Moderna is one of the most discussed companies in 2021 due to its COVID-19 vaccine. What makes it more special is, it is not a conventional one like AstraZeneca or SINOVAC. It is RNA – based. A messenger of life. And the potential expansion of this new kind of biotechnology is almost limitless. Through this Moderna stock analysis post, we bring you to reality.
In This Issue
The Unicorn Against Helios
Moderna Stock Analysis Based on Market Potential
In the pre-pandemics world, Moderna should not at the same headline as Pfizer. The Massachusetts-based company is known for its unicorn status with unproven products. On the other hand, Pfizer is a member of Fortune 500 with more than 150 years of experience. Till COVID-19 – the global plague which is caused by a coronavirus that has for like corona in the sun – changed it all.
Both are now the leader of the mRNA-based COVID-19 vaccine. Pfizer registered more than 284 thousand vaccination while Moderna has 186 thousand – leaving Johnson & Johnson in third place (17 thousand).
In short, what makes mRNA special is, instead of using the real pathogen, it uses pieces of that pathogen that are enough to provoke the immune system. It is safer and gives more efficacy.
The Spike: We Aren’t Talking About the Virus’ Spike
Moderna Initial Public Offering takes place in December 2018, two years before the outbreak. Till Full Year 2020, the company still recording negative earnings. But, as we have said earlier, the pandemics have written a new fate for this company. The Spikevax maker recorded its historic first positive earning figure in 2021, following its COVID-19 vaccine massive distribution for a wealthy country. Trailing its twelve months of current earning trend, the mRNA specialized company is expected to record a jaw-dropping 7 Billion in earnings for FY 2021.
With millions of people from many countries not getting vaccinated yet, along with technological leadership at the same level as Pfizer. It is a buy?
- More than half of the global population isn’t yet vaccinated.
- Booster needed annually
Do not hurry. Let take closer some possible outcomes.
When Human Still Stands: Scenarios
Moderna Stock Analysis by Inspecting Several Possible Case
The first is the worst case – for Moderna, but actually the best outcome for mankind. Somehow (due to the vaccine program or whatever other cause), the COVID-19 become less and less deadly (but more contagious), eventually, it becomes a flu-like disease. In this scenario, Moderna’s revenue could tumble, and then people never heard about Moderna again. Due to this reason, we are reluctant to invest in this company.
The second is the moderate scenario. That is when an annual booster is required to overcome the mutation. In this situation, the business model of Moderna become more subscription-based. Which is the update of the antivirus given periodically. At a glance, these circumstances allow Moderna to preserve its earning level. But, we will talk about it later (spoiler alert: we doubt it).
The worst-case for humanity but the best for Moderna. The mRNA works best for outbreaks. This means that the more frequent the outbreak occurs, the better for Moderna. But we believe none want this. Not even Moderna employee.
We are very optimistic that the first case will happen in the future, like the Spanish flu, it created global havoc – and then disappeared. But as investors, we need to elaborate on all of that.
Competitive Advantage of Moderna.
The Business Model, Following The Fate of Other Pharma
An investor could think that Moderna inherits an economic moat or a durable competitive advantage like other Pharma companies. That is, The Federal Drug Authorization approval provides some barriers to entry for other companies to come in Moderna playground. Readers should visit this post (also this) to refresh this idea.
Problem is, whoever gets significant benefit from a disaster like a pandemic will be labeled as a bad guy. Government is there to become the hero. So, patent protection as an economic moat will be fading quickly. This is pandemics, this is emergency, said the politician.
And we agree.
In the absence of durable competitive advantage. It is hard for us to invest.
Moderna could be this big not because of its resource alone. The senators and Congress remind Moderna that the company gets injected at least 1 Billion from taxpayers for its vaccine R&D. As usual, the US as the global hero has a commitment to provide that R&D result to the global population. This surely weighs a burden to Moderna management. Pfizer also feels that pressure.
Rethink The Possibility
This makes us rethink even the best scenario when the annual injection is required to protect humans, Moderna competitive advantage could not last long. Instead of giving privilege to Moderna (or Pfizer), the government will encourage other companies to flood the market with vaccines, as much as possible.
And this does not happen in the US only, it will happen globally. Not to mention that every country will – if possible – produce its own magic injection. Since vaccination becomes a national defense issue: Jinping with SINOVAC and SINOPHARM, Putin with SPUTNIK, Boris with conventional AstraZeneca – others will follow.
Combating pandemics, The WHO has funded 100 million the Afrigen Biologics and Vaccines to crack the Moderna vaccines and produce them for Africa.
The Next for mRNA
Moderna Stock Analysis by Analyzing Another Opportunity with New Technology.
Interesting that the WHO target is the Moderna vaccine, not the others’. According to several sources, it is because the vaccine is so effective against COVID-19 and at the same time, show potential against severe diseases like malaria and TBC.
With cash in hand, government support, and proven technology, Moderna’s status has changed from unicorn to one of the largest vaccine suppliers. In the absence of COVID-19, say amen, the company could survive.
Thought for Investor
Quantifying the Scenario
The investor should ask, how much? Even when Moderna could deliver a new dose for rare and severe diseases, it has no economic scale at the level of COVID-19. At the same time, the COVID-19 market will be flooded by other competitors. Also, the valuation now is insane: Moderna’s market cap now exceeds aspirin inventor Bayer AG and Biotech US that has a long reputation. With so many uncertainties, investors should know what they need to do.