Should Investing in Moderna's Shares be Considered?

Moderna's (MRNA 5.59%) triumph in the COVID-19 vaccine market has begun to wane. Over the past three years, the company's revenue, earnings, and stock price have all taken a downward turn, resulting in an 85% loss of value.

Despite this, Moderna has made strides in clinical and regulatory advancements. If these developments continue and the company's plans materialize, it could provide substantial returns to investors who decide to invest now. Let's explore if this prospect is feasible for Moderna.

The COVID-19 vaccine market still thrives

Although we've moved past a state of crisis, COVID-19 remains a concern. Thousands continue to contract the virus, get hospitalized, and succumb to it, particularly the elderly and those with underlying health conditions. As a result, there's still a market for Moderna's COVID-19 vaccine, albeit demand has significantly dropped since 2021. In the third quarter, Moderna reported $1.9 billion in revenue, virtually unchanged from the previous year.

Financially, the company reported earnings per share of $0.03, compared to a net loss of $9.53 in the same quarter the previous year. Moderna's primary source of income was Spikevax, its coronavirus vaccine. It also held a 40% share of the U.S. commercial coronavirus vaccine market. For the next five years, Moderna is likely to maintain its leadership in this sector.

Exploring other avenues

In March, Moderna received approval for a vaccine against the respiratory syncytial virus (RSV), mRESVIA. In Q3, this product generated just $10 million in sales. However, Moderna has more aces up its sleeve. In June, it reported positive phase 3 results for a combination COVID/flu vaccine. Moderna's pipeline for late-stage development also includes candidates for cytomegalovirus (CMV), a stand-alone flu candidate, a potential norovirus vaccine, and a personalized cancer vaccine.

Several of these projects appear promising. Currently, there are no approved vaccines for CMV or norovirus. Moderna's candidates could be among the first or at least among the early pioneers. Moreover, consider Moderna's personalized cancer vaccine, which it's developing in collaboration with Merck. In a phase 2b study of melanoma patients, this candidate, in combination with Merck's cancer drug Keytruda, decreased the risk of disease recurrence or death by 49% and the risk of metastasis or death by 62% compared to Keytruda alone after 34.9 months of follow-up.

Moderna is expected to share data from its late-stage candidates over the next year. However, its pipeline extends beyond that. Moderna has several more programs in phase 1 and 2 studies. From cancer to Lyme disease to HIV, the company is tackling numerous targets, including some particularly challenging ones. Not all projects will succeed, but Moderna could significantly enhance its portfolio over the next five years.

Is it worth the gamble?

Moderna's shares are not far from their 52-week low. In my opinion, at these levels, the company is a worthwhile investment. Although its coronavirus franchise is no longer as successful as it once was, the emergence of new products, including its combined COVID/flu vaccine and RSV product, among others, will improve Moderna's revenue growth in the near future. Moreover, Moderna's achievements so far have demonstrated the worth of its platform. mRNA vaccines are quicker to manufacture than traditional ones.

This is a significant advantage. And due to its extensive pipeline, we can expect numerous successes in the future. The market may have overvalued Moderna's shares back in 2020 and 2021, but it is currently undervaluing the company's potential a tad excessive. That implies plenty of upward potential for patient investors.

Despite Moderna's current financial struggles in the COVID-19 vaccine market, the company's diversification into other areas of finance and investing, such as the development of vaccines for RSV, flu, CMV, norovirus, and a personalized cancer vaccine, presents an opportunity for substantial returns for investors who choose to invest now. With promising results from phase 3 trials and several late-stage candidates in development, Moderna's pipeline has the potential to significantly enhance its portfolio and financial growth in the future.