Two years ago, after its IPO raised $604 million at a valuation of $7.5 billion, I suggested here that Moderna (NASDAQ:MRNA) might be a good speculation. If you took my advice and we meet in 2021, you’re buying the coffee. MRNA stock now trades around $123/share, a market cap of nearly $50 billion.
Moderna is the big winner in the race to find a COVID-19 vaccine, called Operation Warp Speed. Moderna got a vaccine through multiple trials in less than a year.
Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, who has become world famous during the pandemic, took the Moderna vaccine December 22.
It gave everyone a shot in the arm.
A Closer Look at MRNA Stock
MRNA stock rose, and recently fell, as a “COVID vaccine speculation.” But as I wrote two years ago, it’s a lot more.
Moderna isn’t just a drug company. It has a method for finding drugs, based on Messenger RNA (mRNA). This translates DNA’s instructions to ribosomes creating the polypeptides and proteins of life. If DNA is software, mRNA is a systems architect, translating between what the body needs and the chemical factories producing it.
Moderna has a half-dozen vaccines in its pipeline in addition to MRNA-1273, which is its first commercial product. It is also working on drugs against cancer, heart disease and hepatitis.
In 2018 I compared it to Regeneron (NASDAQ:REGN), whose VelociSuite acts as a system for drug discovery, mRNA isn’t a drug but a technology for creating drugs. I find that far more powerful than any single compound.
What Winning Means
From its founding in 2010 to Operation Warp Speed, Moderna was a company hungry for capital. It signed a five-year exclusivity agreement with AstraZeneca (NYSE:AZN) that brought in $240 million for 8% of its equity.
So far it has only gotten one of those drugs through Phase One trials. It signed an agreement to develop 10 drugs with Alexion Therapeutics (NASDAQ:ALXN), bringing in $125 million. But those treatments were scrapped as unsafe.
Moderna’s system let it develop MRNA-1273 over a weekend, once the virus’ genetic code was mapped. It was already in a Phase One trial when the first American died of the disease. As its safety and efficacy were tested, 300,000 Americans died of COVID-19, nearly 1 in every 1,000 of us.
Estimates for the value of MRNA-1273 are all over the map. Goldman Sachs (NYSE:GS) has estimated its 2021 take at $13 billion. Morgan Stanley (NYSE:MS) estimates it could make $30 billion over the next two years. An Evercore ISI note over the summer estimated the total take at $100 billion, with $40 billion in profit.
But that’s not the point.
The Bottom Line on MRNA Stock
Moderna’s success with MRNA-1273 puts it in a different league among drug makers.
Instead of giving away its future for cash, as in the AstraZeneca and Alexion deals, Moderna can now fund its own and others’ research. Companies with promising ideas built around mRNA may now take Moderna cash in exchange for their equity. Moderna can now fund university studies and license that intellectual property on favorable terms.
Moderna’s stock price has been falling as investors sell the vaccine news after a year buying the rumor. Questions around COVID-19 have gone from being about science to being about trust. But Moderna is not and never was just a COVID-19 play. Its COVID-19 success will accelerate research into the manifold uses of mRNA technology. While Moderna’s current pipeline is interesting, the future pipeline it could develop is unlimited.
Once the hangover from the current party has set in, Moderna will be a great speculation again.
On the date of publication, Dana Blankenhorn did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O’Flynn and the Bear, available at the Amazon Kindle store. Write him at [email protected] or follow him on Twitter at @danablankenhorn.