On Tuesday, Moderna Inc. (MRNA, Financial) CEO Stéphane Bancel made a bold prediction at the company’s first in-person Science and Technology Day since 2019, saying mRNA technology has the unique opportunity “to change medicine forever.”
If that viewpoint proves to be accurate, companies like Moderna that pioneer the technology will benefit not only mankind but investors who showed confidence in them early on.
Bancel wants Moderna to amplify its impact on patients. “We believe this will happen by building a platform so that we can scale and by obsessing about how fast we can expand the platform in terms of its applications for patients,” he explained.
Messenger RNA (mRNA) vaccines teach our cells how to make a protein that will trigger an immune response inside our bodies. This is how the Covid-19 vaccine developed by Moderna works. Like all vaccines, the mRNA variety benefits people who get vaccinated by giving them protection against diseases like Covid without risking the potentially serious consequences of getting sick with the full disease. This is a relatively new area of medical technology, as researchers only recently began developing successful mRNA vaccines.
Moderna is now expanding the use of its mRNA platform into other areas of medicine besides vaccines. During the technology briefing, the company discussed its current research into lipid nanoparticle engineering. In most instances, mRNA-based medicines need to be encapsulated in tiny lipid (fat) droplets, known as lipid nanoparticles (LNPs), to protect them from degrading and promote uptake by cells.
In one case, Moderna developed a new LNP formulation that could be inhaled and delivered directly to the lungs, creating a variety of new ways to tackle pulmonary disease. If fact, Moderna is now working with Vertex Pharmaceuticals (VRTX, Financial) to deliver mRNA inhalation to treat cystic fibrosis.
If Moderna is successful in applying its mRNA technology to develop drugs, the stock could be a bargain at its current price considering it is well off of its 52-week highs.
While the ability of mRNA platforms to develop other drugs has yet to be proven, if the technology can be broadly applied the platform could be the pharma industry’s version of Apple Inc.’s (AAPL, Financial) iOS and Alphabet Inc.’s (GOOG, Financial) (GOOGL, Financial) Android - that is, a technological core open to adopters and complementors but tightly controlled by the platform owner. An article in the Harvard Business Review points out that this could allow platform developers to charge fees for other drug developers who use its platform, which is an extremely profitable business model.
At the height of the Covid vaccine frenzy, Moderna traded near $500 per share but has since shed more than 70% of its value as the shares have slid to about $137. Investors have concerns about demand for the company’s Covid vaccine, even though sales are projected to be $21 billion this year. Perhaps Wall Street needs to consider the company has four drugs entering final-phase testing this quarter, including three that target non-Covid respiratory viruses. Three products could launch over the next two to three years.
Moderna has a market cap of nearly $55 billion, and its current price-earnings ratio is just under 5. The shares are rated between and buy and hold by analysts, with an average 12-month target price of $220 and a high of $506, according to Yahoo Finance.
Investors may also want to keep up to date on the progress of other public companies that are developing products based on mRNA technology. According to Genetic Engineering & Biotechnology News, the four biggest besides Moderna are:
- CEO Buys, CFO Buys: Stocks that are bought by their CEO/CFOs.
- Insider Cluster Buys: Stocks that multiple company officers and directors have bought.
- Double Buys:: Companies that both Gurus and Insiders are buying
- Triple Buys: Companies that both Gurus and Insiders are buying, and Company is buying back.