Modern, Inc.: All signs point to a rally impact (NASDAQ: MRNA)


Investment thesis

Modern, Inc. (MRNA) is a front runner to win the Emergency Use Authority for its COVID-19 vaccine candidate. Despite being more than quadrupled in value in the last twelve months, the stock has seen sharp improvement over the past two months, and our technical analysis has only revealed a bullish signal. Meanwhile, FDA approval will validate Modern’s broader therapeutic platform, and the CMV vaccine, a key candidate awaiting next year’s Phase 3 trial, looks promising as it seeks a billion-dollar peak sales opportunity is. Our conservative estimates for sales indicate a revenue estimate of nearly double the revenue estimate for 2022.

However, the need for premium pricing and stricter storage may harm the long-term potential of the vaccine as risk-averse peers prefer safety over speed, ready to unveil cheap vaccines for greater market access Huh. With our sales forecast for 2022, placing a large premium based on the price to forward sales ratio for the year, we turn ‘bullish’ on the stock ahead of the period of key catalysts for the company.

Source: Modern – TK Day Presentation

Early winners emerge

Vaccine developers who have been vaccinated for success against COVID-19 have entered the house. Of the eight candidates in late stages of clinical development, many are ahead of interim data readouts at the end of this month or early October as developers await emergency use authorization from the FDA. To develop and scale, mRNA (messenger RNA) vaccines had an edge over traditional vaccines when the severity of epidemic compressed years of vaccine development in a few months. The breakthrough technique triggers natural immunity by directing human cells to produce viral proteins and mimic actual infections.

Two key candidates based on mRNA technology, Modern’s mRNA-1273 and Pfizer Inc. (PFE) and BioNtech SE (BNTT) ‘s BNT 16B1, are currently undergoing phase 3 clinical studies, which will begin preliminary data readouts next month. Are expecting In late August, the CDC urged public health officials across the country to prepare for COVID-19 vaccine delivery in late October / early November. Technical specifics were outlined for the two vaccine candidates, similar to Modern and Pfizer / Bio N Tech, whose shares later wept on hopes of their initial success. Nevertheless, Modern remains ~ 29.5% lower than its peak in mid-July, with ~ 21.5% and ~ 5.5% declines in BioNTech and NASDAQ Biotechnology Indices, respectively.

Moderna_Recent selling offSource: Cofin

Sales potential underestimated

The CEO of Morden does not rule out releasing an interim data next month, although he has set a base case for November that indicates the speed of data production that will be subject to contagion severity in the US where testing is in progress . Despite uncertainty at production levels for this year, the company is on track to deliver ~ 500 million to 1 billion doses in 2021. In a $ 1.5 billion deal with the US government, it has already reached an agreement to supply 100 million doses. With an option for an additional 400 million doses. Even though the payment means a cost of only $ 15.25 per dose, Modernity already had ~ $ 954.9 million of federal funds for the development of the vaccine. Considering the total government funding of ~ $ 2.5 billion, the price per dose climbs to ~ $ 24.80, close to the $ 25.00-30.00 per dose range the company was negotiating with buyers at the end of July. Considering the prior and delivery of 500 million doses in 2022, we believe that mRNA-1273 could fetch ~ $ 12.4 billion in sales for the mod.

Moderna_PipelineSource: Company Financial

But this is not the only revenue opportunity for the company, which boasts a rich pipeline consisting of 23 candidates with 23 programs and six modalities. According to the company, candidates within a modality share similar product features and pharmacological profiles. The success of the COVID-19 program would validate the prophylaxis modality, in which mRNA-1647 is an experimental vaccine targeted to CMV (Congenital cytomegalovirus) infection. Despite being the leading cause of birth defects in the US, there is no approved vaccine for CMV infection to prevent congenital transmission. Currently pursuing a Phase 2 dose confirmation study for mRNA-1647, Modern hopes to release its interim data before the end of this quarter as it prepares for next year’s Phase 3 trial . It will be a major catalyst for the upcoming R&D day to see the company as it is, with sole commercial rights for vaccines, seeking a peak sales opportunity of $ 2-5 billion annually. ~ 10-25% of the lower range of sales capacity, and as supported by COVID-19 vaccine sales, as estimated above, we believe Modern’s total revenue to reach ~ $ 12.6-12.9 billion by 2022. Could be, almost twice the estimate. With the current forward price to sales ratio of ~ 4.0x for 2022, the above sales forecast indicates a $ 49.8-51.0 billion market cap for Modern, which is upside down to ~ 88.6-93.1%.

Technical analysis cites a bullish signal

Even technical analysis gives a fast look at the stock. As indicated in the graph, the MACD (Moving Average Convergence Divergence) line has crossed its signal line. After a more than four-fold rise in the past twelve months, the stock’s recent selloff appears to be a brief correction within a long-term correction. However, the crossover also occurred in early July, only for the RSI (Relative Strength Index) to climb above the ~ 70% level a few days later, indicating an overbought (rapid rise) scenario. But this time, the RSI is below 70%, indicating that the stock is still in motion as the market awaits emergency use authorization for the company’s COVID-19 vaccine candidate. Nevertheless, long-term risks remain formidable competitors prioritizing safety and priority vaccines.

modern.  Analysis Source: Cofin

Two-dose regimen is expensive

Based on an agreement of ~ $ 1.95 billion signed by the US government to purchase 100 million doses of BNT162, Pfizer and BioNTech have indicated a price tag of ~ $ 19.50 per dose for their vaccine candidate. With the opponent getting cheaper and the first-mover advantage, Modern will have to fight for market share. AZD1222, being developed by AstraZeneca plc (AZN) in partnership with Oxford University, is likely to be even cheaper so far at $ 2.96-4.00 per dose depending on various supply agreements. Meanwhile, Johnson & Johnson (JNJ) has indicated $ 10.00 per dose for its candidate, whose Phase 1 / 2a trial is currently underway in the US and Belgium, the same location as Merck & Company, Inc. (MRK) is advancing its vaccine candidate in a similar test. Unlike the current leaders in the race, both companies are evaluating a single-dose diet, which will become a major competitive advantage in the long run.

Strict Storage Requirements

However, mRNA vaccines are likely to face a major obstacle for effective and fast delivery as they need to be stored at sub-zero temperatures. Even though the emergency authority will limit the wide availability of the vaccine, ultra-cold facilities are not necessarily commonplace even in a hospital setting, the most likely point of administration. While mRNA-1273 requires minus 20 ° C for storage, Bnt 162, with minus 70 °, is likely to face a difficult challenge. Both AstraZeneca and JNJ vaccines can remain effective at fridge temperatures, giving them a major advantage beyond emergency use. However, the stricter storage requirement is unlikely to affect the initial sales gains of modern storage, as developed countries like the US, pressed for a quick fix to the crisis, can quickly ramp up such specialized freezer facilities Huh.

Moderns, which have no commercial products in the stable, may risk testing. Nevertheless, for big pharma with the marketing of large drugs, even a minor accident can jeopardize consumer confidence earned over decades. The decisions by Pfizer / BioNTech and AstraZeneca to run several large studies involving multiple countries reflect their spread for such risks, while more robust data sets resulting from larger trials may also trigger regulatory approval. An initial data release was expected this month that AstraZeneca had not been withdrawn from halting Phase 3 testing for AZD1222 last week over safety concerns. Therefore, despite the early successes of mRNA vaccines, Lagarde, being cheaper and more convenient to administer and distribute than the likes of AstraZeneca and JNJ, will remain long-term winners for both the rich and the poor, as they are against COVID- Are the same as his battles. Lying on 19.

The conclusion

Although the modern COVID-19 vaccine is likely to be an early winner in the race, the stock has fallen to its peak since mid-July. Even a base case scenario for production suggests that the consensus size for 2022 is estimated to be approximately annual sales. With our sales forecast and the current sales price of 2022 selling price to put a big premium, we believe Modern is on the verge of a major. As the rally confirms our technical analysis. Yet requiring a premium price and ultra-cold storage, the vaccine’s long-term sales potential remains uncertain as rivals advance cheaper and more convenient regiments.

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Disclosure: I / We have no positions in any of the stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinion. I am not getting compensation for this (other than Seeking Alpha). I do not have any business relationship with any company whose stock is mentioned in this article.

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