Moderna (NASDAQ:MRNA) is truly the stock of the decade. As I wrote when it went public in 2018, MRNA stock is a bet less on specific drugs and more on a method for finding them. Moderna’s method is based on messenger RNA (mRNA), which are single-strand molecules that give orders for DNA to synthesize proteins against disease.
Once it had the genetic sequence of the novel coronavirus, Moderna was able to create a vaccine candidate called mRNA-1273 in 48 hours. It already has a second Covid-19 vaccine, mRNA-1283, in an early trial.
I finally got into MRNA stock myself. Thanks to Moderna’s successful Covid-19 vaccine, I now have a small profit. At its May 20 price of about $166/share, MRNA stock is now worth more than $66 billion. This seems extreme based on first quarter earnings of $1.2 billion, or $2.84/share fully diluted on revenue of about $1.9 billion.
Looking Beyond COVID
Moderna has been using its Covid-19 windfall as I anticipated it would. The company now has the cash to do its own research across a broad front and control the resulting compounds.
Moderna now has a vaccine against Cytomegalovirus (CMV), a common virus in the herpes family, in a second stage trial. It also has begun first stage trials of vaccines against Epstein-Barr disease, seasonal influenza and HIV, the virus that causes AIDS. Beyond vaccines, Moderna is working on therapeutics against heart disease, hepatitis and cancer.
The approach isn’t even new. Hungarian scientist Katalin Kariko has been working on mRNA since 1978. Yale scientists are preparing a malaria vaccine based on that work. There are over a dozen companies exploring mRNA vaccines, a market growing at nearly 29% per year.
Moderna Has the Upper Hand
Moderna’s advantage over their rivals is their scale of operations. The company hopes to triple its supply of its Covid-19 vaccine to 3 billion doses in 2022 using European partners. BioNTech, by contrast, needed Pfizer’s help to go into production.
Currently, Moderna looks expensive based on its 2020 revenue of less than $1 billion. But the company is projecting sales of $19.2 billion in 2021. In addition to sales of their of existing vaccine, Covid revenue may continue in the form of booster shots against new variants. Some analysts think Moderna is currently trading at just six times 2022 earnings.
Moderna stock has fallen recently. Its first quarter earnings, while massive, were seen as a disappointment. In 10 days, shares fell from $184 to $152, which is about 18% after earnings. The MRNA stock price has since recovered to about $165.
In terms of Moderna’s products, it’s becoming clear that the mRNA approach may be more successful than traditional vaccines. Johnson & Johnson (NYSE:JNJ) has had problems with manufacturing and side effects. AstraZeneca’s (NASDAQ:AZN) vaccine is losing out to BioNTech in Europe, and distribution has been paused in Indonesia.
The Value of MRNA Stock Lies in the Possibilities
Moderna’s greatest strength is its new – and so far successful – approach to drug discovery. I’ve compared it to Regeneron (NASDAQ:REGN), whose Velocisuite mouse models speed up the validation of cancer drugs.
Moderna will be here long after the Covid-19 pandemic has faded into history. It won’t be the only mRNA winner. But Covid-19 has given Moderna the scale it needs to be a big winner in this new space.
That’s why, despite the first-quarter “disappointment,” I’m holding my MRNA shares. This is a long-term project. It’s part of making DNA act like a programming language, one of the great investment themes of my kids’ generation. mRNA vaccines can take over the industry, and Moderna is ready to lead the way.
On the date of publication, Dana Blankenhorn held a LONG position in MRNA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial journalist since 1978. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Follow him on Twitter at @danablankenhorn.