets increased, led by weakness in the technology sector.
Fundamentally, Moderna’s vaccine trials should indicate high levels of safety. The company outlined its primary efficacy endpoint (slide 14 in its Aug. 26 “mRNA-1273 Clinical Development Program” review). It said the participant must experience at least two systemic symptoms. For example, fever, chills, headache, sore throat, chills, and new olfactory and taste disorder. Alternatively, the subject experiences one respiratory sign, including cough or shortness and breath.
The second criterion Moderna is looking for is a positive for SARS-CoV-2 through a nasal swap, NP swab, or saliva sample. If the majority of subjects report those symptoms, then those waiting to buy MRNA stock will want to do so.
Vaccine Safety a Key Concern
A coalition of nine pharmaceutical leaders pledged not to cave to political pressure. The group will not seek vaccine approval until after properly going through Phase 3 clinical trials. The statement is a powerful one. None of the companies, including Moderna, can afford a lawsuit if the vaccine causes complications to the subject. By adhering to strict regulatory approvals, Moderna and the other drugmakers will win patient trust.
A vaccine is only good for a population if people are willing to take it. Any skepticism on its safety will leave them vulnerable to the real virus.
Moderna’s Phase 3 study has 30,000 patients. It is a long-term safety study, in addition to testing the effectiveness in protecting subjects.
Moderna signed a deal with Switzerland to supply 4.5 million doses of its vaccine if successfully developed. The guaranteed access implies a revenue potential of $144 million, at a minimum. This is based on a smaller volume agreement at $32-$37 per dose.
On Aug. 11, Moderna announced a 100 million dose supply agreement with the U.S. government. Assuming the same pricing below value and at a pre-approval supply agreement with the government, the revenue potential is $3.2 billion.
Recurring Revenue if Immune System ‘Forgets’
Reports of subjects re-infected with novel coronavirus suggests two things. First, exposure to a different strain could lead to another infection. Second, governments may need to order vaccines from Moderna annually. If the immune system “forgets” the vaccine after a few months, subjects will need another injection.
On Wall Street, analysts have not issue any recent ratings on Moderna stock. The average price target is $90.75 (per Tipranks). Moderna beat consensus estimates in five out of the last six quarters:
| Surprise Type | Announce Date | Period End Date | Actual | Est. | Surprise (%) |
| EPS | EPS | ||||
| Positive | 8/5/2020 | 6/30/2020 | ($0.31) | ($0.36) | 13.90% |
| Positive | 5/7/2020 | 3/31/2020 | ($0.35) | ($0.37) | 5.40% |
| Positive | 2/26/2020 | 12/31/2019 | ($0.37) | ($0.42) | 11.90% |
| Positive | 11/6/2019 | 9/30/2019 | ($0.37) | ($0.43) | 14.00% |
| Positive | 8/7/2019 | 6/30/2019 | ($0.41) | ($0.42) | 2.40% |
| Negative | 5/8/2019 | – | ($0.40) | ($0.34) | -17.60% |
Related Investments to Consider
Investors may look at AstraZeneca (NYSE:AZN), which is also working on a vaccine in collaboration with the University of Oxford. Pfizer (NYSE:PFE) is partnering with BioNTech (NASDAQ:BNTX) in a 50/50 deal. Novavax (NASDAQ:NVAX) will also post clinical data that may move its stock price.
Moderna is among the many vaccine developers that will post data readouts in the next few weeks. While the earliest completion dates are early-spring 2021, shares may still move higher as markets react to early data results.
Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns.
On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article.
