The Moderna Pullback is Worth a Shot

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The Moderna Pullback is Worth a Shot

April 7, 2021 5 min read

This story originally appeared on MarketBeat

A little over two years ago, Moderna (NASDAQ: MRNA) was an unknown relative in the world of investing. The Massachusetts-based biotech company debuted in the public market, hoping investors would take its novel approach to drug and vaccine development. How have times changed?

Moderna is a household name among investors and non-investors today after defeating dozens of companies that vied to develop a COVID-19 vaccine. The stock price soared to nearly $ 190 in February 2021 on expectation of a major slump. Since then, the company has pulled back by more than 30%, providing an interesting entry point for a company with growth potential that extends well beyond the coronavirus.

What are Moderna’s COVID-19 Perspectives?

Moderna’s COVID-19 vaccine, along with Johnson & Johnson and Pfizer-BioNTech, is one of three vaccines approved in the United States and administered in other countries. It is a remarkable achievement to be in the company of these pharmaceutical giants, and one that Moderna is sure to put on the map.

With the vaccine distribution already well underway, the company’s upcoming financial results should be excellent. Moderna has signed sales contracts worth more than $ 18 billion for its vaccine and is preparing for the likelihood of many more on the way.

This week, drug maker Catalent announced it was expanding its production of Moderna’s COVID-19 shots. The agreement will nearly double production of the vaccine at Catalent’s Indiana facility starting this month to approximately 400 vials per minute. A further 80 million vials are filled every year at this rate.

But Moderna doesn’t stop there. In recognition of the shortcomings of the two-dose COVID-19 regime, the company is also developing a one-shot vaccine that can be kept in a regular refrigerator. Positive results from this ongoing study could help the stock hit another price at the $ 200 level.

So too could Moderna’s progress with another COVID-19 vaccine. This next-generation COVID-19 vaccine is designed to address the potential for more variants of the coronavirus. With the global varieties of the disease threatening to hurt economic recovery, there is a clear need for better performing coronavirus vaccines – and Moderna is once again ahead of the competition.

What further growth opportunities does Moderna have?

Moderna may forever be linked to COVID-19, but at some point the pandemic will go down in the history books. The company will again focus on developing other therapeutics and vaccines based on its messenger RNA (mRNA) technology.

An mRNA vaccine is a new way to protect people from infectious diseases because it does not introduce a weakened germ into the body. Instead, they train cells to make a protein that triggers an immune response. The approach offers all sorts of opportunities to vaccinate against infectious diseases, heart disease, immune diseases, and even certain types of cancer.

Moderna’s development pipeline includes several promising early and mid-stage candidates. More than half of the 24 mRNA candidates are in clinical trials. Three new vaccination programs against seasonal flu, HIV and the Nipah virus were launched earlier this year. It also announced a partnership with Vertex Pharmaceuticals to develop a novel treatment for cystic fibrosis.

Perhaps the most exciting program at Moderna is working with Merck. This is a personalized cancer vaccine candidate that, in conjunction with Keytruda, targets a patient’s specific tumor. Positive phase 1 data from a study in patients with head and neck squamous cell carcinoma (HNSCC) were published late last year.

Is It A Good Time To Buy Moderna Stock?

Moderna’s risk-reward profile is now back down to around $ 130 per share and tastier. On the risk side of the equation, of course, there’s an ongoing risk to the company’s current COVID-19 vaccine. While things appear to be going well, negative news of side effects or production setbacks could put pressure on the stock. And as with any biotech company, the ubiquitous chance is that setbacks in clinical development will trigger a sell-off.

The reward part is pretty simple. Moderna has supply agreements worldwide that represent hundreds of millions of its COVID-19 vaccine doses. It is less certain whether it will be possible to develop a one-shot vaccine. Given the high rate of effectiveness of the current vaccine and the money that goes into single-dose development, it’s hard to imagine that this won’t be a success.

As the dark horse in the COVID-19 vaccine race, the market should know better than to limit Moderna’s potential for commercializing more coronavirus solutions as the pandemic continues to turn. As you look further into the future, greater financial resources and institutional support should increase your chances of success in other disease and cancer areas.

Sell-side companies have a mixed view of Moderna, which makes sense given the uncertainty of their business. While the ratings for the stock are omnipresent, the price targets of the analysts are decidedly shifted towards the positive. Of these companies that dare to forecast prices, all but three have targets that are above the current share price. The other eleven companies (including one with a sales rating) have targets between $ 140 and $ 208, with several north of $ 200.

Despite its success, Moderna still carries a high level of risk for investors. Given the potential to manufacture additional COVID-19 vaccines and advance the non-COVID pipeline, the stock is worth trying at this level.