Cash-flushed Moderna searches for its next home-run drug

Behind on your booster shots? We won’t judge, but we can’t say the same for vaccine makers who feel the pressure of lower demand. Up to 70% of Americans are behind on their vaccine shots.

Global vaccine demand has fallen off a cliff…

Global demand for vaccines has been down by over half since the start of 2022, international organizations are cutting orders and the U.S. is uncertain about COVID vaccine demand.

Novavax fell 30% yesterday after reducing its sales forecast by 50%. But Novavax is an outlier — it was late to be approved and is far from the preferred vaccine.

Using the cutting-edge mRNA technique, two companies lead the U.S. for vaccinations — Pfizer-BioNTech (357M shots administered) and Moderna (227M).

• mRNA vaccines trick the immune system into thinking the virus is in the body, which then develops antibodies.
• The concept has been around since the 1980s — but going from concept to FDA approval was long and difficult.

COVID was the perfect use-case

Founded in 2010, Moderna spent years developing mRNA treatments before landing on the perfect use-case, COVID. Moderna’s Spikevax was the second mRNA vaccine approved — behind Pfizer.

Moderna relies primarily on COVID vaccine sales, while Pfizer generates 55% of its sales from other treatments.

How does Moderna plan on surviving past COVID? The answer: Milk COVID vaccine sales and expand into other treatments.

• Moderna is developing a flu-COVID combo vaccine with 43 other drug candidates and 31 in active clinical trials.
• During the last quarter, Moderna generated $9.6B in cash — nearly all from its COVID vaccine — enough to authorize $3B in buybacks.

Investors: Moderna has time (and cash) on its side

According to The Diff, Moderna looks similar to its pre-COVID days — plenty of products in the pipeline with lots of cash. The difference now is Moderna isn’t relying on raising money (which can dilute investors) — with time to find its next blockbuster drug.

• At an 11x forward price-to-earnings ratio, Moderna is trading near biotech’s industry average of 13x.
• The stock is down 28% in 2022 but moving forward, investors can’t rely on another pandemic to accelerate clinical trials.

Moderna is pumping cash — but the taps won’t run forever.