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Moderna Delivers The Bad News

Mar. 01, 2021 11:03 AM ETModerna, Inc. (MRNA)JNJ, NVAX, PFE515 Comments
Shock Exchange profile picture
Shock Exchange


  • MRNA could generate $18 billion in COVID-19 revenue this year, shattering expectations.
  • 2021 revenue is likely a high watermark. MRNA should squirrel away capital to fund future vaccines.
  • Management did not indicate what it expected 2022 revenue to look like. No news is bad news, in my opinion.
  • The 2022 COVID-19 market is expected to fall hard. A smaller market and more competition sound foreboding for MRNA.
  • Sell MRNA.
  • This idea was discussed in more depth with members of my private investing community, Shocking The Street. Get started today »

Moderna COVID-19 Vaccine. Source: BarronSource: Barron's

Moderna (NASDAQ:MRNA) reported Q4 revenue of $570.7 million and GAAP EPS of -$0.69. The company beat on revenue by over $291 million, but missed on earnings. The stock rose just over 4% post-earnings. I had the following takeaways on the quarter.

2021 Advance Purchase Orders Blew Me Away

Moderna continues to cut supply deals and ramp up revenue as a major rollout of COVID-19 vaccines is underway. President Biden has pledged 150 million COVID-19 vaccinations in 100 hundred days, and Moderna is expected to play a major part in those plans. In Q4 2020 Moderna, Pfizer (PFE) and AstraZeneca (AZN) had each received Emergency Use Authorization for COVID-19 vaccines. AstraZeneca came to market shortly thereafter; however, the German media has questioned the efficacy of AstraZeneca's vaccine, particularly among seniors.

Up until now the COVID-19 vaccine market has been largely a two-horse race between Moderna and Pfizer. Moderna's Q4 revenue of $571 million was up about 88% sequentially on the strength of product sales. Sales growth could remain explosive for the rest of 2021.

Moderna Q4 2020 revenue split. Source: Shock Exchange

Grant revenue was 60% of total revenue, while product sales were 35%. Product sales were largely non-existent prior to Q4. Product sales represent customer deposits recorded as deferred revenue; revenue is recorded upon customer acceptance and control of the transferred product. Grant revenue largely reflects revenue from the Biomedical Advanced Research and Development Authority ("BARDA"), which is part of the HHS Office of the Assistant Secretary for Preparedness and Response. This revenue is recognized as Moderna performs services under the agreement.

Bernstein analysts projected Moderna to garner $11 billion in sales from a 2021 COVID-19 market expected to be around $39 billion. I was keen on Moderna's management confirming this $11 billion figure. Management divulged it has advanced purchase agreements ("APA") representing about $18.4 billion in

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Shock Exchange profile picture
The Shock Exchange has a B.A. in economics and MBA from a top 10 business school. He has over 10 years of M&A / corporate finance experience. Currently head the New York Shock Exchange, financial literacy program based in Brooklyn, NY.His book, "Shock Exchange: How Inner-City Kids From Brooklyn Predicted the Great Recession and the Pain Ahead", predicted pain ahead for the U.S. economy and financial markets.In 2014 the law firm of Kirby, McInerney, LLP brought a class action lawsuit against Molycorp, Inc. for "materially misleading statements" in its financial statements. Kirby, McInerney used investigative journalism from the Shock Exchange to buttress its case. That's the discipline the Shock Exchange brings to every situation he covers for SA.

Analyst’s Disclosure: I am/we are short MRNA. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (515)

subpopfinance profile picture
One fact check: The MRNA vaccine does not require ultracold storage, it only needs normal freezer temps.

Everyone knows the massive COVID vaccine boost is temporary, otherwise it wouldn’t be trading at a ~6 P/E for 2021. But I’m betting that the COVID vaccine cash can carry them through to several blockbuster vaccines coming out in the next 5 years. There’s also a strong possibility that everyone needs an annual booster of the COVID vaccine that will mean recurring cash for Moderna.
Shock Exchange profile picture
@subpopfinance That helps the situation. It could remove any advantage NVAX may have had.

Chihawk Research profile picture
@Shock Exchange Moderna is also trialing a refrigerant version vaccine. We should get immunogenicity this month and if successful it would be ready by the Fall flu season (Soon to be called the Fall Covid/Flu season).
subpopfinance profile picture
@Shock Exchange Thanks for the reply, I always enjoy reading other prospectives on what I own.
Appears vaccine trials lately has been cherry-picking and innovative interpretations. Why not people and the street remember PFE and MRNA published the trial protocols and present trial results open to public and through peer reviewed journals? The deterioration of trial standards does no good for the industry and public confidence we badly need to contain the pandemic. See the link below.

Copied from WSJ. Is Juan Andres Bancel’s buddy they just hired from Norvatis where Juan was overseeing worldwide productions? Impressive on the production side.

“Moderna, of Cambridge, Mass., took about three months to make the first 20 million doses of its vaccine last year, but now it is making roughly 40 million a month for the U.S., Juan Andres, chief technical operations and quality officer, said in an interview.

He said the company would likely peak at producing 50 million a month by summer.

Moderna laid much of the groundwork for its production capacity last year by adding floor space and new equipment to its plant in Norwood, Mass., and another plant in Portsmouth, N.H., operated by its contract manufacturing partner Lonza Ltd.

It wasn’t able to produce at maximum capacity right out of the gate, however, because of the need to introduce new equipment and processes in stages. Moderna was still training newly hired workers and encountering issues like equipment malfunctions and holdups in getting replacement parts such as filters.

“There has not been a single week since we started that we have not had issues,” Mr. Andres said. “In making medicines, it is absolutely impossible not to have issues in the beginning. It takes time.”

Now, the company has trained employees and figured out how to address challenges like getting raw material to its plants more quickly, he said. The company has also looked for ways to speed the process, including shortening the time needed after a batch is finished to inspect and package vials.

It is planning to further speed output by boosting the number of doses in each vial to 15 from 10, something that needs U.S. regulatory approval, Mr. Andres said.

“We’re in the zone,” he said. “I like our chances to continue delivering.”
Chihawk Research profile picture
@ScienceMatters Juan Andres and Stephane Bancel worked at Eli Lilly together. Those years of Bancel at Eli Lilly had a big effect later on for Moderna. Noubar Afeyan wanted Bancel for Moderna based on his work at BioMérieux and Eli Lilly. That experience has clearly given a more mature direction than I would normally expect from this large biotech. I do wish these guys would hold their options, but their work is great.

Keep in mind that 50 million/ month production is not Lonza's full production. It's just the US. I think we are close to Moderna going to 800 million in the target. I also think 2021 is going over a billion. If you are making Winter targets and it's your first full quarter of production it's a very good sign. And these guys are clearly still building out.
sts66 profile picture
@ScienceMatters WSJ article must be ancient - MRNA got FDA approval to fill vials with 14 doses instead of 10 weeks ago.
@sts66 yes, a few weeks ago. The essential story line is about the production side. I have been watching this part of the story unfold. Besides R&D and new med discovery, production and scale up is a test for a young biotech to grow and grab the market as a disruptive force. So far MRNA has been smooth to ramp up worldwide productions, to my surprise, without big hiccups.
21 Mar. 2021
A one hit wonder.
@mrkd Thankfully, this isn't a yahoo message board. I for one appreciate intelligent comments with real data. If you have the inclination to research or even read posted comments you will find that Moderna has now developed vaccines for Zika, Cancer, AIDS, and herpies among many others. You may visit their website to understand where each of these vaccines are with respect to clinical trials.

Again, for one liner, dataless comments, please use yahoo messages. More people will see your comment and you may get thumbs up in recognition of your contribution.
sts66 profile picture
@dellis915 "Moderna has now developed vaccines for Zika, Cancer, AIDS, and herpies among many others"

"Is developing", not "has developed" - big diff in the meaning, need P3 clinical trials to prove they're safe and effective. And the cancer trials will likely take years, they're notoriously slow to get readouts - NWBO has been waiting for what, 14 yrs?
06 Apr. 2021
@dellis915 , Who are you? the Seeking Alpha Police.
.. Its my opinion.. but thanks for replying exactly like someone would on a Yahoo forum.😂
anil92691 profile picture
NVAX plans on introducing a combo vaccine for Flu and COVID. I expect it will be available by 2023-2024. Probably earlier if Fauci & Biden et. el. are really concerned of public health.

Such a vaccine would kill Moderna and Pfizer's vaccine sales. It will also force other flu vaccine manufacturers including Pfizer to introduce their own combo vaccine, after all the Flu vaccine is a cocktail of several viruses.

Also there is a sure drop by 50% for next year and later as this is a two dose vaccine and only one per year maximum as a booster is expected; that is if we dont find that the immunity lasts 5 years or ten years or even longer.

And then there are the Indian and Russian vaccines that will take over the world as they will be a lot cheaper than US made affecting international sales.

This was a good ride. Time to leave the vaccine manufacturers whose stock was riding this pandemic.
Hudson Investments profile picture
@anil92691 pipe dream
achilleus profile picture
@ArnieW maybe, maybe not.
these two companies have a lot more potential than this set of vaccines; but first the stocks will have to consolidate.
could well take a year or two after the big move is over. But this is new technology, in first deployment. Potential looks nearly limitless.
Hudson Investments profile picture
Moderna is ahead of NVAX, who doesn’t have a Covid-19 approved vaccine yet, and M has pipeline vaccines for the Flu, Cancer, Zika etc. already based on the mRNA process. Many of these pipeline drugs are in phase 2 study and are looking promising.
Chihawk Research profile picture
I think there will be reoccurring revenue here....
Shock Exchange profile picture
@Chihawk Research

The valuation should not be based on "I think ..."

Chihawk Research profile picture
@Shock Exchange ok. I know the revenue will be reoccurring at this point. The science, production and need is obvious at this point.
achilleus profile picture
@Chihawk Research really one can only talk about probabilities.

somebody comes out with a spray mist tomorrow that cures all ills.
probability: low

this company will have recurring revenue.
probability: moderate to high.
After reading the article and comments I must ask: Is anyone working on a sorely-needed vaccine for confirmation bias?
@Dag Nabbit
I like your post. It confirms what I have been thinking.
Shock Exchange profile picture
@Dag Nabbit

The Shock Exchange was just thinking the same thing ...
The Fed just said the economy is going to have good growth without inflation!
To the author: 

I wrote elsewhere, but this article is remarkably flawed, from a public health/medicine/virology perspective. It's making a lot of terrible assumptions (the number one being the idea that Moderna is a COVID vaccine company; they're not, they're an mRNA delivery company, which means they can eventually do an insane number of things like personal cancer vaccines, eventually cell-specific delivery, etc. And they have both CMV and Zika vaccines in late stage (phase 3 and 2 respectively; CMV is the number one cause of birth defects in the US and 70% of all of us are chronically infected...it's a herpes virus). Just as COVID is hopefully winding down in the developed world, those products should be ready for market. Not to mention a company with $20B in revenue will probably earn so much the P/E well under 20 at the end of the year (if it tanks as you think, or even is stagnant). And I'd say their forward-looking multiples are value-attractive too, despite them being a growth stock.

Short-term, it's just out of a cup with handle. Medium-term prospects are solid to excellent based on issues with the live virus vaccines, pediatric trial, variant vaccines, concerns over the viral chimera vaccines (AZN and J&J, as well as those from Sinovac and Russia) and their late-stage clinical trials. I would argue their long-term prospects as a disruptive tech are on a par with Apple, Tesla, Amazon, etc. at all of those companies earnings - to + inflection points. Actually, in terms of development cycle, that inflection is coming incredibly soon for Moderna. Moderna, unlike any of those, has a guaranteed MONSTER revenue stream for the inflection year of what amounts to about a quarter of market cap. That's ridiculous. Their overhead is low, too. No bioreactors or small molecule screening. Lean. And with insane goodwill in the medical community. They will attract the best talent. They have the support of the medical community (hell, many might even invest). IDK what you're thinking, dude. And I'm not talking out my ass, this pandemic is the confluence of my two doctoral trainings...critical care MD and viral immunology PhD.

This tech is a 20-y/o idea that had the entire science/medicine world on fire (read about siRNA and Craig Mello, although hopes for RNA predate that), but delivery was the problem. Still is with siRNA. Moderna solved it for messenger RNA and patented it. Now they're going to refine and expand it. They have the support of the Biological Advanced Research and Development Authority...the federal body that prepares for exactly this sort of thing (there's your tax dollars doing the most they ever have). Don't like their pipeline (idk why you wouldn't)? Well, with $20B they can add to it. They can buy back stock. Eliminate some debt. Just...wow, what are you thinking? You need a WAY better grasp of the tech, the market, and the medicine before you go writing articles on them. This absolutely whiffs on almost every major point. Disclaimer, I am most definitely long on MRNA. In a very big way. Oh well, articles like this just help me. I like to buy the dips.
@Naeturgali_mudphud Nice read and I am long as well adding to my position on the dips. Nice to read someone else's professional point of view on Moderna. I also agree with your assessment on this article.
Limot profile picture
@Naeturgali_mudphud "Moderna solved it for messenger RNA and patented it." So what is BNTX doing?

So for instance, mRNA delivery mechanism replaces U by Ψ in the RNA code to avoid the body recognizing it as RNA, as per this blog post


But are you saying MRNA or BNTX has patented the UΨ swap? Then how is the other company (BNTX or MRNA) making sure to also not trigger the defense mechanisms of the body, e.g. to not trigger Type I Interferon pathways?

(As per this below blog post, Type I Interferon pathways, if triggered, can do a lot of damage.

blogs.sciencemag.org/... )

Basically, we have two companies doing very similar tech. What's the patent situation on that?
achilleus profile picture
@Limot bntx is not an american company so does not fall under american patent law.......................................................
Michael Clark profile picture
STOCKS ARE NOT RATIONAL or rationalizable. They do not listen to readers/writers' arguments. Rationalizing might make investors more comfortable with their investments but they do nothing else.

Stocks are moved by emotion, by sentiment.


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Steve Fischer profile picture
Pfizers' vaccine is better anyway - fights more strains and less side effects. Drug companies are not in fashion now but they will be ok. This one isnt the best- Vertex and CRISPR hold a lot more promise.
Shock Exchange profile picture
@Steve Fischer That sounds bearish for MRNA.
Steve Fischer profile picture
@Shock Exchange I think at least up until now -and probably well into the future people will be taking any vaccine they could get. CRISPR is something else entirely -developed by Cal Berkeley Scientists who won a Nobel Prize for it.
Shock Exchange profile picture
@Steve Fischer Agreed. They will take MRNA, JNJ, PFE or NVAX, depending on what's available.

Hudson Investments profile picture
Moderna delivers the GOOD news.

They will come out with mRNA-1283 which will be refrigerator safe.
They are testing variant boosters.
The mRNA-1273 works well with the current predominant variants and they have had no hospitalizations or deaths for anybody who has gotten the two dose regimen 4 weeks apart.

THE USA has pre-ordered multi-million doses of the Moderna vaccine which guarantees a steady income for the company and the ability to proceed with the final testing of several pipeline drugs that utilize their patented messenger RNA process.
@ArnieW Thank you for sharing this information with us. This is a glaring omission by the author who is short in MRNA.
Shock Exchange profile picture
@ArnieW How much revenue does that equate to?

Chihawk Research profile picture
Phase 1 study of our next generation COVID-19 vaccine candidate, mRNA-1283,” said Stéphane Bancel, Chief Executive Officer of Moderna. “Our investments in our mRNA platform have enabled us to develop this next generation vaccine candidate, which is a potential refrigerator-stable vaccine that could facilitate easier distribution and administration in a wider range of settings, including potentially for developing countries. We remain committed to helping address this ongoing public health emergency.”

This Phase 1 dose-ranging study will assess the safety and immunogenicity of mRNA-1283, a next-generation vaccine candidate against COVID-19. mRNA-1283 encodes for the portions of the SARS-CoV-2 spike protein critical for neutralization, specifically the Receptor Binding Domain (RBD) and N-terminal Domain (NTD). The encoded mRNA-1283 antigen is being developed as a potentially refrigerator-stable mRNA vaccine that will facilitate distribution and administration by healthcare providers. This Phase 1 study will evaluate three dose levels, 10 µg, 30 µg, and 100 µg, of the mRNA-1283 vaccine candidate given to healthy adults as a 2-dose series, 28 days apart, and one dose level, 100 µg, of mRNA-1283 given to healthy adults in a single dose. These will be compared with a 2-dose series of 100 µg of mRNA-1273, the currently authorized dose level. mRNA-1283 is intended to be evaluated in futures studies for use as a booster dose for previously vaccinated or seropositive as well as in a primary series for seronegative individuals.
Jim Wilbanks profile picture
@Chihawk Research So when the 30 ug is found to be just as effective and safe as the 100 ug, does that mean they just increased their production 3 fold? Just asking for a friend.
Chihawk Research profile picture
@Jim Wilbanks Yes. Based on the Q4 call it's that simple with the mRNA process.
But there is more to this than dose reduction...
I think when the single dose 100 µg refrigerant stable vaccine is found to be more efficacious (especially to new variants) than JNJ it's time to bring mRNA to the developing world.
Hudson Investments profile picture
@Jim Wilbanks If it’s the same vaccine, yes. It’s just a matter of increasing the dosage 3 1/3 X in my opinion.
Seems like everyone in my area getting the Moderna shot is getting sick from it
@KeithCole Many news outlets are avoiding to cover this. Many can barely get out of bed two weeks later. They are not even talking about some who received the vaccine second dose developed Parkinson's like symptoms. Unknown how long those symptoms will last.
@Aristocrat & Dividend King Investor They last forever - take the Olderma one or the China-nova vac. Most vac reactions are in your head. Cheers!
sts66 profile picture
@Aristocrat & Dividend King Investor Proof? I think you're just making that up - I've seen zero reports of such severe reactions from MRNA's vaccine.
Good points but not discussed is any upside from new products based on it technology ie cancer
achilleus profile picture
@Starfish115 it does seem strange but then these are strange times.

Also headlines = vaccines vs. backpages = everything else
Limot profile picture
@Starfish115 The cancer vaccine is old news, I can find articles dated 2016 and 2018 on the idea of mRNA cancer vaccines. It is a new tech, with the typical risks for investing in new tech. So the stock would reflect the risk/reward already, it's the "fully baked in" thing.
achilleus profile picture
@Limot no.
It is trading at 7x forward PE. And just proved to the world it's tech is legitimate. Its a joke to call this a covid play. There will be considerable more pressure to use the tech in the future. Not to mention boosters, if you want to call it a covid play.

This is the cheapest legit growth biotech stock in the market.
Shock Exchange profile picture
@Bobandstuff Earnings are not recurring.

GameBuzz profile picture
@Shock Exchange Why do you think the company won’t have any earnings going forward?
achilleus profile picture
earnings are announced quarterly because they do not recur
Geez, what will they do with $18B? You can't squirrel away that much dough. So, you pocket $1.3B for R&D, what do you do with $17B?
achilleus profile picture
arbitrarily designate some 3rd world country a threat to survival and start up the war machines
sts66 profile picture
@Willy42 They're not _earning_ $18B, that's gross revs - don't know their margins and OPEX will go up, but they should have enough profit to pay the bills until their next non-CV19 vaccine for CMV comes out. In contrast, NVAX shelf is pretty bare of new candidates, and they've been sitting on the Nanoflu results forever, still haven't submitted an NDA.
Puche profile picture
@sts66, I agree with you comment about gross revenues versus profits. With that said, do not be surprised if MRNA leaves the year with approximately $12 - $15 BILLION in cash and investments on its balance sheet at the end of 2021.

Just my two cents. Slow and steady! Good luck to all!
Michael Clark profile picture

1 Long 33 10/11/19 12/04/19 +7.215 +51.33 Exit Long Rule
2 Long 51 09/10/20 11/20/20 +40.050 +69.58 Exit Long Rule
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4 Long 26 01/08/21 02/17/21 +64.010 +56.77 Exit Long Rule


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IMO this is a near-sighted series of articles from this author about MRNA, and are decent justification of the author's short position, but fail to consider the value of the company's technology moving forward. The decreased valuation over the last couple weeks is indicative of the market's belief in a purely COVID play, but the technology is here to stay with this virus unlikely to be a one-time event. Additionally, the company is going to use this technology to battle other diseases that traditional vaccines have failed to do effectively. Staying long MRNA.
Limot profile picture
@Jail I agree. If MRNA was under $30, maybe $15, I would have started accumulating, because it would have been a fair bet that within a few years the stock would be worth ten times that, based on its great new technology. As it is - a pure Covid-19 play, with half a dozen competitors, dependent upon the news releases and rumors of the day, hyped to ten times its value already... I think this could kill MRNA as and when the vaccines' failure is understood by the public.
Bright spot profile picture
@Limot, being over 90% effective isn't a failure. So, not really sure what you're thinking.
Limot profile picture
@Bright spot That's the spin, is what I am thinking. In reality, the virus shape-shifts so effectively that people would have be vaccinated weekly.

At some point, people are going to start finding out that the pandemic is basically gone from Africa, India, even China, and are going to wonder how that happened without vaccines. I am also thinking that the pandemic just goes away in summers naturally if nobody wears masks.

Many states in the US are already opening up, defying CDC and vaccines and masks, and once it becomes clear that no-masks and no-vaccines is the way to defeat the pandemic, once people revolt against masks, it will be game over for vaccine sellers.

So that's what I am thinking.
I have sold out all of my Moderna shares over the past 3 weeks and moved it into Pfizer.
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