- Moderna has already sold over half a year’s supply and they are delivering very smoothly for a large first drug with $11.7 billion in Advanced Purchase Agreements.
- ChAdOx1 nCoV-19 (AZD-1222) at 62% efficacy and minimal older participant testing is not a competitor to Moderna's mRNA-1273.
- Johnson and Johnson’s Ad26.COV2.S is not show good enough early results to expect strong efficacy.
- Novavax’s NVX-2373 is too speculative with too many doubts to treat as a competitor even with current overvaluation.
- Based current purchases and production estimates Moderna is very undervalued. With average estimates and some value for it’s pipeline my price target for year end 2021 is $300.
For Moderna the doubters never stop, but the bear arguments get more and more absurd. Pfizer/BNTX and Moderna both launched a revolutionary change with mRNA vaccines that are 95-94% effective against SARS-CoV-2. After a brief recognition the bears started in with claims:
1) Other vaccines will compete;
2) There will be a vaccine glut; and now
3) The market will not last.
The absurdity of this is Moderna has already sold over half a year’s supply and they are delivering very smoothly for a large first drug. It is true Operation Warp Speed has been a big help in that direction. But Moderna is also showing great execution as well. So while Moderna makes and ships their new found gold to save the world, let’s add some science to the bear case as it flies off the rails of logic and sanity.
The newest competitors coming to the vaccine market are ChAdOx1 nCoV-19 (AZD-1222), Johnson and Johnson’s Ad26.COV2.S, and Novavax’s NVX-2373. ChAdOx1 nCoV-19 (AZD-1222) is approved and the other two projects have provided immunogenicity data and are scheduled to give efficacy data in the coming months. Although Moderna’s product is contracted and sold already, the bear view is these projects will devalue Moderna through competition.
ChAdOx1 nCoV-19 (AZD-1222)
The ChAdOx1 nCoV-19 was found to be 62.1 % effective in the two standard doses and was approved by the United Kingdom Medicines and Healthcare products Regulatory Agency (MHRA).Safety and efficacy of the ChAdOx1 nCoV-19 vaccine (AZD1222) against SARS-CoV-2: an interim analysis of four randomised controlled trials in Brazil, South Africa, and the UK
But according to epidemiologist Fred Brown when all of the ChAdOx1 nCoV-19 trials are combined only 6% of the participants were over age 65. Above it shows only 16 participants over 70 years in a 4,000 participant Brazil trial with 64% efficacy. ChAdOx1 nCoV-19 claims to limit severe COVID but the promise is facing doubts due to the trials lacking older people as participants.
Older individuals are not only the focus of the pandemic; they also are the focus of vaccinology since their immune systems are less responsive to vaccines in general. Individuals over 55 make up the largest group of serious disease, hospitalizations, ventilator patience, and deaths for COVID-19. The likelihood of people experiencing these bad outcomes increases as age increases. In short, our greatest concern is focused on older members of society based on the prior results we have seen with COVID-19.
The lack of clinical testing in this group undermines any claims by Oxford or Astra Zeneca establishing either efficacy for the full population or the prevention of severe covid. Absent this proof in older people there is little reason to believe ChAdOx1 nCoV-19 (AZD-1222) will affect the vaccine market. Considering the drug sells for less than $5 a shot and new governments have bought few doses since its approval it is clear the customers in the vaccine market agree. Until such claims in populations or clinical testing are proven ChAdOx1 nCoV-19 (AZD-1222) will not be a significant competitor to Moderna.
Johnson and Johnson’s Ad26.COV2.S
Johnson and Johnson’s Ad26.COV2.S does not concern me as an investor or give me much hope as a world citizen either. It is an Adenovirus with a human vector and the clinical data looks ordinary. Adenovirus vector vaccines are established science that traditionally struggle with efficacy in older populations. As mentioned, AZD-1222 (ChAdOx1 nCoV-19) is a 62% efficacy with a lack of older participants. Johnson and Johnson’s Ad26.COV2.S will need to surpass this level to make an impact on Moderna in the Covid vaccine market. Let’s compare data:
Like ChAdOx1 nCoV-19 Johnson and Johnson’s Ad26.COV2.S showed similar results with Rhesus macaques by clearing the BAL in the lungs but performing less in the nose of the monkeys.
Here is the AZD-1222 (ChAdOx1 nCoV-19) Rhesus macaques data:
And here is the Ad26.COV2.S (then called Ad26-S.PP in early animal studies) Rhesus macaques results:
www.nature.com/articles/s41586-020-2607-... (Note: The optimal (full-length S and mutation of the furin cleavage site and proline-stabilizing mutations) Ad26-S.PP vaccine from this study, termed Ad26.COV2.S, is currently being evaluated in clinical trials. This result was even more modest in hamster challenge studies.
Next look at JNJ's successful adenovirus vaccine-Ad26.ZEBOV. Ad26.ZEBOV is over 90% effective as a two dose vaccines and the reasons are obvious in the immunogenicity data. The boost is logs higher and the end titers are very high. Some have suggested Ad26.ZEBOV is a predictor for Ad26.COV2.S results. I think the difference in the results is too large to support the comparison for prediction purposes.
jamanetwork.com/journals/jama/fullarticl... (Figures and Tables)
Johnson and Johnson’s Ad26.COV2.S is better tested in older groups but shares two similar qualities with the AZD-1222 data that suggest its efficacy could be in a similar range. Ad26.COV2.S is near where Astra Zeneca’s AZD-1222 was against its Human Convalescent Serum with a similar boost. Below is the ChAdOx1 nCoV-19 immunogenicity showing a modest rise after the boost on Day 29 and showing it remains in the lower half when compared with human convalescent serum.
Here is the AZD-1222 (ChAdOx1 nCoV-19) immunogenicity data:
Note: The three data entries above zero are participants with antibodies prior to trial (previously infected). Two of those three data points are the top two results at 35 days. With an N=8 the results would be well under Convalescent Plasma median if removed.www.thelancet.com/journals/lancet/articl... (Figure 4)
Johnson and Johnson’s Ad26.COV2.S showed similar results with early Immunogenicity results as well.www.medrxiv.org/content/10.1101/2020.09.... (Figure 2)
Here are the most recent immunogenicity results for Ad26.COV2.S. I believe these results on a low dose comparison to Human Convalescent Serum (HCS) and on boost are much more like ChAdOx1 nCoV-19 at 62% efficacy than they are like Ad26.ZEBOV.
www.nejm.org/doi/full/10.1056/NEJMoa2034201Johnson and Johnson went with the low dose going forward in Phase 3 and they are planning a single dose vaccine. They also are currently continuing to trial a booster dose in their Phase 3 at this time. They have suggested a single dose might be appropriate protection for some groups and a prime/boost for others. It is surprising no boosting data for age over 65 years group is shown since their less responsive immune systems would likely need a boost for true protection. But even where a boost is not the approved vaccine, the immunogenicity results for a boost often reflect antigen quality. A boost evaluates memory immunity and where it shows a large production of antibodies it is a form of proof that memory T-Cells are created and effective when exposed to the spike protein again. So if you want to predict efficacy, a booster dose is a useful factor to consider.
When Johnson and Johnson boosted the low dose of Ad26.COV2.S they got less than half a log increase in titers. On the Neutralization Assay above you can see the 18-55 age Low dose group had a geometric mean titer of 321with a placebo boost. The over 65 years Low dose group had a geometric mean titer of 277 with a placebo boost. The Human Convalescent Serum had a geometric mean titer of 522. None of those numbers suggest a highly efficacious vaccine.
All Adenovirus vaccines face vector immunity. Ad26 is a human vector with minimal exposure in the population. But if you give out a billion doses and then change the vaccine for future mutations, the new version will disappoint based on vector immunity. Bottom line: JNJ is great at public relations but really the science will decide this. The current results give little confidence and vector immunity will make any boost later on less efficacious. This vaccine seems unlikely to effect Moderna’s position in the Covid vaccine market.
After Ad26.COV2.S efficacy results Novavax’s NVX-2373 is scheduled to release efficacy results. This project has been delayed a few times and the only data we have is from the beginning of August. But the project has to trials enrolled and is currently enrolling it’s Operation Warp Speed trial. Currently, Novavax’s NVX-2373 has only offered immunogenicity in 29 participants all under 40 in its forward dose (Age-yr Sentinel n=3 23.7±7.37 and Group C n=26 29.5±7.99).
The group was catagorized as 18-59 but the peer reviewed publication exposed the true ages.
Either by design or circumstance there is not enough data to predict the efficacy of those coming results. The technology is very affected by age and with 29 participants all under 40 it is not possible to compare graphs. We do know the antigen without the Matrix-M adjuvant gave almost no detectable measurement. And we saw the partnered project of GlaxoSmithKline and Sanofi Pasteur with similar armyworm egg based protein production is delayed due to poor immunogenicity in the elderly.
Novavax is currently a company with Phase 1 data trading like it has further results. It has two trials that are fully enrolled and regularly delayed and somehow maintains Phase 3 valuations. This makes it an extremely desirable short with a 30 year history of failure, no successful efficacy trials, and two failed Phase 3 trials in the past.
So having concluded that the coming competition should not affect Moderna’s current valuation it’s time to reflect on that valuation. Moderna has said they have Advanced Purchase Agreements for $11.7 Billion.
Those agreements are not counting the options and cover just over 500 million doses. So deliver the drug and they get the money. Moderna is ramping up production at this time. They hope to make 1 billion doses in 2021. If all of those doses were sold at their current prices that would be $23.4 billion in revenue. If we assume a 33% Net Margin (and that is a guess based on industry averages) and then take an industry average PE of 12.4 it works out to a 95.8 billion market cap and a $242 share price.Moderna Stock (MRNA) and BioNTech Stock (BNTX) 1/15/21 - Latest Events, Tech & Fundamental Analyses
DanMarket L worked this slide, but I think he should ADD the rest of the platform price and raise the PE for the accelerating revenue and expanding pipeline. His 20% price reduction makes no sense when the rest of the Moderna pipeline is considered.
Moderna’s pipeline clearly shows value through news catalysts and clinical progress. It clearly shows Moderna’s ability to maximize the mRNA technology well beyond the Covid vaccine. On this basis my target is $300 for Moderna by the end of 2021.
Analyst's Disclosure: I am/we are long MRNA.
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