The Moderna logo is seen at the Moderna campus in Norwood, Massachusetts on on December 2, 2020, … [+]
Moderna stock (NASDAQ: MRNA) rallied by more than 20% over the last week, significantly outperforming the S&P 500 which was down by about 1%. The recent rally comes as Moderna is set to be included in the S&P 500 index starting from July 21. Moderna stock has already risen by more than 2.5x year to date, as demand for Covid-19 shots keeps growing (see updates below). The stock closed at about $286 on Friday, and levels of $300 are looking easily reachable, as the S&P inclusion is likely to drive strong near-term demand for Moderna stock from not just index funds that track the S&P 500, but possibly from managed funds that are benchmarked to the S&P 500. This could continue to drive the stock up in the near term. Now is a $400 stock price achievable for Moderna stock in the next year or so? It’s looking like a real possibility for a couple of reasons.
Moderna stock currently trades at a mere 12x 2021 consensus earnings. The conservative multiple is largely due to the fact that investors expect sales of the Covid vaccine – Moderna’s only revenue-generating product – to drop from 2022 onward. Consensus estimates point to a 15% decline in sales next year. That said, Covid-19 has proved more difficult to contain than initially thought, due to the emergence of new Covid variants. Despite high levels of vaccinations, countries such as the U.K and Israel are seeing a sharp increase in Covid-19 cases. This is making a real case for booster vaccinations with new formulations targeting the variants. Moderna is perfectly poised to cater to the booster market with its mRNA technology which can be more quickly adapted to fight new variants. Pricing for booster shots shouldn’t be an issue, as governments are likely willing to pay up to limit the strain on economies and healthcare infrastructure. This should mean that Moderna’s Covid-19 vaccine sales could hold up stronger than we realize over a multi-year period.
More importantly, Moderna’s vaccine cash cow will give it the ability to fund its research pipelines in the years to come. The company is developing nine vaccines and 13 therapeutic candidates in areas including immuno-oncology and rare diseases. Four of the company’s developments, including its CMV vaccine and personalized cancer vaccine, are in phase 2 trials. Overall, the strong momentum following the S&P inclusion, continuing prospects for the Covid-19 shot, and upside from Moderna’s pipeline could mean that a rally to $400 isn’t looking like a stretch for Moderna stock.
See our indicative theme of Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies. The theme is up by about 64% year-to-date and by over 16x since the end of 2019.
[6/23/2021] Will The Moderna Rally Continue?
Moderna (NASDAQ: MRNA) has seen its stock rally by 35% over the last month and remains up by almost 11% over the last five trading days alone, as the good news keeps on coming for the Covid-19 vaccine major. Last week, the company said that the U.S. government was buying another 200 million doses of its Covid-19 shot, which will likely be used to vaccinate children or be used as booster shots. This is in addition to the existing order of 300 million doses that the company will likely supply by the end of July. The new deal could be valued at upward of $3 billion, assuming a price of $16.50 per dose, which is the price the U.S. paid for the original vaccine.
Moderna is also looking to scale up its production capacity to as much as 3 billion doses in 2022, up from roughly 1 billion doses in 2021, and recently outlined plans to add two new production lines at its plant in Boston. Although we initially expected the size of the Covid-19 vaccine market to fall off sharply from 2022, growing concerns about new coronavirus variants make it a real possibility that Covid-19 vaccinations will be a recurring affair in the near future. This bodes well for Moderna, which now has ample production capacity and a flexible mRNA technology, which should enable it to quickly adapt its vaccine formulation.
Separately, Germany’s CureVac reported that its highly anticipated messenger RNA vaccine candidate, which leverages a somewhat similar technology as Moderna’s shot, achieved subpar efficacy of just 47% in a late-stage study. Although this is an unfortunate development, investors might be viewing this as positive for Moderna’s vaccine, which would see one less competitor in the near term.
See our indicative theme of Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies. The theme is up by about 50% year-to-date and by over 15x since the end of 2019.
[6/1/2021] Will The Gains In Moderna Stock Continue?
Moderna (NASDAQ: MRNA) stock has rallied by almost 15% over the last week (five trading days), outperforming the S&P 500 which was up by just over 1% over the same period. The rally comes as Moderna’s Covid-19 shot saw strong efficacy results (93% to 100%) from clinical trials conducted on children aged between 12 to 17. Moderna is expected to submit the results to the U.S. FDA in early June and this could eventually help to widen the addressable market for the company’s vaccine. So will the rally in Moderna stock continue, or is a correction looking more likely from current levels? The Trefis Machine Learning Engine, which analyzes multiple years of historical stock price data, indicates that there is a 53% chance of a rise in MRNA stock over the next month, after rising by about 15% over the last week. See our Moderna Stock Chances of a Rise for more details.
So what’s the longer-term outlook like for Moderna stock? Moderna is expected to see windfall profits over 2021 (likely exceeding $9 billion), with strong earnings likely to follow over 2022 as well, driven by robust demand for its Covid-19 shot. However, with the stock up by about 65% this year, trading at levels of around $185 per share, investors will need to look closely at Moderna’s prospects well beyond 2022. Factors that could drive Moderna’s performance in the longer term include boosters of its Covid shot which could be used to tackle evolving variants of the novel Coronavirus. Moreover, Moderna’s sizable pipeline, which includes another nine vaccines and 13 therapeutics in areas including immuno-oncology and rare diseases, will be key to its post-pandemic prospects. Four of the company’s developments, including its CMV vaccine and personalized cancer vaccine, are in phase 2 trials and any positive data surrounding these developments could also help the stock in the interim. [1][2/19/2021] What’s 2022 Looking Like For Moderna?
Moderna (NASDAQ: MRNA) is poised for a solid 2021 as it ramps up sales of its much sought-after Covid-19 vaccine. The company is on track to deliver between 800 million to 1 billion doses of the shot this year and based on its advance purchase agreements, sales for the year could top $19 billion, up from less than $1 billion in 2019. The vaccine is also turning out to be hugely profitable for Moderna, which recorded an incredible 70% net profit margin over Q1 2021. That said, with the worst of the pandemic likely to be behind us this year, what could 2022 have in store for Moderna?
We expect the Covid-19 shot to remain the primary driver of Moderna’s performance in 2022 as well. The global inoculation drive is still in the early stages, with the Bloomberg Vaccine Tracker estimating that vaccine doses have been administered to fully vaccinate just about 10% of the world’s population. This gives Moderna room to scale up further, with the company looking to boost production to as much as 3 billion doses in 2022. That said, 2022 is unlikely to be as profitable for the company, as more doses are likely sold to lower-income markets. For example, the World Health Organization’s Covid-19 Vaccines Global Access program could likely take on as much as 466 million doses from Moderna next year.
Moreover, many experts think that Covid is likely to become endemic with the virus continuing to mutate, potentially making Covid vaccine shots an annual occurrence, much like flu shots. Moderna is working on specific booster shots needed to tackle evolving variants of the virus and this could be a factor driving sales in 2022 and beyond. Governments also aren’t taking any chances, choosing to lock in future vaccine supplies given what’s at stake from a healthcare and economic standpoint, if the virus persists. Countries including Israel and Switzerland have already signed advance purchase agreements (APA) for 2022 and Moderna says that it is having discussions for 2022 supplies with all the countries that signed APAs for 2021.
Moderna has a large development pipeline that includes another nine vaccines and 13 therapeutics in areas including immuno-oncology and rare diseases. Four of the company’s developments, including its CMV vaccine and personalized cancer vaccine, are in the phase 2 trials and any positive data surrounding these developments could also help the stock. [1] With Moderna poised to generate big profits from its Covid-19 shot (as much as $10 billion this year), it will have the resources to bolster its pipeline further in the coming years.
See our indicative theme of Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies. The theme is up by about 25% year-to-date, compared to the S&P 500, which is up by about 10%.
[4/19/2021] Will A Third Vaccine Dose Boost Moderna Stock?
Pfizer (NYSE:PFE) recently said that people who have received both doses of their Covid-19 vaccine would likely require a booster shot and potentially require an annual shot thereafter, much like seasonal flu shots. Moderna (NASDAQ: MRNA), too, has indicated that it would have a booster shot ready by this fall. Now, although there are studies that are underway to determine if additional shots are indeed required to maintain immunity against Covid-19 and fight new variants of the virus, the commentary from two of the largest Covid vaccine players indicates that this is looking like a probable scenario.
Booster and potentially annual doses should be positive for Covid vaccine makers, in general, as they could likely see some level of recurring revenues from what initially appeared like a one-off vaccine. This should be particularly positive for Moderna which counts its Covid-19 shot as its only revenue-generating product at the moment. Moderna is likely to see revenue rise by more than 20x this year to $17 billion driven almost entirely by the Covid shot, with sales projected to decline next year. Moreover, Moderna’s (and Pfizer’s) mRNA vaccine technology allows the development of highly effective vaccines quickly (potentially in a few weeks) and this could help it to quickly adapt its shot based on new variants. However, we think that pricing for booster shots is likely to be lower compared to prices for doses being administered through the pandemic, when governments were willing to pay a premium to end the strain on economies and healthcare infrastructure. For example, Moderna’s shot currently costs as much as $37 per dose, and we think it is quite unlikely that the booster doses will command similar pricing.
See our indicative theme of Covid-19 Vaccine stocks which includes U.S.-based pharma and biotech companies. The theme is up by about 44% year-to-date.
[4/7/2021] Are Covid Vaccine Stocks Still Worth Investing In?
Covid-19 vaccine stocks have had a solid run, driven by the urgency to end the pandemic and the unprecedented speed at which companies have developed highly effective vaccines. Our theme of Covid-19 Vaccine Stocks – which includes Moderna (NASDAQ: MRNA), Novavax (NASDAQ: NVAX), Johnson & Johnson (NYSE:JNJ), and Pfizer (NYSE:PFE)– is up by 22% year to date and by over 13x since the end of 2019. We’ve now reached the point in the cycle where most major players (except Novavax) are scaling up deliveries of their shots. About 690 million Covid vaccine doses have been administered thus far worldwide, per the Bloomberg Vaccine Tracker. With vaccinations happening at a rate of about 16.3 million doses per day globally and most vaccines requiring two doses, there’s still a long way to go before the global population of close to eight billion people is vaccinated.
So clearly vaccination programs are just getting started based on the larger scheme of things. However, the markets are beginning to look beyond the pandemic. With bond yields rising and the economy continuing to open up, investors have been rotating out of pandemic winners such as vaccine and work from home names to more cyclical and value stocks. For example, Moderna and Novavax – both viewed as a direct play on Covid-19 vaccines are down by about 28% and 44% respectively from their February highs. Moreover, the Covid-19 vaccine market is also likely to get increasingly competitive as time goes on, as new players enter the fray and existing players scale up capacity. Pfizer, for instance, says that it could scale up capacity from two billion doses this year to as much as three billion in 2022. Considering this, we think that investors will need to evaluate these companies based on the potential of their future pipelines, rather than just focusing on their Covid vaccines.
[1/29/2021] Novavax’s Vaccine Could Be A Game Changer
Novavax (NASDAQ: NVAX) has said that its Covid-19 shot is 89.3% effective, based on interim data from its phase 3 clinical trials conducted in the U.K. [2] The company expects to file for emergency authorization with U.K. regulators in the coming months. While the reported efficacy numbers seem to put the vaccine slightly behind Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA), who have rolled out vaccines that are roughly 95% effective, we think the Novavax shot holds more promise for a couple of reasons. Firstly, Novavax’s two-dose shot has shown efficacy against the new strains of the Coronavirus found in the U.K. and South Africa, making it the first company to prove this in clinical trials. So while the 89% figure looks slightly lower than Pfizer and Moderna’s reported results, the Novavax shot is at 95.6% effectiveness against the original virus — right in line with the two competitors. The shot should also be easier to distribute, considering that it doesn’t need to be stored in super-cold temperatures, unlike Pfizer’s mRNA-based vaccine. Novavax’s vaccine is also likely to be more reasonably priced – a deal with the U.S. government saw each dose priced at about $16, versus as much as $37 per dose for Moderna’s vaccine. Crucially, the company has also lined up a lot of production capacity, collaborating with the world’s largest vaccine producer Serum Institute of India with plans to produce its vaccine at a rate of 2 billion doses a year starting from mid-2021. See our updates below for more details on the Novavax shot.
[1/27/2021] Novavax Updates
Novavax’s (NASDAQ: NVAX) experimental Covid-19 shot is being closely watched, given some promising early-stage data and the company’s move to line up significant manufacturing capacity. Here’s a quick overview of what has been happening with Novavax stock in recent weeks. Firstly, the company is looking to raise as much as $500 million in equity, in a move that should improve its liquidity position and help fund its R&D spending. This is probably a smart move, as Novavax stock is up almost 15x over the last 12 months, with its market cap standing at about $8 billion. Novavax also has three efficacy/safety studies of its Covid-19 shot underway in the U.K, South Africa, and the U.S., with some initial efficacy data expected to come out in a few weeks. The company could be looking to hedge its position before the data readout. Separately, interest in the vaccine appears to be increasing. Novavax has finalized an agreement with the Canadian government to supply as many as 76 million doses of its Covid-19 vaccine and there have also been reports that South Korea is in talks to buy around 40 million doses of the Novavax vaccine. Novavax stock has fared relatively well year to date, rising by about 12% since the beginning of January. See our indicative theme of Covid-19 Vaccine stocks which includes U.S.-listed pharma and biotech companies. The theme is up about 4x over the last 2 years.
[1/4/2021] Why Did Novavax Stock Decline 20% In December?
Vaccine specialist Novavax (NASDAQ: NVAX) – which is seen as a key player in the Covid-19 vaccine space – saw its stock price decline by about 20% over December. Here are a few possible reasons for the decline.
Covid-19 vaccines by Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) received emergency approval from the U.S. FDA in December and inoculation drives have already begun in the U.K and the U.S. with these countries looking to get their citizens vaccinated as quickly as possible. For instance, the U.S. says that every American who wants a Covid-19 vaccine should have one by June. This likely means that demand for the Novavax vaccine – which is only likely to be available, subject to approval, in Q1 2021 or later – will be somewhat limited in the country. While Novavax has supply agreements with the U.S. and Australia, the company might not see much upside in developed markets.
Novavax announced that it was commencing phase 3 clinical trials for its novel coronavirus vaccine in the U.S. and Mexico last week. While this is good news, considering that Novavax saw multiple delays in starting late-stage U.S. studies amid manufacturing challenges, there are concerns whether the company will be able to meet its target of signing up 30k volunteers when there are two highly effective vaccines already available in the market. For example, prospective volunteers might be concerned that they are given a placebo or that Novavax’s candidate could be less protective or even if their involvement in the trial could impact their ability to take another vaccine.
See our indicative theme on Covid-19 Vaccine stocks for more details on the performance of key U.S. based companies working on Covid-19 vaccines.
[Updated 12/23/2020] What Are The Risks For Novavax?
Vaccine specialist Novavax (NASDAQ: NVAX) has seen its stock price soar by roughly 25x year to date. While part of the gains were driven by encouraging results for phase 3 trials of the company’s NanoFlu flu vaccine back in March, a bulk of the price appreciation is due to the company’s development of a Covid-19 vaccine candidate. While we discussed some of the merits of the Novavax vaccine in our previous update (see below), in this note, we take a look at some of the key risks that it could face.
While Novavax entered the Covid vaccine race in the Spring, along with Moderna and Pfizer/BioNtech who have now started rolling out their vaccines, the company has faced delays in its timeline. The first readouts from its phase 3 trials are expected around Q1 2021 – likely one quarter behind the front runners. Only after these results are available will the company be able to file for emergency approval and rollout its vaccine. While this may not be a big deal considering that there’s enough room for multiple Covid vaccines, Novavax might miss out on relatively more lucrative orders from developed markets. For instance, the U.S. is now expected to increase its order for Pfizer’s vaccine to another 100 million doses.
Margins for the vaccine could also be a concern. Novavax’s vaccine is based on subunits – essentially using a fragment of the virus – and the manufacturing process is apparently more complex compared to the method used in messenger RNA vaccines including Moderna’s. This could potentially make the Novavax vaccine more expensive to manufacture. Based on a supply agreement with the U.S. government, the Novavax vaccine will be priced at about $16 per dose, below the $19.50 for Pfizer’s vaccine and as much as $37 per dose for Moderna’s. The potentially more complex manufacturing process and lower prices could mean that margins might be lower.
[Updated 12/2/2020] Does Novavax Covid Vaccine Still Matter?Novavax (NASDAQ: NVAX) stock saw some volatility after the company said that it had rescheduled its Phase-3 clinical trial in the US, indicating that it could begin in the coming weeks, instead of starting in November. This marks the second time that the company has delayed its U.S. trials, amid some challenges with scaling up production. While the company currently has late-stage trials underway in the U.K, with a readout expected in Q1 2021, Novavax significantly trails frontrunners Pfizer and Moderna who have shown extremely high efficacy rates of roughly 95% and have already applied for emergency approval with the U.S. FDA. Considering that the Novavax vaccine could be at least one quarter behind the frontrunners, will there be a place in the market for the Novavax vaccine even if it proves safe and effective and wins regulatory approval? We believe the answer is yes, for multiple reasons.
While the Novavax vaccine might arrive later than expected, it still holds promise. Firstly, based on data from early trials there are indicators that it might be highly effective. For example, the antibody responses for the Novavax vaccine were meaningfully stronger than other vaccines that have been reported at that time, per data from its Australian trials that were available in August. [3] The vaccine should also be easier to distribute, as it only needs to be stored at refrigerated temperatures, unlike Pfizer’s vaccine which needs to be stored at ultra-cold temperatures. Novavax’s vaccine might also be more reasonably priced. Based on a supply deal with the U.S. government, the vaccine’s price is estimated to be about $16 per dose, compared to as much as $37 per dose for Moderna’s vaccine and $19.50 for Pfizer’s. If all goes well, Novavax could also scale up production fairly quickly. In September Novavax reached an agreement with the Serum Institute of India, one of the largest vaccine manufacturers in the world, boosting the company’s capacity to as much as 2 billion doses a year starting from mid-2021. [4]
Novavax’s vaccine could also emerge popular in low and middle-income markets. While the Oxford-AstraZeneca’s vaccine – which is likely to be priced at a few dollars per dose – is seen as key to fighting the pandemic in emerging markets, it now faces questions regarding the way phase 3 trials were handled, potentially resulting in delays and apprehension among governments. This could make the Novavax vaccine – which can be produced at scale and easily distributed – popular if the pricing is suitably adjusted.
[Updated 11/4/2020] Covid-19 Vaccine stocks
Our indicative theme of Covid-19 Vaccine stocks – which includes a diverse set of U.S.-based pharma and biotech companies developing Covid vaccines – is up by about 560% year-to-date, on an equally weighted basis, compared to the S&P 500 which has gained just about 4% over the same period. While most vaccine stocks declined last week, amid a broader sell-off in the markets, they are likely to come back into the spotlight as efficacy data from late-stage trials is expected from frontrunners Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) in the coming weeks. Below is a bit more on the companies in our theme of Coronavirus Vaccine stocks and their relative performance.
Novavax (NVAX), a vaccine development company, began late-stage trials of its Covid vaccine in the U.K in September, and large-scale phase 3 trials are due to begin in the U.S. and Mexico this month. While the company doesn’t have any other products on the market yet, its flu vaccine NanoFlu could be ready for potential FDA approval. The company has received about $1.6 billion in funding from the Federal government. The stock has soared 2,000% year-to-date.
NVAX
Moderna (MRNA) , a clinical-stage biotech company, is carrying out phase 3 trials of its Covid-19 vaccine, completing enrollment of 30,000 participants. The company is likely to have data on whether its vaccine works or not by this month, and has noted that it would seek emergency approval from the FDA if the vaccine is at least 70% effective. The stock is up 253% this year.
Johnson & Johnson (JNJ): Unlike most other vaccine candidates, which are likely to require two shots, J&J is targeting a single-dose vaccine. While the company had to pause trials in mid-October after an illness was reported in a volunteer, the company is now preparing to resume trials. The stock is down by -5.1% this year.
Pfizer (PFE) is working with German partner BioNTech on a Covid-19 vaccine. The company is likely to have efficacy data from late-stage trials available shortly. The company could supply about 40 million doses in the United States in 2020 if the data is positive and regulators approve the vaccine. The stock is down by about -7.6% this year.
2020 has created many pricing discontinuities that can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Pfizer vs Merck.
See all Trefis Price Estimates and Download Trefis Data here
Notes:
