Moderna, Inc.: The COVID-19 vaccine forerunner

written on January 17, 2021

As the coronavirus struck earlier this year and the world was desperately seeking a solution to halt the pandemic, an obscure, relatively newcomer joined the race for a vaccine, crafting a candidate ahead of its competitors hot on its heels which dwarfed it both in size and resources. And while Moderna’s vaccine may not have been the first to hit the headlines for its efficacy or for being administered to the public, its mRNA-1273 vaccine was the first to begin human testing in mid-March. Yet, its successful jab is not the only marvel behind the biotech. Modena had already smashed fundraising records when it began its journey as a publicly traded company with a market cap of more than $600 million, its stock has tripled since its IPO, while it has teamed up with pharmaceutical heavyweights as it seeks to trailblaze medicine with its mRNA technology.

A brief history of Moderna

Originally named ModeRNA Therapeutics, the company was formed in 2010 to commercialise the research of stem cell biologist Derrick Rossi who had developed a method of modifying messenger RNA (mRNA) by first transfecting it into human cells, then differentiating it into stem cells which could be further separated into desired target cell types. Headquartered in Cambridge, Massachusetts, Moderna focuses exclusively on drug discovery, drug development and vaccine technologies based on mRNA. mRNA carries the DNA’s genetic instruction for making proteins to ribosomes that actually make the proteins. So whereas in conventional medicines immune responses are created and then injected into the body, the company’s technology platform inserts synthetic viral mRNA into living cells and then the mRNA reprogrammes the cells to develop their own immune response. Some of the viral diseases the biotech has targeted with its experimental mRNA vaccines include cytomegalovirus (CMV), H7N9 influenza and Zika, as well as cancer and autoimmune disorders amongst others. Moderna’s powerful approach means that it could, in theory, create a limitless number of medications so much so that its platform has attracted some of the most influential players in the industry like the likes of AstraZeneca, Merck and Vertex Pharmaceuticals, as well as the Biomedical Advanced Research and Development Authority (BARDA) and the Defense Advanced Research Projects Agency (DARPA). In 2013, Moderna and AstraZeneca (AZN) penned a five-year exclusive option agreement to discover, develop and commercialise mRNA in treatments for cardiovascular, metabolic and renal diseases which also included a $240 million upfront payment to Moderna. The move was considered as one of the largest ever initial payments in a deal that does not involve a medication that is already being tested in clinical trials. And in January 2014, Moderna and Alexion Pharmaceuticals signed a $125 million deal for orphan diseases in need of therapies, including rare illnesses like Crigler-Najjar syndrome. Trials with both AstraZeneca and Alexion Pharmaceuticals were mostly unsuccessful, yet despite the setbacks, in 2018 the company rebranded itself to Moderna Inc. and stepped up its vaccine development. Interestingly, before shares were even offered to the public, the company had already attracted $2.6 billion from private equity, its employee base had reached 735 individuals, while it built a 200,000 square foot manufacturing facility, all thanks to investors’ deep pockets and a firm belief in the company’s value. As of November 2020, Moderna has been valued at $35 billion.

When did Moderna go public?

The company went public in December 2018 in what was dubbed as the largest biotech IPO in history at the time. Selling around 27 million shares at $23, the company raised $604.3 million for 8% of its shares and earned a valuation of around $7.5 billion. Moderna’s shares split once in July 2010, with a 1-for-4 reverse split, which means that for each 4 shares owned pre-split, a shareholder now owned 1 share. Reverse splits usually take place when shares have fallen to a lower per-share price point than the company would like.

How much would an investment in Moderna’s IPO would be worth today?

The company’s shares peaked at $29.79 in mid-2019 before reaching an all-time low in August 2019 at $11.54. Then came COVID-19 and with it, optimism around the company's promising mRNA-1273 COVID-19 vaccine, propelling its stock to new heights and skyrocketing 250% higher as of May 2020. If we assume that you had made a $10,000 investment in Moderna’s IPO, giving you 454 shares, your initial investment would today be worth more than $31,300.

Is Moderna stock a buy right now?

In November 2020, just one week after Pfizer (PFE) announced a 90% success rate with its Phase 3 trial of its coronavirus vaccine, Moderna also announced preliminary data of its clinical trial showcasing 94% efficacy. Then, in December 2020, the US government approved the vaccine, clearing the way for millions of doses to be released, while in January 2021, the European Medicines Agency (EMA) also approved the jab, making it the second coronavirus shot to be cleared for general use across the EU. The approval comes at a time when tensions are rising over the slow progress of vaccination programmes in the bloc. Looking beyond the COVID-19 vaccine, Moderna has 12 core developments, including eight vaccines most of which are in phase 1 or pre-clinical trials. Amongst these, the most promising are the vaccine for cytomegalovirus which according to the company could lead to peak sales of between $2 to $5 billion, while the other is the company’s Zika candidate which could also offer several hundred-million-dollar annual peak sale opportunities. Boasting a strong pipeline with the potential for multiple revenue-generating medications over the next few years, this could mean that investors may be able to achieve good returns.

What’s next for Moderna?

As impressive as Moderna’s platform is, it is important to remember that none of its medications have been approved, yet, the company has managed to put together two quarters of triple-digit sales growth which is expected to continue in the coming months as its COVID-19 vaccine rolls out across the world. Ultimately, Moderna’s real value lies in its mRNA technology potential to produce medicines that prevent and treat a variety of diseases. Should the biotech’s medicines become commercial products, its stock could fare well.

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Life’s full of mysteries. Your money shouldn’t be one of them.