| Stock: | Moderna Inc | ||
| Exchange: | Nasdaq | Symbol: | MRNA |
| Date: | 25-Mar-20 | Latest price: | $27.13 |
| Market Cap: | $8.98 bn | Fair Value: | Uncertain |
| Forward P/E: | – | Payback Period | Uncertain |
| Financial Y/E: | 31-Dec-20 | Rating: | BUY (above 30) |
| Sector: | Healthcare | Industry: | Biotechnology |
| Investment Theme: | LT Growth | Structural Trends: | Medical Technology |
Moderna is at the forefront in developing a vaccine for the coronavirus COVID-19. Development work done on SARS and MERS vaccines has given the company a lead on competitors, with government approval to fast-track trial of the vaccine on humans.
Summary
It is difficult to determine a fair value for Moderna — vaccines the company is working on are still in the development phase — but there is massive upside if development is successful. We rate MRNA as a BUY if it closes above 30.00.
We suggest a weighting of 1% of portfolio value because of the uncertainty.
Technical Analysis
Moderna (MRNA) was listed late 2018 and is testing resistance at its previous high of 30.00. Momentum is rising but declining Trend Index warns of strong resistance. A close above 30.00, or Trend Index recovering above zero, would be a buy signal.
Company Profile
Moderna is a clinical stage biotechnology company, based in Cambridge, Massachusetts, focused on the discovery and development of messenger RNA (mRNA) therapeutics and vaccines.
Messenger RNA plays a fundamental role in human biology, transferring the instructions stored in DNA to make the proteins required in every living cell. Moderna’s approach is to use mRNA medicines to instruct a patient’s own cells to produce proteins that could prevent, treat, or cure disease.
The firm uses mRNA to develop therapeutics and vaccines for infectious diseases, immuno-oncology, rare diseases, autoimmune and cardiovascular diseases.
Coronavirus COVID-19
Moderna is at the forefront in developing a vaccine for the coronavirus COVID-19. Michael Diamond, a viral immunologist at the Washington University School of Medicine in St. Louis, Missouri, and on Moderna’s scientific advisory board, says the company has obtained FDA permission to commence phase 1 trials on human volunteers:
A vaccine represents the best long-term defense against the virus, known as SARS-Cov-2, and could help thwart future outbreaks. But even if one is found to be safe and successful at preventing infection, public health experts say it will take at least a year to become widely available. While that seems like a long time, it’s actually extremely fast for vaccine development.
Just weeks after China shared the genetic sequence of the coronavirus in January, Moderna announced that it would ship its experimental vaccine to the U.S. government for testing. Last week, a handful of volunteers in Seattle became the first to receive that vaccine……
A total of 45 healthy adults ages 18 to 55 years are expected to receive the investigational vaccine over the next six weeks. Known as a Phase I trial, this initial human study will test the safety of the vaccine as well as its ability to produce an immune response at three different doses. An effective vaccine must be able to create an immune response in the body that imitates an infection but doesn’t make a person sick.
Moderna manufactured the vaccine quickly, skipping lab experiments to determine how well it prevents infection in animals. Typically, scientists must test vaccines on animals before moving to human subjects, but the U.S. Food and Drug Administration has given Moderna permission to instead conduct animal tests in parallel with the human safety trial.
Dr. Nathan Erdmann, an infectious disease physician at the University of Alabama at Birmingham, says the decision is warranted amid a public health crisis. “Fortunately, we had a head start on this…..Because of our experience with SARS and MERS, there’s been work toward developing ways of having an immune response to a coronavirus vaccine for some time.”
….The viruses that cause SARS, or severe acute respiratory syndrome, and MERS, or Middle East respiratory syndrome, are also coronaviruses. Previous outbreaks of these diseases provided scientists with a starting point for making a coronavirus vaccine so quickly. Moderna was already working with researchers at the National Institute of Allergy and Infectious Diseases on an experimental MERS vaccine.
Coronaviruses are sphere-shaped, with protein spikes protruding from their surface. These spikes lock onto human cells, allowing the virus to get inside and infect them. The vaccine that Moderna is developing consists of a short segment of genetic material, called messenger RNA, that provides instructions for a human cell to make a harmless version of the spike protein. The RNA is packaged into nanoparticles to be delivered as a vaccine. (Unlike some other vaccines, this one does not contain part of the actual pathogen.)
Once in the body, the vaccine is meant to spur cells into producing some of the harmless spike proteins. If it succeeds, the immune system will recognize the spikes as foreign and unleash antibodies to attack them. These antibodies will continue to live in the body and would prevent infection if a person is exposed to the virus in the future.
…..There is no vaccine on the market today that uses this approach. So far, this type of vaccine — known as an RNA vaccine — has only been tested on people in small safety trials. Scientists don’t actually know how effective it is in people. In previous experiments on animals, RNA vaccines produced antibody levels “in the same ballpark” as other types of vaccines, says Diamond.
RNA vaccines have some advantages compared to current vaccines. “They can be developed and deployed very rapidly,” says Diamond, [who] worked with the company on an RNA vaccine for Zika virus. The process is much faster than other methods of making vaccines. Moderna was able to manufacture and ship the vaccine to the NIH for testing in a matter of weeks.
“Even generating the flu vaccine takes months and months, and we know exactly what we’re working with year to year,” says Erdmann.
This type of vaccine could also be fairly inexpensive to manufacture because RNA is cheap to produce in the lab. Plus, some scientists think the risk for serious side effects is low because the body makes the protein itself. But because these vaccines haven’t been tested widely in people, their side effects aren’t well understood.
Even if Moderna does not win the race to produce a COVID-19 vaccine, the appeal of vaccines that do not contain part of the actual pathogen could go a long way towards overcoming anti-vaxxer safety concerns surrounding vaccines.
Financial Position
Moderna spends close to $500 million a year on research and development and has accumulated losses of $1.5 billion against contributed share capital of $2.7 billion.
With cash balances of $1.1 billion and trade liabilities of $140 million, the company has roughly a two-year window to start generating revenue or else raise further capital.
Disclosure
Staff of The Patient Investor may directly or indirectly own shares in the above company.