When looking for a stock to buy, it can often be best to start with one’s own portfolio. Are there any shares in there that I’d like to add to?
There are a handful, actually. But until recently, Moderna (NASDAQ: MRNA) wasn’t one of them. That’s because sales of the firm’s only product, the Spikevax Covid vaccine, have been declining rapidly as the pandemic fades in the rear-view mirror.
In 2022, the company generated nearly $19bn in sales. This year, it’s only expecting $4bn.
However, 2024 might prove to be an inflection point for this digital biotech stock. Here’s why.
Two-product company
In late May, the company received approval for mRESVIA, a vaccine for respiratory syncytial virus (RSV). This causes mild, cold-like symptoms but can lead to serious respiratory illnesses, especially in infants and the elderly.
This was the first approved mRNA vaccine for a disease outside of Covid. But this isn’t the only RSV shot. GSK and Pfizer both had theirs approved 12 months ago.
However, Moderna’s vaccine is the only one to come in a pre-filled syringe. This compares favourably with the multi-step process of its competitors’ products.
Here’s what Moderna’s CFO James Mock said about these rival RSV jabs: “So you have to mix it and swirl it and then take a jab and measure it out. And so that is prone to error or breakage and that is cost.”
He believes that busy pharmacies and healthcare providers will buy in to its more efficient administration method. And despite being late to the party, he estimates that the firm has a good chance of capturing at least an equal share (33%) of this large market over time.
A risk to consider
Now, I should note that the firm is currently generating losses as it invests in its various programmes.
This isn’t a problem yet as it still had $12.2bn in cash and investments, as of 31 March. And the company expects to break even in 2026 through product launches and disciplined investment.
But investors will want to monitor how quickly this war chest starts to dwindle over the next couple of years. It always adds risk to the investment case when a firm is loss-making.
More positive news
Yesterday (10 June), the firm announced that its combined flu-Covid jab provoked a higher immune response when compared to separate shots (including its own Spikevax) in a late-stage trial.
If approved, this 2-in-1 jab could upend the global flu vaccine market. “This is a home run,” CEO Stéphane Bancel told Barron’s. “The whole field has been waiting for something like this.”
He estimates that the total addressable market could go up by three times compared to Covid alone.
Looking ahead, Moderna says sales from its collection of respiratory vaccines could be between $8bn-$15bn in 2027. So, the company may more than treble its sales over a three-year period.
By that point, we might also have approvals for one of its experimental mRNA cancer vaccines that are currently in phase 2 and 3 studies for several types of cancer.
There are also vaccine candidates for HIV, Zika and cytomegalovirus. The future suddenly looks very exciting. As a result, I’m going to add more shares to my portfolio for the long term.
This post was originally published on Motley Fool
