Modern (NASDAQ: MRNA) jumped into the spotlight when it began developing a coronavirus vaccine candidate. And stocks soared as the vaccine raced across the finish line, generating billions of dollars in revenue.
But in later days of the pandemic, investors grew concerned about Moderna’s dependence on its only commercialized product, and that weighed on its stock price. The biotech company’s shares are down 70% from their 2021 high.
Moderna may be about to enter a new phase of growth. Investors just got bullish news last week: news that could open up a $10 billion market for the company. Let’s take a look at the details.
Moderna’s biggest problem
As mentioned, investors’ biggest concern about Moderna is the fact that it is dependent on the coronavirus vaccine for its revenue. It’s always risky to rely on just one product, and it’s even worse if that specific product is associated with a pandemic, as demand is unlikely to sustain at pandemic levels in the longer term.
As a result, the coronavirus vaccine could continue to generate recurring revenue each vaccination season, but levels are unlikely to replicate what we saw during the early days of the pandemic. We had a taste of this last season, when vaccination demand was weaker than expected. So investors today don’t view the vaccine as a growth product for the company.
But this problem disappeared with the good news that Moderna delivered a few days ago. The biotech sector received regulatory approval for its respiratory syncytial virus (RSV) vaccine, paving the way for the product’s commercialization in time for the upcoming vaccination season.
RSV is a common virus that generally causes cold symptoms, but it can be extremely serious for infants and the elderly. In the US 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 demonstrating efficacy of more than 83% after an average of 3.7 months of follow-up. And the vaccine showed sustained protection more than eight months after administration. This was in a Phase 3 clinical trial involving 37,000 adults.
The RSV market is significant, and while two rivals — Pfizer And GSK — got their vaccines here last year, there could be room for all three companies to succeed.
A potential RSV leader
And even if Moderna’s product comes to market later, it could even become a leader. First, the RSV vaccine was not associated with cases of Guillain-Barré syndrome in late-stage clinical trials (but the Pfizer and GSK vaccines were). Although cases of the neurological condition (which causes muscle weakness) have been rare, this point could still lead some healthcare providers to prefer the Moderna shot.
Second, Moderna’s vaccine is the only vaccine that comes in a prefilled syringe. This may seem like a detail, but it is actually quite important. A pre-filled syringe makes administration faster and safer: since the injection is ready to use, there is a much lower risk of errors when administering it.
The Moderna vaccine could also make busy pharmacies more efficient during vaccination season, allowing them to complete more vaccinations – saving them time and even increasing their profits. These two points can help Moderna win over healthcare providers and ultimately become a leader in the RSV market.
The latest approval is critical because it provides the company with a new potential source of billions in revenue, which could potentially repeat itself as the vaccination season continues each year. The approval is also a step forward in Moderna’s plan to become a major supplier of respiratory vaccines.
Through its coronavirus and RSV vaccines, as well as possible flu and combined coronavirus/flu vaccines, the company aims to rake in as much as $15 billion in revenue by 2027.
So even if Moderna’s stock doesn’t rise overnight, RSV’s approval is bullish news for shareholders — and a good reason for other investors looking for a biotech growth story to buy the stock now.
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Adria Cimino has no positions in the stocks mentioned. The Motley Fool holds and recommends positions in Pfizer. The Motley Fool recommends GSK and Moderna. The Motley Fool has a disclosure policy.
Moderna Investors Just Got Some Bullish News was originally published by The Motley Fool
