As Moderna (MRNA 0.68%) looks to shore up its business in the wake of its declining coronavirus vaccine sales, it's natural for investors to wonder about where the biotech will go in the near future.
By early 2028, Moderna will be firmly within its next phase of life, potentially operating more like a traditional pharmaceutical business than like an up-and-coming biotech with a lot to prove about the value of its platform and its general competency in drug development.
The question is, will that phase be better than the one it just exited? Let's investigate what it's working on and the financial impacts that work could have for investors.
The transition continues
Before beginning the discussion of where this company is going, let's set expectations appropriately.
Moderna won't revisit its all-time highs for revenue or earnings in the next three years. The odds of it experiencing another idiosyncratic gold rush like there was for its coronavirus vaccine are close to zero. But there's still an investment thesis for this stock that's grounded in what it's planning to do, so long as investors are willing to be patient.
Management's plans for the next three years entail a total of 10 product launches and, in 2027, reducing the annual sum it invests in research and development by $1.1 billion. Today, Moderna's trailing-12-month (TTM) revenue is just over $5 billion, and it reported TTM operating losses of $2.7 billion. That means the pressure is on for it to produce in-demand medicines precisely when its financial resources are becoming more constrained.
The products with the biggest earning potential that could be approved are its combination shot for influenza and COVID, its influenza vaccine, and its next-generation COVID vaccine. Under the right conditions, each of those programs could become a blockbuster drugs generating more than $1 billion in annual revenue.
But the drugs with somewhat more niche applications could drive the stock's price higher even in advance of their approval.
In particular, its seven oncology drugs in mid-to-late-stage clinical trials, especially the six of those that are individualized neoantigen therapies (INTs), are notable for their mechanism of action. INTs use the genetic sequence of a patient's tumor cells to train their immune system to fight against their cancer much more effectively, especially with the help of other anticancer medicines.
Version 1.0 of these medicines could be a major advancement in treating cancer, even if it doesn't immediately lead to a large inflow of revenue due to the relatively small size of the oncology markets being targeted. Still, there is zero chance that Moderna will stop if it can successfully commercialize any of its candidates. So it'll be a great sign for its future if the biotech can get one of those programs out the door, and getting late-stage updates on how they're proceeding will be a green flag as well, if it happens.
The longer the time horizon, the better this looks
In a nutshell, there's a solid chance that Moderna will be gearing up for its next major push of growth by the time early 2028 rolls around, but it probably won't be realizing much of the growth from its newly launched programs between now and then until shortly thereafter.
Therefore, if you're going to make an investment in this company, be ready to hold it for at least five years or more, and be aware that there isn't a pressing deadline that demands buying the stock today or even within the next couple of quarters.
At the same time, be aware that any of its clinical programs could fail to produce a marketable drug, and that any such failure would damage the stock's price. Multiple failures within the same segment could easily create multiplicative damage.
Moderna will probably be an important part of the biopharma landscape for quite some time, especially if its advanced therapeutic vaccines deliver on their potential. Within the next three years, it'll need to prove that assumption, and so far, it's on track.
