The Perfect Enemy | COVID, Shmovid: This Could Be the Next Big Growth Story for Moderna Stock - The Motley Fool
February 2, 2023

COVID, Shmovid: This Could Be the Next Big Growth Story for Moderna Stock – The Motley Fool

COVID, Shmovid: This Could Be the Next Big Growth Story for Moderna Stock  The Motley FoolView Full Coverage on Google News

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Moderna (MRNA 1.53%) is on a roll. Entering the fourth quarter of 2022, the biotech’s shares were down more than 40% from their previous high. Over the last three months, though, they’ve skyrocketed.

The news still isn’t good for the company on the COVID-19 front. Moderna expects to report sales of $18.4 billion for its COVID-19 vaccine in 2022. But Spikevax sales will decline sharply this year. The reality is that COVID-19 will almost certainly wane in importance for Moderna. But there could be a new big growth story for the vaccine stock.

The next vaccine race

Respiratory syncytial virus (RSV) presents a huge healthcare problem. It’s highly contagious and especially concerning for infants and senior adults. Analysts at SVB Leerink estimate that the RSV vaccine market could top $10 billion by 2030, with the senior adult opportunity making up at least $7 billion of the total.

The COVID-19 pandemic kicked off the greatest vaccine race among biopharmaceutical companies ever. RSV appears to be the next vaccine race. There currently are no approved vaccines for that virus.

Pfizer (PFE -0.29%) was the first to win U.S. regulatory approval for a COVID-19 vaccine, and it’s angling to become the leader in the RSV vaccine market as well. In August 2022, the giant drugmaker announced positive results for its RSV candidate, RSVpreF. The company filed for Food and Drug Administration (FDA) approval of the vaccine in December. A decision is expected in May.

In addition, Pfizer reported great results last November for RSVpreF in maternal immunization of infants. The company is the only drugmaker with an RSV vaccine targeting both infants and older adults that’s in or near the regulatory approval phase. 

But Pfizer isn’t alone in targeting the older adult market. GSK (GSK -0.06%) also announced positive results from a late-stage study of its RSV vaccine candidate. The British pharmaceutical company expects an FDA approval decision in early May. 

Moderna’s great results

We can now officially add Moderna to the group of leaders in this race. On Tuesday, the company reported results from its phase 3 study of its vaccine, mRNA-1345, in immunizing older adults against RSV. 

This study included more than 60,000 adults ages 60 or older in 22 countries, including the U.S. Moderna stated that mRNA-1345 achieved an efficacy of 83.7% in preventing RSV lower respiratory tract disease defined by two or more symptoms. The investigational vaccine demonstrated an efficacy of 82.4% against RSV lower respiratory tract disease with three or more symptoms. Like Spikevax, its new candidate is a messenger RNA (mRNA) vaccine.

The reported efficacy for mRNA-1345 was slightly higher than the 82.6% efficacy of GSK’s candidate. It was also well above the 62.7% efficacy of Pfizer’s RSVpreF. However, clinical study designs differ, so those efficacy numbers can’t necessarily be compared on an apples-to-apples basis.

Moderna plans to file for regulatory approvals of mRNA-1345 in the first half of 2023. Assuming it doesn’t encounter any roadblocks in the approval process, the company could soon add another blockbuster vaccine to its lineup. 

Time to buy?

Does the promise of a successful RSV vaccine mean that it’s time to buy Moderna stock? I wouldn’t go that far.

Moderna’s market cap currently stands at close to $75 billion. That’s a steep valuation for a company that is assured of only $5 billion worth of COVID-19 vaccine sales this year. Approval of mRNA-1345 could help Moderna return to growth in 2024 and 2025. However, the competition with Pfizer and GSK in that indication could be fierce.

Sure, Moderna’s pipeline features other late-stage programs. The company could deliver good news from its experimental flu and cytomegalovirus vaccine candidates down the road. But it’s too soon to bank on positive results. 

Some investors wouldn’t touch Moderna with a 10-foot pole. I’m not that negative about the stock. My view is that Moderna could be a huge winner over the long term with its mRNA technology. However, I can’t estimate the company’s earnings over the next decade with anything close to a warm-and-fuzzy feeling. For now, staying on the sidelines with this resurgent vaccine stock seems to be the best approach, in my view.

SVB Financial provides credit and banking services to The Motley Fool. Keith Speights has positions in Pfizer. The Motley Fool has positions in and recommends Pfizer and SVB Financial. The Motley Fool recommends GSK and Moderna. The Motley Fool has a disclosure policy.