Moderna: Long-Term Guidance at Vaccines Day Represents Upside to Our $266 Fair Value

Moderna’s MRNA vaccine day provided more support for our belief in its ability to expand vaccine revenue beyond COVID-19, given the firm’s rapid pace of development and flexible manufacturing. We’re maintaining our $266 fair value estimate. Management offered a range for 2027 respiratory vaccine sales—including the COVID-19 vaccine and leading phase 3 programs in RSV and influenza—of $8 billion-$15 billion, which is above our own $7.7 billion estimate. While Moderna’s phase 3 efficacy study for flu vaccine mRNA-1010 did not show non-inferiority to approved flu vaccines at an interim look, we expect this was due to the small number of cases seen so far in the study and not an indicator that the vaccine is inferior. We still think the vaccine is positioned to launch in 2024, and we’re bullish on the firm’s pipeline of next-generation respiratory vaccines and combination vaccines, as well as advancing programs in other infectious diseases (including latent viruses like HIV and CMV), oncology, and rare diseases. Research and development costs are growing substantially in 2023 and are likely to continue to grow over the next few years, and we now forecast losses at Moderna through 2025. However, platform costs are shrinking over time, and costs could begin to drop as more of the first wave of programs complete clinical studies and smaller studies are initiated for combination vaccines. We think the firm’s lead in mRNA technology and expanding evidence of efficacy across multiple therapeutic areas could support an economic moat if the firm stays on track to launch several new vaccines over the next few years.