The 3 Things That Matter for Moderna Now

Key Points

• Moderna's coronavirus franchise faces regulatory threats, and its other approved vaccine isn't gaining traction.

• The biotech does have several exciting clinical programs in development.

• Moderna may offer substantial upside, but it's essential to consider the associated risks.

• 10 stocks we like better than Moderna ›

Since hitting their peak in late 2021, Moderna's (NASDAQ: MRNA) shares are down by more than 90%. The biotech company gained recognition by developing one of the leading coronavirus vaccines on the market, but its revenue and earnings subsequently plummeted as the pandemic waned.

Can Moderna rebound and surpass its previous highs? Whether it can do so will depend on several key developments investors should pay close attention to. Let's consider three.

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1. Will new recommendations limit its COVID-19 vaccine revenue?

Moderna continues to generate decent annual revenue from its coronavirus vaccine, Spikevax. In the second quarter, the company reported $114 million in sales from this product. It's essential to note, though, that Spikevax generates most of its revenue during the second half of the year. Moderna expects its total revenue to be between $1.5 billion and $2.2 billion this year, with the majority of this revenue coming from Spikevax. Most medicines or vaccines never generate more than $1 billion in annual revenue, so Moderna's performance in this market is still noteworthy.

However, regulatory developments could impact Moderna's sales of its COVID-19 vaccine. In the U.S., regulatory authorities have changed recommendation guidelines and requirements. The focus is now on targeting older adults, and those who may be at risk of severe COVID-related complications based on one or more factors that increase this risk. The vaccine is no longer being recommended for healthy adults at average risk. It will be important to see how these recent developments impact Moderna's financial results.

Image source: Getty Images.

2. Can its RSV vaccine make headway?

Last year, Moderna earned approval for mResvia, a vaccine for lower respiratory tract disease caused by the respiratory syncytial virus (RSV), for adults age 60 and older. Although it was one of the first RSV vaccines to reach the market, it has generated negligible sales so far. However, it recently received a label expansion in the U.S. for adults age 18 to 59 and has also gained approval in several other countries, including the U.K., Australia, and Switzerland.

Moderna's CEO, Stéphane Bancel, estimates that approximately 40 million people in the U.S. alone are eligible for an RSV vaccine. Moderna could still make strong sales from mResvia as it makes headway into this market and others abroad. But with competition from several other players, how will this product progress, especially with recent new approvals and label expansions? Investors should keep an eye on that.

3. Will there be promising developments from late-stage candidates?

Perhaps the most critical aspect of Moderna's business to pay attention to right now is its late-stage pipeline. The company has several candidates that are in phase 3 studies or have already demonstrated efficacy in late-stage trials. It recently announced positive data from a phase 3 study for its investigational influenza vaccine, mRNA-1010.

Although several competitors have already been on the market for a while, flu-vaccine efficacy tends to be relatively low. That's partly why last year 600,000 patients were hospitalized due to flu-related complications in the U.S. There's a need for new options here, and Moderna's candidate may be the answer.

Elsewhere, the biotech is running late-stage studies for mRNA-4157, an investigational personalized cancer vaccine it's developing in collaboration with Merck. In a phase 2 study, mRNA-4157 significantly reduced the risk of recurrence or death when paired with Merck's Keytruda in patients with advanced melanoma, compared to Keytruda alone. If Moderna can replicate this success in phase 3 studies and launch this product, it would be a meaningful approval for its lineup.

The company also has other late-stage candidates, including mRNA-1647, a potential vaccine for cytomegalovirus (CMV); there is currently no approved vaccine for this virus. Strong clinical progress across these programs (and others) could jolt Moderna's stock.

Is Moderna's stock a buy?

Moderna has a deep pipeline of mRNA vaccine candidates, extending beyond the ones discussed. The biotech is also recording decent annual revenue from its two approved products. Provided it can continue innovating and significantly improve its lineup in the next few years, its share price could jump. Furthermore, Moderna has been engaged in cost-cutting efforts, which should help it navigate the somewhat precarious economic conditions it faces.

The stock carries above-average risk, given the difficulty of predicting sales of Moderna's approved products, and the potential consequences of a significant clinical setback (a threat biotech investors routinely face). However, Moderna also boasts considerable upside potential. Those comfortable with the risk should seriously consider the stock.

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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.