In a letter released to shareholders this week, Moderna Inc. (NASDAQ:MRNA) CEO Stephane Bancel stated, “Our mRNA platform is working.” Referring to the company’s groundbreaking messenger RNA drug and vaccine biotechnology, this may turn out to be one of the biggest understatements of the decade.
Best known for its life saving Covid-19 vaccine, Moderna has begun a new chapter of developing innovative treatments for common and unmet medical needs. By 2028, the company hopes to launch at least 15 commercial products for respiratory disease, oncology, rare diseases and other health conditions.
One of the first products expected to hit the market is mRNA-4157, a melanoma therapy that is being developed in conjunction with Merck. Last month, the companies announced that the drug, in combination with Keytruda, demonstrated positive results in a Phase 2b trial of high-risk skin cancer patients. Phase 3 studies are underway for both melanoma and non-small cell lung cancer — and rapid expansion to additional tumor types is anticipated.
The news caused Moderna shares to gap up 9% on December 14th in five-times average volume. After falling as low as $62.55 in November 2023, the stock entered 2024 with a head of steam aided by an upbeat financial outlook.
On Tuesday, Mr. Bancel reiterated the company’s plan to return to sales growth in 2025 following an extended period of weaker Covid vaccine sales. Moderna, which forecasts it will amass $9 billion in cash by the end of this year, said it expects to break even by 2026.
The encouraging trial data and financial guidance has MRNA enjoying its first seven-week win streak ever. In 2021, the stock began the year on a six-week up streak en route to soaring to almost $500.
Back above the $100 level, it has miles to go to return to its pandemic glory days — but has technical momentum in its favor. For the first time in a while, MRNA is trading above its key long-term moving averages (including the 20-day, 50-day and 100-day lines).
Absent a pandemic, Moderna likely won’t soar as much 273% this year as it did in 2021. But with interest in the stock picking up alongside news flow, investors could be in for some healthy 2024 gains.
Here are three more reasons why.
#1 - Covid is here to stay
As outlined in the 2023 shareholder letter, the virus behind COVID-19 will be around for a long time. Similar to the common flu, it is constantly evolving and presenting a need for updated formulations. Look no further than JN.1, the latest dominant COVID variant sweeping across the U.S. this winter.
With the coronavirus at the endemic phase, though, Moderna’s first approved product will probably continue to slip into the background and have a lesser impact on financial performance. But with Spikevax expanding its share to 51% in December 2023, Moderna has a dominant grasp on the Covid vaccine market — and a significant revenue contributor for years to come.
More importantly, the success of Spikevax proves that Moderna can hang with the bigger, more established pharmaceutical industry players. This is something investors should hang their hats on as the company transitions to other clinical areas.
#2 - Growth is about to re-accelerate
Moderna’s second commercialized product is expected to be the RSV vaccine MRNA-1345. Last month, positive Phase 3 clinical results were published in The New England Journal of Medicine, setting the stage for a 2024 launch. As the only mRNA-based vaccine for a virus that causes up to 160,000 hospitalizations in the U.S. annually, MRNA-1345 is the catalyst Moderna shareholders have long awaited.
The RSV vaccine could indeed spark a lengthy run of successful product launches for the diversifying company. Nearly all of its 45 mRNA developmental candidates have reached clinical studies, and nine are in late-stage studies. In preparation for multiple launches over the next two years, Moderna recently announced changes to its commercial structure that are intended to accelerate decision-making and increase customer awareness.
#3 - Oppenheimer is a bull again
Oppenheimer’s Hartaj Singh has been one of the most successful analysts when it comes to Moderna. Well before the coronavirus outbreak, Mr. Singh took a bullish position on February 26th, 2019 on the unproven biotech when it was trading at $20.94. Roughly two and a half years later, the stock blasted up 1,650%. Banking the enormous win and seeing slower growth ahead, he took a neutral stance on Moderna in August 2021, where he remained until this week.
Mr. Singh kicked off the new year by upgrading MRNA to a Buy. Citing improved visibility around Covid vaccine sales and the potential for as many as four new commercialized products by 2026, he also gave the stock an arguably conservative $142.00 price target. With the closely followed Oppenheimer a renewed bull and Goldman Sachs and others offering $200-plus targets, Moderna may get another shot in the arm in 2024.
