Moderna Investors Just Got Some Bullish News
Moderna (NASDAQ: MRNA) jumped into the limelight when it started developing a coronavirus vaccine candidate. And the stock soared as the vaccine raced across the finish line and went on to bring in billions of dollars in earnings.
But in later pandemic days, investors started worrying about Moderna's dependence on its only commercialized product, and that has weighed on the stock price. Shares of the biotech company have dropped 70% from their high back in 2021.
Moderna might be about to enter a new phase of growth, though. Its investors just got some bullish news last week -- news that could unlock a $10 billion market for the company. Let's check out the details.
Image source: Getty Images.
Moderna's biggest problem
As mentioned, investors' biggest concern about Moderna is the fact that it depends on the coronavirus vaccine for revenue. It's always risky to rely on just one product, and it's even worse when that particular product is linked to a pandemic because long-term demand isn't likely to continue at pandemic levels.
As a result, the coronavirus vaccine might continue delivering recurrent revenue each vaccination season, but levels probably won't replicate what we saw during the early days of the pandemic. We got a taste of this during the past season, when vaccination demand was weaker than expected. So investors today aren't viewing the vaccine as a growth product for the company.
But this problem evaporated with the good news Moderna delivered a few days ago. The biotech received regulatory approval for its respiratory syncytial virus (RSV) vaccine, paving the way to commercialization of the product in time for the upcoming vaccination season.
RSV is a common virus, generally causing cold-like symptoms, but it could be extremely serious for infants and the elderly. In the U.S. alone, 60,000 to 160,000 older adults are hospitalized with RSV each year.
Moderna won regulatory approval for its RSV shot for people 60 and older by showing efficacy of more than 83% after an average of 3.7 months of follow-up. And the vaccine demonstrated continued protection more than eight months after administration. This was in a phase 3 clinical trial including 37,000 adults.
The RSV market is significant, and although two rivals -- Pfizer and GSK -- entered it last year with their vaccines, there could be room for all three companies to succeed.
A potential RSV leader
And even though Moderna's product is entering the market later, it could even become a leader. First, its RSV vaccine wasn't linked to any cases of Guillain-Barré syndrome in late-stage clinical trials (the Pfizer and GSK vaccines were). Though cases of the neurological disorder (which causes muscle weakness) were rare, the point still might prompt some healthcare providers to favor the Moderna jab.
Second, Moderna's vaccine is the only one to come in a pre-filled syringe. This might seem like a detail, but it's actually pretty important. A pre-filled syringe makes administration faster and safer: Since the shot is ready to use, there's a much lower risk of error in administering it.
The Moderna vaccine could make busy pharmacies more efficient during vaccination season, too, allowing them to complete more vaccinations -- saving them time and even boosting their profits. These two points could help Moderna win over healthcare providers and eventually become a leader in the RSV market.
The latest approval is key because it offers the company a new potential source of billion-dollar revenue, which might be recurrent as vaccination season rolls around every year. The approval also is a step forward in Moderna's plan to become a major respiratory vaccine supplier.
Through its coronavirus and RSV vaccines as well as eventual flu and combined coronavirus/flu vaccines, the company aims to bring in as much as $15 billion in revenue in 2027.
So, even if Moderna shares don't take off overnight, the RSV approval is bullish news for shareholders -- and a great reason for other investors looking for a biotech growth story to buy the stock now.
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends GSK and Moderna. The Motley Fool has a disclosure policy.
