Moderna, Inc.: Trial Uncertainty Risks Peak Valuation

Summary

• With the big pharma setting ambitious goals, COVID-19 vaccine development is getting more competitive.
• Despite modest returns and low probability of success, Moderna has joined the fray with a relatively unproven technology.
• Following a record-breaking stage of initial testing, riskier late-stage trials await the company, threatening its peak valuation.
• With our relative valuation based on a modest NTM EV/Sales multiple suggesting a significant overvaluation, we are looking forward to a better entry point in Moderna.

Investment Thesis

The stakes have never been higher for Moderna, Inc. (NASDAQ:MRNA) as it battles a myriad of competitors in the race for a successful COVID-19 vaccine. The long and arduous process of vaccine development and testing has slim monetary gains and a low chance of success. Despite a record-breaking phase in initial testing, the company’s novel and largely unproven technology has already been trumped by the competition in late-stage trials and the financially powerful biopharma companies have announced far more ambitious timelines for their vaccine launch.

As competitors advance proven technologies in their trials, Moderna’s attempt at COVID-19 could risk the validity of its entire vaccine platform. However, thanks to a chain of catalysts throughout the year, its valuation has reached a peak leaving no room for error. With a modest NTM EV/Sales multiple to reflect the heightened risk, our relative valuation with the consensus revenue forecast for 2020 reveals a sizable overvaluation in Moderna, justifying a pause in further accumulation of the stock.

Source: Moderna - Vaccines Day Presentation

The Rapid Development

While the wider stock market crumbled in the pandemic-driven downturn, the vaccine developers posted robust gains as the investors scrambled to pick the most potent winners in the coronavirus vaccine battle. Funded by CEPI (the Coalition for Epidemic Preparedness Innovations), and leveraging its expertise in MERS vaccine (Middle East Respiratory Syndrome) development, Moderna in February kicked off the development of mRNA-1273, its candidate against COVID-19. The virus causing MERS belongs to the same family of coronaviruses that lead to SARS (Severe Acute Respiratory Syndrome) and SARS-CoV-2 (the novel coronavirus).

Source: Moderna - Vaccines Day Presentation

Becoming the first to start the human trials against COVID-19, Moderna initiated Phase I dosing in March, only two months after the initial design of the vaccine. Driven by a chain of catalysts in its development, the stock rallied ~145.0% YTD (year-to-date) when the NASDAQ Biotechnology Index only eked out ~1.0% of gain. For a clinical stage biotech that managed only ~5.2% of gain since its IPO in late 2018, it is a remarkable turnaround as the regulators and government agencies attempt to figure out the promising therapeutic interventions.

Source: koyfin

Though Remdesivir, the antiviral treatment from Gilead Sciences, Inc. (GILD), has already been approved by the FDA on an emergency basis, only a safe and effective vaccine will be capable of disease prevention. The vaccine development, subsequent testing and commercialization, however, is an arduous and lengthy process taking more than ten years on average with only a 6% chance of market entry, according a 2013 study published by PLOS ONE. Even after extensive research for nearly four decades, science is yet to discover vaccines for life-threatening disease such as AIDS. As the pandemic sweeps across the globe leaving a trail of devastating impact on human lives and the economies, the returns of finding a permanent cure has far outweighed the risks of failure. Per the latest data from the World Health Organization, eight vaccine candidates are undergoing clinical trials currently with ninety-four in the pre-clinical phase. Given their multiple approaches, a deeper dive into their pros and cons could reveal the potential winners.

Picking the Winners

The majority of candidates are protein-based even though none is yet to reach the clinical stage. According to Nature, these vaccines might need multiple doses and adjuvants to elicit an adequate immune response. Historically, the animal trials for protein-based vaccines such as the one for SARS have shown favorable results. Meanwhile, the vector-based vaccines, the second most popular approach, have made significant progress with CanSino Biologics Inc. (OTCPK:CASBF) becoming the first to advance a COVID-19 vaccine to the Phase II trials. Another candidate, ChAdOx1 nCoV-19, developed by the University of Oxford became the first European contender for human trials, and AstraZeneca PLC (AZN), its partner for global development and distribution, expects the vaccine could be available for limited use as early as the end of this year. The global pharmaceutical giant Johnson & Johnson (JNJ), building upon its expertise in Ebola vaccine development, follows a similar approach for its candidate targeting early next year for its emergency use.

Unproven Technology Battles Big Pharma

Meanwhile, Moderna, Inovio Pharmaceuticals, Inc. (INV), and BioNTech SE (BNTX)/Pfizer Inc. (PFE) are advancing nucleic acid vaccines. Safe and easy to develop, this vaccine type can be speedily scaled up for production, but yet to be proven clinically. Despite slow human applications owing to difficulty in moving the DNA molecule into the cellular interior, Inovio’s technology based on DNA plasmids has been used in veterinary care and a Phase I trial is currently underway for its candidate. Meanwhile, Pfizer working with BioNTech has already initiated a Phase I trial for its mRNA vaccine in Europe expecting the emergency use later this year.

Moderna’s candidate contains the mRNA that codes for the Spike protein expressed on the coronavirus particle helping it cause the host cell infection. The company has already filed an IND (Investigational New Drug) application for the Phase II trial, planning its initiation in the second quarter of 2020 (Q2 2020) leading to a possible Phase III trial in the fall of 2020 subject to regulatory approval. Having passed the development stage fairly easily, Moderna now has entered the riskier testing phase where its unproven technology will be up against the already-proven mechanisms of vector-based and DNA vaccines backed by the deep-pocketed big pharma.

Gearing up for large scale late stage trials, the leading contenders are concurrently expanding their vaccine manufacturing capacity, prompting Moderna to secure the supplies. Recently, BARDA (Biomedical Advanced Research and Development Authority), its largest grant provider over the past three years, awarded ~$483M for the advanced development and large-scale manufacturing of mRNA-1273. A few weeks later, an agreement was signed with Lonza Group Ltd. (OTCPK:LZAGY) to source up to 1B of vaccine doses per year. Even though the production could reach a hundred million per month with the support of its own manufacturing facility in Norwood, MA, the capacity increase has already been matched by Pfizer and JNJ which plan to ramp up the production up to hundreds of millions and ~1B of vaccines, respectively.

Revenue Slide to Reverse

Despite the risks taken, Moderna is only a clinical-stage biopharmaceutical company with none of its candidates having reached the Phase III clinical trials yet. Generating revenue through strategic alliances with government and private collaborators, the company has witnessed two years of back-to-back revenue contractions. With BARDA agreement committing more than eight times of its 2019 revenue, the trend could reverse this year. Therefore, the consensus revenue estimate of $85.8M with ~42.5% of YoY (year-over-year) growth is justifiable for 2020, in our view.

Source: koyfin

However, the vaccines, despite their low probability of success, are hardly money-makers. The chief scientific officer of J&J has already estimated that its COVID-19 vaccine could cost as little as “ten dollars or ten euros a dose” depending on the production output. Even if mRNA-1273 makes market entry, the tight competition and government pressure could, therefore, weaken Moderna’s pricing power, eroding its profitability.

Risks don’t justify the Peak Valuation

As I pointed out in my previous article on Moderna, the coronavirus vaccine development can be a double-edged sword for the company. As much as any success could validate its entire mRNA vaccine platform, the pitfalls could jeopardize its technical soundness, risking the company’s peak valuation, which, at ~211.3x of NTM (next twelve months) EV/Sales currently, leaves hardly any room error.

Source: koyfin

The multiple is more than double its average over the past six months and several times higher than that of peers, BioNTech and Inovio. When compared to CanSino, the company with the leading candidate in the race, Moderna commands a premium of ~53.0%. With a valuation unmatched by the novelty in its vaccine development strategy, we believe Moderna’s soaring multiple needs to be revised down. Assuming an NTM EV/Sales multiple of ~133.0x - ~140.0x, the consensus revenue estimate for 2020 suggests the company is overvalued by ~32.7% - ~29.5%, hardly a compelling ‘Buying’ opportunity despite a few indications to the contrary.

Sources: The Author; Data from Seeking Alpha, Koyfin and Author Estimates

Considering Moderna's insider trades over the last six months, the selling has exceeded the purchasing by ~13.9x. However, for the last three months, it has declined to ~4.5x from ~15.7x in the first-three-month period, suggesting an improving level of confidence by the insiders over the company’s prospects.

Keeping All Eggs in a Single Basket

Meanwhile, Moderna’s broader candidate portfolio diversifies its product risk even though the reliance on a single vaccine platform impacts its future collaborations should any of the programs encounter setbacks. Moderna’s CMV (Cytomegalovirus) vaccine currently undergoing a Phase II trial is a potential blockbuster therapy with a peak sales opportunity of ~$2B - ~$5B. With no approved vaccine, the CMV infection is the commonest cause of birth defect in the U.S. Estimating $200M - $250M for its Phase III trial set for 2021, Moderna, with sole worldwide rights for the vaccine, could seek collaborations to ensure its unhindered clinical development as the COVID-19 vaccine testing strains the cash flows. While positive interim data of the latter could expedite funding for Moderna’s other promising candidates such as the CMV vaccine, any failures could dry up funding from new collaborations, impacting the top-line growth.

Source: koyfin

Conclusion

The search for a COVID-19 vaccine has become a zero-sum game as the big pharma with their proven technical know-how and financial prowess set ambitious timelines for its market entry. Despite the low monetary gains and uncertainty in success, Moderna has joined the fray with its largely unproven technology. Even though its share price shot up as initial testing progressed at record speed, the risks in late stage trials and intense competition no longer justify the peak valuation. With a modest NTM EV/Sales multiple and 2020 consensus revenue estimate suggesting a sizable overvaluation, Moderna deserves a better entry point in our view.

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Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Comments

[howarddork]

It’s interesting how little interest there is in Moderna on Seeking Alpha. If this had been the only Tesla post for a week it would have ~2,000 comments by 500 posters. Im going to hazard that it’s because Millennials don’t read and geezers only read Drudge. It also implies the story isn’t out.

[sts66]

If this were a Tesla article with 2k comments I wouldn't be reading or following the comments - would take way too much time to keep up, and I'd guess a large majority of the comments would contain little useful content.

[Chihawk Research]

@howarddork Of course that's true. But Moderna investors are in a rare situation. At first blush the trade looks crowded because the valuation is high (like Tesla). But Moderna holders are looking at the new science and looking long for a new science and new platform. But all of us are a fraction of the patience and belief that Flagship showed with Moderna. Imagine sinking close to a billion into Moderna before it was public; then watching the company go through a billion since the IPO and now hearing they are overvalued because they have no earnings yet.

You can only do that if you understand the science. Prior to the IPO Moderna did a lot of "Developing mRNA science,delivery technology and manufacturing. investors.modernatx.com/... (Slide 10)
A lot of that phase was addressing LNP toxicity, and making the delivery stelth to the immune system. Two of the most basic parts to this science were to make the LNP stealth to the body but to drop the PEG so entry into the cell cytoplasm is clean or natural like a true infection. They found “Stealth” lipid nanoparticles that are able to avoid the reticuloendothelial system (RES) can be obtained by coating their surface with polyethylene glycol (PEG). www.hindawi.com/...
And they also needed to make the PEG diffusible. I don't want to go into te details, but it's science. It takes time and a lot of money and the payoff comes years later.
I think you will see some of it when we compare Moderna and BioNTech results in the near future. But even after these developments and the IPO, Moderna has worked with NIH and NiAiD for years on vaccines and antigen design. www.youtube.com/... (58:00) And that work is only one of their current modalities. We have all had the advantage to at least see a pipeline and it's modalities grow since the IPO. But if you want to get the true value out of Moderna you need to understand the story. The advantage holders have now is the achievements get more concrete as they progress. Even great biotechs rarely work this way.

[khlim115]

Pfizer started phase I trial with their mRNA vaccine. It lipid nanoparticles similar to Moderna. Not sure if it is the exam same thing. However, if they are both producing mRNA vaccines, what will be the market share for Moderna? (in light of Pfizer's scale vs Moderna's).

[howarddork]

There won’t be enough supply if the Oxford, Pfizer and Moderna vaccines are all effective which we should all be hoping for. Moderna is years ahead with CMV. and Zika and the cancer drugs.

[TraderLawJF]

Does the current market cap or insider sells bother anyone. It’s clearly breaking out to 75?

[Chihawk Research]

Moderna Insider Selling Plans
(Moderna) transactions were conducted through so-called Rule 10b5-1 trading plans. Such devices automatically execute transactions when conditions set by the insider, such as price and volume, are met. Planned transactions are meant to remove any potential bias an insider may have from knowledge of material nonpublic information.
www.barrons.com/...

[mechan1sm]

Finally a sober assessment of Moderna’s chances/mRNA based vaccines in general.

Moderna have not disclosed which dose they are taking into Ph2, when they will start enrolling people over 55 for the first time (something which Oxford has done in Ph1). This makes me wonder whether it is the 250ug dose, which requires a great deal of lipid to formulate. Supply??

Nucleic acid vaccines have been tested for nearly 30 years now. None has ever shown it can hold its own against viral vectors, or protein in adjuvant formulations, especially when it comes to induction of neutralizing antibodies.

It is worth noting that Moderna’s vaccine requires two doses and about six weeks to induce immune responses, whereas the Oxford vaccine is one and done, with immune responses peaking by day 14, a month ahead. Assuming both are approved and available, do you want the one that protects you within 14 days, or the one where you’ve got to come back in a month for a booster, and would be protected about 14 days after that?

In the real world adherence to vaccine boosters by adults is horrendous. People skip appointments or simply forget, even for known lifesaving vaccines like HBV, and HPV.

My expectation is that mRNA vaccines will fall flat in older people (over 55) and in people with diabetes, so the people who need a COVID19 vaccine most will be steered towards an Adenoviral-vectored vaccine (JnJ, Oxford/AZ) or protein in adjuvant (Sanofi/GSK)

[howarddork]

The phase 2 trial is using 50 and 250 mcg (or placebo) - which implies the 100 mcg dose in phase 1 worked. Their Phase 1 study was also done in 55+ and 71+ cohorts as is the Phase 2 study. Their Zika vaccine shows a strong immune response as did the animal studies on mRNA-1273. Even if the Oxford virus works, and I pray it does, it’s biological and can’t be manufactured fast enough to compete with Moderna’s if Modrna’s is efficacious. And since they started testing it last week, no one knows anything about how efficacious it is in people. Speculative, but I think people are less likely to forget their second shot after 6 months of being stuck at home. MRNA-1273 (and the Zika and CMV vaccines) are proof of concept. Moderna was a 9 billion dollar company back when it was all speculative.

If you can’t be bothered to do the research, please stop posting.

[Chihawk Research]

@mechan1sm Thank you for the world's most backward shallow insult on nucleic acid vaccines. Science will progress nevertheless. Now let's talk present day and reality. Moderna has tested 8 vaccines and shown immune responses and neutralizing antibodies in all of them. mRNA-1273 will be the ninth.
Since you like Oxford's vaccine so much I'll assume you have seen the prior research. All of their prior research involved a prime and boost. Because it uses a Chimp Adenovirus Vector that receives an immune response it has been generally thought that a boost will be ineffective. In research the boost has always been a second adenovirus vector but that would mean AZN would need to manufacture a second drug to create a boost. With current timelines, that is not realistic. Now Oxford mentioned boosting a small number of subjects but I did not see another vector. I'm guessing those will be the same Adenovirus as the prime and we will see the data from there.

In any case, all prior data suggests Oxford wanted the boost for efficacy. I highly doubt the patient inconvenience of coming back in a month (it's almost always 28 days in the industry) is driving Oxford here. Still, both Moderna and Oxford are going to have efficacy data in the next few weeks so we will see if Moderna's prime/boost follows their prior platform drugs. I suspect Oxford will get Moderna prime only results and mRNA-1273 will impress with data showing a prime boost format. When we get to seropositive subjects in later trials, you will see a mRNA-1273 prime only impresses.
I hate constantly repeating links but every critique keeps hitting the same data points. Moderna has shown efficacy in older subjects for mRNA-1777 investors.modernatx.com/... (Slide 3). And they are doing the most older clinical participants in any Covid trials right now, and the only elderly participants. Oxford is only going with 18-55 subjects. Considering the well known limitations of annual flu virus efficacy, I'd say you preference for Adenoviral-vectored vaccines is on shaky grounds.

[howarddork]

I posited early on that hedge fund managers would be buying blood from the phase 1 participants to see if the vaccine worked. I’d say a 20% rise in the share price in 2 days is an indication that there are deep pockets pretty sure the vaccine is efficacious

[John King Jr]

Allow me a few references for your reading/watching/listening pleasure and my naive thought in the end:

A. On animal test: please "watch" below two videos
Dr. Fauci and team did the animal test of SARS-CoV-2 at NIHA, hence very confident on MRNA's m-rna platform technology, according to:
1. Dr. Tal Zaks' interview at STAT's Combating Covid-19 — Part 3 on 2020-05-06 @ www.statnews.com/... and
2. Dr. Fauci's interview with National Geography on 2020-05-04 @ www.nationalgeographic.com/...
Note that:
1. there are other previous and current animal and human tests of MRNA's m-rna platform technology, in addition to SARS-CoV-2. Please check it out at Moderna First Quarter 2020 Conference Call presentation deck @ investors.modernatx.com/...
2. Like it or not, the "competitors in this race are the virus and the clock", rather than the standard procedure. The MRNA team are trying to save human lives here. BTW, I do not work at MRNA but I think they are doing great things.

If still not enough, Bill Gates seems to think the same as of 2020-04-30 @ www.gatesnotes.com/...

Allow me to restate, this is a "platform" technology and COVID-19 is just one use case of it.

B. A short "read" per MRNA leadership team's ethics and professionalism:
On 2020-05-06, MRNA filed 8-K per Dr. Fauci's positive third-party comments with National Geography on 2020-05-04 @ investors.modernatx.com/...

C. Please "listen" to MRNA's Moderna First Quarter 2020 Conference Call earlier today to get a feel about its team, their technology and plan going forward: @ investors.modernatx.com/...

Finally, I understand that we are all here to make a bet and make MONEY. One way to make good money in the long run, is to do good things to human society and money will flow naturally. I hope MRNA is yet another case in this category. Of course, I could lose since it is a bet, but I am okay with it. :)

[howarddork]

The Phase 2 trial is being done at 50 and 250 mcg (or placebo). Phase 1 trial at 25, 100 and 250 mcg. They must have results on immune response - 100 and 250 mcg must have been similar and 25 less so. It wouldn’t make sense to change dosages otherwise- they must be hoping 50 mcg will be as good as 250 mcg. While they aren’t saying it, it must have worked. Doesn’t mean vaccine is effective in preventing disease, but it’s over the big hump.

[Chihawk Research]

@howarddork I agree. But I'd add the 50 mcg dose based on the other clinical drugs in the platform was sort of an expected dose focus. I think all of the information continues to validate the platform. Conventional wisdom is not wrong to need data as proof. But what is becoming obvious is the results will be good because everything keeps validating the platform. May 12 is the Healthy Returns conference. I think we get animal information immunity data there (that will look like the MERS Rabbit). Then later in the week or the following week we might get the human titers data (I hope it looks like Moderna's Zika Virus numbers). Today was the first time the inevitable conversation about speed and scale showed why Moderna is not really in a race with many. Only one or two vaccines will launch. We have seen this before. I have no doubt a big company will pivot away from Covid-19 by the Summer. That's when Moderna's lead on mRNA-1273 will become fully clear to the market. But it could take months or even years before others realize how Moderna's platform is revolutionizing medicine. This one has so much room to run. Write it down-I think it will be the top stock in 2020!

[biotech1980]

Great article. Thank you! Totally agree regarding a huge risk. Moderna decided to conduct human trials without testing their vaccine on animals. This was a huge mistake. The presence of s-protein specific antibodies may not provide protection against SARS-CoV-2. In some cases it may even contribute to severe infection.

[Dulan Lokuwithana]

Thanks for all the feedback...should not forget the evidence of mutation which will force the vaccine design back to square one...

[biotech1980]

agreed. just found it:
seekingalpha.com/...

[Chihawk Research]

Moderna is a biotech. It's biology and it's technology are the reason the company is so special. You guys simply can't understand that and therefore have nothing interesting to offer. You will never chase anyone out of Moderna if they understand it's biology and technology.

[Real007]

Bloody mad how some think MRNA has something different than the ten other biotechs utilizing the exact same technology, identical approach (the mRNA tech has been around almost 35 years). It's a horribly crowded space and vaccines generally have some of the worst business models (cases) of anything out there -- most firms concluded decades ago that the entire vaccine dev/test area bleeds money and that's why the world lacks vaccines for the vast majority of DNA, RNA crud --- there's simply no business case.

Good luck holding positions in this 22 cents/share stock. You'll need it if long.

[howarddork]

I imagine you’ve mortgaged the house to buy puts. How’s that going?

[Stock 1638]

Bill gate foundation
"Bill & Melinda Gates" has 36 billion.
In this critical period. The Bill & Melinda
Gates keep continuess support the pharmaceutical company to develop the Covid 19 vaccine to fight again the new coronavirus 💪✔️. One of the company called Inovio pharmaceutical got the $ 5million or more funding from the Bill Gates foundation. Inovio is optimistic to have the Covid 19 Vaccine by end of this year.
INOVIO it's the leader of Covid 19 Vaccine development using their advance DNA technology to develop the vaccines for COVID-19, Cervical cancer, zika virus, HIV and more.
Https://www.phillymag.com/healthcare-news/2020/05/02/inovio-pharmaceuticals-covid-19-vaccine/
Https://www.inovio.com/dna-medicines-pipeline/

[Chihawk Research]

@Stock 1638 ok, since you came here I'll say it... you are about to get super schooled my friend.
*They do not have near enough for DNA clinical funding.
*They cannot manufacture anything they create.
*In the best vaccine month we have ever seen they have not raised additional funding.
*They did not get a drug company partner while Moderna got Lonzo and BionTech got Pizer.
*They have proved zero in the vaccine space.
*They are inflated off Robinhood.
*There is no path to market and they have six months until the small guys hit market and the big boys are ready.
*They have been mining shares for decades and they are about to dilute again.
Flame me anytime. But at least I said it at $10. Thank me later.

[Chihawk Research]

The coronavirus has mutated and appears to be more contagious now, new study finds
www.cnbc.com/...
Spike mutation pipeline reveals the emergence of a more transmissible form of SARS-CoV-2
www.biorxiv.org/...
The mutation D614G (a G-to-A base change at position 23,403 in the Wuhan reference strain) was the only site of interest identified in our first Spike mutation report in early March (Page 5-The D614G mutation)

D614 is located on the surface of the spike protein protomer, where it can form contacts with the neighboring protomer. (Page6-D614G and potential mechanisms for enhanced fitness).

Thus, based on currently available information, there are several ways the D614G mutation may impact Spike’s infectivity: it may improve receptor binding, fusion activation, or ADE antibody elicitation. Another mechanism for the shift to the G614 form at later times points might simply be through antigenic drift mediating antibody escape. If the D614G mutation in SARS-CoV-2 was impacting neutralizing antibody sensitivity as well as, or instead of, the ADE activity observed in the SARS-CoV study, D614G could also be mediating escape that makes individuals susceptible to a second infection. (Page-7)

Andrew Lo of MIT did a nice Webinar with Moderna CEO Stephan Bancel. This question came up and Bancel gave a pretty detailed answer about how this would be answered from best case to worst case scenario.
www.youtube.com/...
1:05:30
1:07:35-emphasis
1:09:34-key
The Phase I trial has taken place in both Seattle, Washington and Atlanta, GA (Emory University). That has proved fortunate. Looking at the bioRxiv D614 was first and in China most. The change is to G614. The later areas were to report cases the more G614 cases are present. Applying this to Moderna’s mRNA-1273 Washington State got more of the D614 version of the virus and Atlanta got more of the later G614 cases. www.biorxiv.org/... (Page 17 Table B and Page 19)
If this is affecting the m-1273 vaccine, it should show in the results at some point (but not necessarily on anticipated results). That would add another layer to this onion but will show the advantages to RNA approaches. No adenovirus vaccine can be produced and changed to keep up with persistent mutations. However, as Bancel explains, RNA technology can certainly handle the task. If mRNA-1273 Phase I results do not vary from Washington to Georgia, I doubt this issue will ever matter.

[Chihawk Research]

All the way back on March 31 when scientists were still allowed to be optimistic and only CanSino and Moderna were in trials.....
We’re now inventing new vaccines from scratch and could plausibly go from nothing to a marketed vaccine in about a year. If laboratories around the world detect that this coronavirus is changing gradually, we’ll most likely have time to match new strains before they change enough to cause a new outbreak. Rest assured: a vaccine is coming, it will work, and it will continue to work for as long as humanity must contend with Covid-19.
www.city-journal.org/...

[Real007]

PFE and MRNA will both learn soon it's beyond difficult getting the right, correct amount of genetic material in humans (and even getting the immune system to respond at all) with these completely unproven, untested approaches. mRNA is a Macau Casino roll of the dice all the way.

Longs holding both positions better prepare for a major haircut around June 1 when "official" results of Phase 1 get delivered. Leaks about 1-2 weeks earlier.

MRNA is worth (maybe) 22 cents a share - speculative holding only.

[Chihawk Research]

@Real007 The work these guys do is tough. They do amazing things. They have done it with 7 drugs before in clinical trials. And they have posted those results. I think they will get the mRNA for a single molecule spike protein right in mRNA-1273. You might be right about everyone else. Like I said this stuff is tough. But Moderna is much better than everyone else. They will show results. This is only gambling if you don't understand the science. And you can't understand Moderna without appreciating the science. investors.modernatx.com/...

[John King Jr]

@Real007 Allow me Sir, no offence: Why some people simply claim things w/o any reference or fact or proof to support such a claim please? At least one should state he is long or short for what reason, or simply state the facts w/o trying to convince people. Even gambling (and insurance too) takes science, which is called probability and statistics IMHO. That's why Casinos always gain. On the flip side. how was the 22c price calculated at what probability please? Otherwise, it is wasting the community's time to read a comment at SeekingAlpha IMHO.

[Real007]

22 cents is valid, their vaccine and mRNA (generally) won't work. This crud is bioweapons grade contagious and reinfections, reactivations will be recurring, cyclic. The US is in Round 1 of a multi-round event lasting another 18-24 month.

www.biorxiv.org/...

nextstrain.org/...

Indices have another 25-45% to go on the downside once awareness levels increase (most investors don't know what they don't know)

[Pisces19081]

Looks like buy the dip time again before ER.

[Chihawk Research]

I do believe most, if not all, of these companies are working 24/ 7 on these vaccines. It still interesting to hear this landlord angle. It is also exciting to think of what a great time it must be to work in these industries right now. If you have ever had a chance to make your work an obsession I think it is a really special time. It's not everything in life. And it shouldn't stay that way forever. But it is a great time if it happens for a little while.
www.cnbc.com/... (at 2:05 / 8:11)

[Chihawk Research]

Never mind politics, do you think Trump stays away from an international vaccine effort if he believes a non-American company will find a good vaccine and the companies he supports through BARDA might fail? I know he does not want to be instructed by the WHO or share anything with China. But if he thought the Oxford vaccine was in his Operation Warp Speed plans or a needed backup he would have been in Brussels in my opinion. www.nytimes.com/...

[sts66]

Yes, I actually do believe Trump would publicly steer away from a foreign made vaccine - don't forget he and the CDC refused to take the diagnostic test kits that WHO offered them, saying "no thanks, we'll make our own AMERICAN test". Privately, he would send AF1 to the UK to get enough of Oxford's vaccine for his family and staff and select other associates.

[Tech Junkie]

@Dulan Lokuwithana Good article, I agree that Moderna is currently overvalued due to FOMO hype over CV-19. Very good point on how limited commercial success the CV-19 vaccine can bring in.

Keep up the good work and ignore the critics, many of whom if you look at their comments history have no biotech experience outside of CV-19.

Funny how people are flaring up because the author don't agree with their views. If they actually bothered to research more, they'd realized that the author had wrote 2 previous articles in Nov 19 and Feb 20 and were bullish but is not cautioning that the company's valuation has gotten ahead of itself.

[Dulan Lokuwithana]

Thanks @Tech Junkie and everyone else who added comments. A safe vaccine is exactly what the humanity needs to contain the pandemic. However, I just wanted to highlight the investment risks in a sky-high valuation that is unable to support a novel vaccine technology.

[Rhmassing]

Dr. Fauci’s interview by the National Geographic was just out. He was very enthusiastic with the strong response induced by the nRMA platform by MDNA from animal trials and thought the vaccine would be available by January! He believe this one would be the first one on the market. No wonder MDNA received such strong financial support to the tune of $482 millions and signed so soon a manufacturing contract with this Swiss co aiming to produce a billion dosage of vaccine by then! Conservatively this stock will double from here in six months. Shorts are in serious trouble. Small wonder Trump said he expected a vaccine would be available by the end of the year. His often casual statement is confirmed this time by Dr. Fauci in this interview just published.

[Tech Junkie]

So in 6 months' time, Moderna will be worth $16B x 2 = $32B market cap company? So having 1 drug approved will make them the top 25 pharma/biotech in the world?

en.wikipedia.org/...

[John King Jr]

@Rhmassing Thanks for sharing! Nice article and video interview with Dr. Fauci @ www.nationalgeographic.com/...

[worldclass777]

@Tech Junkie sure seems like you talk like you are short MRNA. Yes, the company would be worth that and more given that this would validate the mRNA platform.

[SpreadEdge]

Glad someone pointed out the long term risks. In the near term I wouldn't be betting against it. Can see a sell off if Oxford's study shows efficacy given the scalability with AZN.

[Chihawk Research]

The scalability is not just about AZN. AZN is essential for Oxford to supply the UK. I doubt a single dose goes outside Britain until the middle of 2021 at best. Why? Oxford is using a non-replicating chimpanzee adenovirus vector. It requires extensive purity and considerable time to culture. AZN can do it, but not in large amounts quickly. The Oxford vaccine is funded by the UK government and they made it clear that they want it to go the UK people first. And if the vaccine is created rapidly without a glitch then AZN can produce enough for most of Britain. But a vaccine like that would need years to help the global situation.

[Mantequilla]

I’m placing my bet on Oxford university with AstraZeneca partnership. However AZN will not operate as a for profit during the pandemic. So I’m not sure there is any real returns to be had from it.

[Chihawk Research]

This surprised me...... Among those who were willing to be vaccinated against the virus, 89% would do so if it was made in the United States, and 11% said they would take it if it were developed in another country.
www.yahoo.com/...

[Mantequilla]

I think this survey probably gives false choices. If a consumer has a choice between an American made vaccine or foreign vaccine, they would chose American sure because of the implied reliability. But I doubt doctors would be presenting patients with this exact choice. Doctors will push for the the best option whoever develops it. It’s still certainly interesting to see consumer mind set though.

[Chihawk Research]

You said-The long and arduous process of vaccine development and testing has slim monetary gains and a low chance of success.
I say-That is how it is in normal times. Times that do not include an active global pandemic; devastated global economies with no alternative; and a vaccine race where the president spends billions through BARDA and creates Operation Warp Speed which sets timeline goals that perhaps only Moderna is currently capable of meeting.

Moderna has 7 other mRNA vaccines in the pipeline showing safety and immunogenicity including titer measurements to establish the levels of immunity they reach. So they are not licensed but they do have detailed data and experience. investors.modernatx.com/...

No one can deny they are putting the platform credibility on the line with mRNA-1273. But if they are right it not only supports the platform, it will take a young and promising pipeline into "Operation Wrap Speed" compared to where it was before mRNA-1273. If they are sure about safety and effectiveness that supports the risk. Actually that statement is the only explanation for all of the news events involving Moderna.

*Fauci and NiAiD skip animal trials and put a biotech with no approved drugs into Phase one in a month an a half from genetic sequencing-If they are sure about safety and effectiveness that supports the risk.

*BARDA gives a biotech with no approved drugs $483 million to fund them all the way through the drug approval process-If they are sure about safety and effectiveness that supports the risk.

*Lonza makes a 10 year 1 billion doses/year agreement with a biotech with no approved drugs-If they are sure about safety and effectiveness that supports the risk.

*The president in an election year says we will have a vaccine by the end of the year with only one company having the timeline and funding to come even close to his dream of 300 million doses.-If they are sure about safety and effectiveness that supports the risk.

You said-"Despite a record-breaking phase in initial testing, the company’s novel and largely unproven technology has already been trumped by the competition in late-stage trials and the financially powerful biopharma companies have announced far more ambitious timelines for their vaccine launch."

Can you indicate a competition timeline that trumps Moderna?

You said "When compared to CanSino, the company with the leading candidate in the race.

I say- Are you with the WHO?!?! CanSino dropped their highest dose going from Phase I to Phase II and we are getting no update since. In fact, we are getting more news on China's other vaccine projects ever since the Phase II announcement. Stock Update-The CanSino stock is flat after the Phase II announcement. Flat now after initially dropping on the Hong Kong exchange with the Phase II announcement.

“The Chinese now do not have confidence in the vaccines produced in China,” said Ray Yip, the former head of the Gates Foundation in China. www.nytimes.com/...

I say-The CCP vaccine will be the first ineffective vaccine that CCP propaganda can create. It will be for the Chinese, and the informed Chinese will avoid it. The will travel to Hong Kong to get the real (Western) vaccine. That is what the rich do in China because they are smart and ruled by an authoritarian government.

You wrote-mRNA-1373
Really? You wrote most of the article about mRNA-1273 including slides with the proper code and in your writing you wrote it correctly once and in correctly once? Thanks for being half right.

[Tech Junkie]

So, in normal times vaccine has limited monetary gains but somehow they will be able to profit during a pandemic?

Half of the company's vaccine candidates have not even started clinical trials, even for those that are in trials there are very limited clinical data reported, so how can they have detailed data?

If we based on the theory that BARDA is funding Moderna because only they have the capabilities, then why did BARDA award a similar amount to J&J as well when they have not even started clinical trials? Based on your logic, BARDA must be even more bullish on J&J given that they are funding them even before trials have started?

Lonza is a contract manufacturer (CMO) that helps biotech/pharma companies manufacture. They have no risks in whether the drugs work or not, they get paid to manufacture the drugs. Companies from the big pharma to clinical-stage companies engage CMOs all around the world because it is expensive to build your own facilities.

[sts66]

Could it really cost $200M-$250M to run the CMV vaccine trial? That sounds really, really high to me.

[Puche]

I enjoyed the read. A well thought out article that provides a strong basis for your view and opinions. Thanks for sharing it.

I happen to agree that MRNA is drastically overvalued based on fundamental or other valuation methodologies. I've been in MRNA since shortly after it went IPO and have accumulated a nice size position. I happen to believe that MRNA maintains a strong management team, a strong balance sheet with flexibility to raise capital, a reputable early stage investor base, a deep pipeline (lots of shots on goal) and an interesting proprietary platform with leading edge technology.

No doubt MRNA is not for the faint of heart especially at these valuation levels. I continue to utilize derivatives to manage my risks, lower my average price and drive returns.

Nice job.....Slow and steady! Good luck to all!

[MikeFromNZ]

@Puche I've read comments on other stocks, and am very impressed with your investment acumen. I bought MRNA pre-COVID following the post-secondary sell-off, and sold last week. I run very diversified portfolio (I previously ran highly concentrated portfolios earlier in my career, but that's another story), and don't have the bandwidth to mess around with harvesting options premiums, but I respect your approach, and recognize that it can be very profitable if implemented correctly.

I sold because I'm not comfortable with the risk/reward here. Being lazy, I'l paste some modified comments of mine from a recent article on INO:

1. MRNA might win, but the odds are against them given that they have many large well-established competitors with proven technology, plus many smaller competitors with less-proven albeit promising approaches
2. Investments by Bill Gates or funding from BARDA don't guarantee anything, success or failure will be determined by clinical outcomes
3. There is substantial downside for MRNA if they don't win
4. If MRNA's vaccine does fail, it will not only vaporize the COVID premium, but also call into question MRNA's entire technology platform
5. Everyone is focused on efficacy, which vaccine will work best, but is ignoring safety. Any one of these speculative stocks, including MRNA, will get destroyed if there are SAEs.

seekingalpha.com/...

[Puche]

@MikeFromNZ, thanks for the well thought response. I also appreciate the nice compliment you gave me. Congratulations on the MRNA trade you executed. You can't complain when you make money on a trade like you did! WELL DONE!

If you follow me you know I invest heavily in biopharma and have been doing it for many years. I also invest extremely heavily in SaaS and other technology focused companies but rarely post about that side of my book (only VEEV and OKTA).

I hear you regarding the time it takes to harvest premiums. At this point, its not nearly as time consuming as you may think having utilized some good tools option tools I've built over the years. By the way, I don't simply harvest premiums but also utilize options to manage my overall risk of my book, buy stocks I want to build larger positions in at below current market prices and as you pointed out drive higher returns.

My thesis on MRNA never included the COVID-19 opportunity. I openly admit that was just the "cherry on the cake" that MRNA's investors received in the short term. IMO MRNA, though a R&D based company, has an incredibly opportunity in front of them. It will take patience and a keen focus on the story as it develops.

Your five risk/reward points are all accurate and clearly need to be taken into account by astute investors. I've written many times that MRNA can easily fall back to the low $20s if any of your risks were to happen.

For the record and as I've disclosed, I have written a significant amount of call options on a weekly basis (the high volatility has allowed investors a great opportunity to make weekly profits). I have also been called about on some additional recent purchases that helped to deliver solid short term profits.

Even if MRNA was to fall back later in the year I wouldn't really care. I've already made excellent returns and expect to be a shareholder 10+ years from now for different reasons than COVID-19 vaccine.

All just my two cents. Thanks again. Slow and steady! Continued good luck to you!

[Chihawk Research]

@MikeFromNZ We are not ignoring the downside risk or safety. We have data on SAE's and titers for 7 vaccines that Moderna has in clinical trials. mRNA-1273 is the eighth with the same delivery, LNP, and buffers. All they do is change the RNA with each vaccine. And honestly their 6RNA CMV vaccine and their Zika envelope protein are way harder to create than a single protein spike molecule. investors.modernatx.com/...

Do you realize Moderna is taking 5 RNA; putting them into a cell; getting that cell to make all 5 proteins; and they are doing it accurately enough to have the 5 proteins correctly reassemble to form the spike antigen they are targeting in their CMV vaccine?
That is absolutely amazing! You have to master a lot to do that. So for me when you do this stuff (Superman stuff to me) I'm pretty sure you can cut a single spike protein molecule. And I know the LNP will work. It's always the same and they show you 7 drugs to prove it. It's chemistry. Chemistry does not have good days and bad days. Is any other stock showing this relevant skill set. Not even close. I can see they are way behind all of that.
investors.modernatx.com/...

So never mind valuation, we just understand the science well enough to know it will work. And if it does we have a super talented company that will make great science going forward. All of the stock analysis dribble sounds like great stock advice at first read. Valuation, number of players, new technology, and so on. All of that is persuasive if you don't understand the science. But if you understand the science and you look at what we know, these stock analysis comments are all way too simple.

Every great stock is overvalued until it's value is proven. And if Seeking Alpha says your stocks are undervalued you have been losing money. If Seeking Alpha says your stocks are overvalued you have been making money. I don't mind these declarations but to be honest I prefer actual research. It's not hard to find this valuation stuff on any stock summary (yahoo finance ect.).

@Dulan Lokuwithana Above we have an article on a biotech with zero scientific data in the entire article. All dollars and cents. No science, Immunogenicity, Chemistry, Biology, ect. It's a pointless if not a childish view of the subject. Just big pharma is big and no mRNA yet so it won't happen. At least in the earlier years we worried about the toxicity of an LNP; or the splicing precision of RNA; or how to get in the cell. No, now that it's all about to happen we just focus on valuation. Lovely.

You guys will disappear if Moderna wins and that's cool. But those of us who have followed mRNA for some time have known it will work. We know it had not had it's time yet because the funding and circumstances had not come together yet. Now, it looks more likely and timely. We are not gambling against bad odds here. We are betting on the science with the company that has the data and proof that they understand it. If you have not done the research to appreciate that, you honestly should not be in this space.