At the height of the hype for COVID-19 vaccine developers, Modern (MRNA), at a high of $ 95.21, looked like it would break above $ 100. Additional announcements for government funding, upcoming Phase 3 clinical trial results, and pre-orders should have sent Moderna stock to new highs. Yet the market has a way of turning a “sure thing” back into uncertainty. While BioNTech SE (BNTX) en Novavax (NVAX) get the reward for trading over $ 100 (BNTX is now $ 74 at the time of this writing), what should Moderna investors do then?
The mRNA platform of Moderna
Investors will first love the glitter of Moderna’s new class of medicines. It modeled itself to maintain its leadership in the mRNA vaccination space. In its second quarter, investors should notice the positive updates on their drug development outside COVID-19. For example, Cytomegalovirus, which is a genus of viruses in the order Herpesvirales, will start next in a Phase 3 study. Moderna estimates that the CMV vaccine is worth $ 2 billion to $ 5 billion in peak sales.
Profit margins for CMV vaccine (mRNA-1647) are equal to those of the COVID-19 vaccine (mRNA-1273) in which it has worldwide commercial rights.
Data courtesy of Moderna
As shown above, the company published Phase 1 safety data for CMV vaccine and Zika vaccine. Despite lower doses, the study included positive data on safety and reactogenicity. At higher doses increased seropositive. Most importantly, the only adverse events were injection site pain, fatigue, headache, and chills in the seronegative group. Seropositives exposed fever and arthralgia.
The company also reported sustained neutralizing antibody responses six months after the final vaccination. Phase 3 trial will begin in 2021. Beginning of its primary endpoint “is expected to prevent primary infection in seronegative women of childbearing age.” It will have involved less than 8000 participants.
Strong COVID-19 vaccine data
Modern repeated the 100% of participants who generated neutralizing antibodies on day 43, higher than those seen from reference sources of sera data. The results of the mouse and nonhuman primates suggest that Moderna will place positive results in the Phase 3 study.
Data courtesy of Moderna
Modern rates the vaccine at $ 300 per course. Investors could try to apply a total addressing market of the world population. Add annual vaccinations and more than one course per subject and the income potential is enormous. This approach is still a wild guess. We do not know if the vaccine will reach the market. Moderna has competition from Pfizer (PFE), AstraZeneca (AZN), and Novavax. However, it secured delivery of 4.5 million doses to Switzerland and millions to Canada.
Strong balance
Modern ended Q2 / 2020 with $ 3.1 billion in cash, up from $ 1.7 billion in Q1. Research and development costs have not increased much, to $ 267 million compared to $ 258 million last year. The use of $ 1.05 billion for operating activities and increased manufacturing activity suggest a stock sale following. As Moderna gets closer to producing the vaccine worldwide, investors may have a slight dilution.
If that happens, a dip in the stock will prove temporary. Revenue growth will accelerate quarterly. Investors should look to Exact Sciences (EXAS) or Sarepta Therapeutics (SRPT) to see how stocks behave after a company launches a drug.
The valuation of Moderna is equal to BNTX and NVAX stock. Novavax has the lead with SA authors bullish:
Data courtesy of SA Premium
The chart below shows the moving average convergence divergence (“MACD”) signals. Despite the bearish cross-overs, Moderna’s keeps uptrend above the important moving averages:
Data courtesy Stock Rover Visuals
Investors are still cautious about offering Moderna stock higher. Markets do not forget about recent stock sales and insider sales (although a very small percentage of an executive’s total holdings). If markets lose interest in suppliers of COVID-19 fax machines, just as they did with shares for electric cars, this share could continue to fall. Long-term investors in biotechnology will still get an entry if that happens. Moderna has gone up almost five times in the last year and is a triple YTD. Profit taking is expected.
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Announcement: I / we have no positions in named shares, and no plans to initiate positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I do not receive compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose supply is mentioned in this article.
