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Moderna's (MRNA) Investors Losing Wealth: What Lies Ahead?

Moderna’s MRNA stock has seemingly bucked its strong uptrend since August last year as investors await another success from its pipeline. The stock has gained significantly since the end of 2019, riding high on the rapid progress in the development of its COVID-19 vaccine, mRNA-1273, followed by its strong sales in 2021. However, challenges for its sole commercialized product, mRNA-1273, seem to be rising with the availability of new COVID-19 vaccines and easy-to-use oral treatment options.

Although the company has several pipeline candidates in its pipeline, the majority are in early- to mid-stage development. Late last year, Moderna initiated a phase III study to evaluate cytomegalovirus (“CMV”) vaccine candidate — mRNA-1647. This is currently the leading candidate in Moderna’s pipeline. A phase III study generally can take a few to several years for completion.

Moderna’s mRNA-1273 significantly boosted its top line as well as the bottom line in 2021. Prior to the development of its COVID-19 vaccine, Moderna recorded revenues of $60 million and $135 million in 2019 and 2018, respectively. These revenues were primarily driven by grants and collaboration revenues. The company had no product sales in the first nine months of 2020 and recorded nearly $200 million, solely from deliveries of mRNA-1273 in the fourth quarter. During 2020, grant revenues to support the development of mRNA-1273 from the U.S. government entities were the major revenue drivers. In 2021, revenues leapfrogged to more than $17.5 billion on the back of strong demand for mRNA-1273 across multiple countries for fighting against the COVID-19 pandemic. In the first nine months of 2021, Moderna’s earnings per share were $17.00 against a loss per share of $1.96 in 2020.

Moderna expects to record revenues of at least $18.5 billion in product sales in 2022, solely from mRNA-1273 sales. The company has an option to deliver additional doses worth $3.5 billion this year. The anticipated revenue growth is likely to be significantly lower than in 2021.

Meanwhile, the company’s sole commercialized product is likely to face competition from new vaccines anticipated to get authorization/approval this year including Novavax’s NVAX NVX-CoV2373.

Novavax’s coronavirus vaccine candidate, NVX-CoV2373, is developed using the company’s proprietary nanoparticle technology. While the company plans to file for emergency authorization of NVX-CoV2373 in the United States by January 2022-end, it has already filed regulatory applications in multiple countries. In fact, the vaccine has already received approval for use in highly populated markets like the EU, India and Indonesia.

Moreover, Pfizer PFE and BioNTech’s BNTX Comirnaty is gaining traction as it is more successful than Moderna’s mRNA-1273 and is also generating much higher sales. The COVID-19 vaccine from Pfizer and BioNTech is also authorized for use in kids aged 5 years or older and adolescents in the United States but Moderna is yet to gain authorization for this population. Pfizer and BioNTech are also reportedly ahead of Moderna in terms of the development of an Omicron-specific vaccine.

With no new product launch scheduled in 2022 and rising challenges for mRNA-1273, investors are seemingly losing interest in Moderna — one of the leading wealth creators over the past two years. Any setback to anticipated revenues from mRNA-1273 in 2022 will likely hurt Moderna’s shares.

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