This messenger-RNA pioneer should be able to keep its rebound going.
Some investors might view Moderna (MRNA -2.38%) as a shooting star that shined bright for a while then flamed out. In 2022, the biotech company generated sales of nearly $18.9 billion, but it expects revenue of only $4 billion this year.
The real story for Moderna is much better than that steep sales decline reflects. Here’s why the biotech stock is a no-brainer buy right now.
At an inflection point
It’s no exaggeration to say that Moderna is at an inflection point. The company’s previous success stemmed entirely from its COVID-19 vaccine Spikevax. That’s changing.
On May 31, Moderna won U.S. Food and Drug Administration (FDA) approval for its respiratory syncytial virus (RSV) vaccine mResvia. This approval of a second product ushers in a new era for Moderna.
The messenger RNA (mRNA) pioneer plans to launch mResvia this fall in time for the 2024-2025 RSV season in the U.S. It’s also hoping to secure regulatory approvals in other major markets around the world.
Leerink Partners projects that the peak global RSV vaccine market for older adults will be between $6 billion and $8 billion, with another $2 billion to $4 billion in peak annual sales for maternal and pediatric use. Moderna stands to claim a significant share of this market: Its RSV vaccine achieved a strong 83.7% efficacy in clinical studies. Perhaps more importantly, mResvia will be the only RSV vaccine with a prefilled syringe, which Moderna estimates will make its vaccine 3 to 4 times more efficient to administer than those of rivals.
More to come
Primarily because of the huge opportunity for mResvia, Moderna expects to return to sales growth next year. And there could be more to come — much more.
The company has already announced positive results from a late-stage study of its influenza vaccine mRNA-1010. It’s in discussions with regulatory agencies, and plans to file for approvals this year. Moderna also expects to report results from a phase 3 study of its combination flu-COVID vaccine later this year.
Meanwhile, Moderna is evaluating its cytomegalovirus (CMV) vaccine mRNA-1647 in a late-stage clinical study, which could report efficacy data as early as late 2024. CMV is the top infectious cause of birth defects in the U.S. and currently has no approved vaccines.
With Merck, Moderna is testing a combination of Merck’s Keytruda with Moderna’s experimental cancer vaccine mRNA-4157 in multiple phase 2 and phase 3 studies targeting several types of cancer. Based on phase 2 data, the partners could seek accelerated approval of the combo as an adjuvant therapy for melanoma.
Moderna also expects to soon advance several other vaccine programs into pivotal studies, including Epstein-Barr virus vaccine mRNA-1189, norovirus vaccine mRNA-1403, and varicella-zoster virus vaccine mRNA-1468. And it’s on track to advance mRNA therapies targeting the rare diseases propionic acidemia and methylmalonic acidemia into registrational studies this year.
What about valuation?
Perhaps the main argument against Moderna is its valuation. Using projected sales for this year, the stock trades at a price-to-sales ratio of 14.8. The average price-to-sales multiple for the biotech industry is around 6.4.
I don’t think the valuation is unreasonable, though, for one simple reason: The company is poised for tremendous growth. Its RSV vaccine should be a slam-dunk commercial success. In my view, Moderna has a good chance of winning approvals over the next few years for many, if not all, of its late-stage programs.
Moderna isn’t a shooting star that has flamed out. With its robust and growing mRNA pipeline, it’s a rising star that should burn brightly for years to come.
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.