Moderna: R&D Day Brings Dramatic Strategic Shift

Key Morningstar Metrics for Moderna

• Fair Value Estimate: $141.00
• Morningstar Rating: 5 stars
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

Moderna MRNA announced a strategic overhaul and new financial guidance at its R&D day on Sept. 12, and we’ve lowered our fair value estimate to $141 per share from $227. We’ve repeatedly pointed to the potential of Moderna’s mRNA technology to help the firm build an economic moat and establish a portfolio of vaccines as well as oncology and rare-disease treatments. However, Moderna is facing several headwinds that are making its previously aggressive research and development strategy less feasible, including weak demand for covid vaccines, entrenched competition in respiratory syncytial virus vaccines, no accelerated approval pathway for its melanoma treatment, and a shrinking pool of cash from pandemic covid vaccine profits. Moderna is therefore focusing its cash and R&D efforts on 10 programs it sees as likely to reach the market by 2027, with estimated breakeven pushed back to 2028.

We think the oncology program remains the highest-potential program in the pipeline; we now assume a launch in melanoma in 2027 with phase 3 data. We’re also encouraged by signs of durable efficacy for the firm’s two leading rare-disease programs, which could launch by 2027, although sales potential is significantly smaller for these rare diseases. We continue to see a potential launch of a combination covid/flu vaccine in 2025, although we’ve slightly slowed our growth assumptions for the new combination, given management’s comments around the potential for further declines in covid vaccine demand. Conversely, we’ve increased our sales forecast for the firm’s norovirus vaccine, as early data has been solid and Moderna sees significant enough sales potential to push this to phase 3 trials. We’re also optimistic about phase 3 data for a cytomegalovirus vaccine expected later this year, which could help reverse negative sentiment around the shares.