“Moderna said its experimental coronavirus vaccine was 94.5% effective at protecting people from Covid-19 in an early look at pivotal study results, the second vaccine to hit a key milestone,” WSJ writes.
The Details: Of the 95 Covid-19 cases with at least one symptom in Moderna’s 30,000-person study, 90 had received a placebo and only five Moderna’s shot. The company said the findings illustrate the vaccine is “effective at preventing disease that causes symptoms, including severe cases.”
Do you know what’s better than one Covid-19 vaccine? Two Covid-19 vaccines. This month, Pfizer, which co-developed its vaccine with BioNTech SE, announced its candidate was 90% effective in late-stage trials. Pfizer is seeking emergency FDA approval this month, intending to roll out the shot by the end of this year.
- Johnson & Johnson, AstraZeneca and Novavax also have vaccine candidates in late-stage trials.
It’s a big win for mRNA technology, which has never been successfully deployed before. Vaccines from Moderna and Pfizer both use mRNA to generate an immune response.
But it’s arguably an even bigger score for Moderna. The Cambridge, Massachusetts-based biotech firm has never brought a drug or vaccine to market.
- Moderna developed the shot with the National Institute of Allergy and Infectious Diseases.
- The federal government committed roughly $2.5 billion to Moderna’s vaccine research and testing through Operation Warp Speed. It also has made plans to buy at least 100 million doses.
Looking Ahead: Moderna needs a total of 151 cases to glean a full set of effectiveness data. But with safe, preliminary results, the company plans to seek federal approval by early December. Last week, federal officials estimated that doses could be available by year’s end.
In my Moderna ($MRNA) deep dive YouTube video I made in August, I made a back-of-the-envelope estimation of the Covid-19 industry earning $10 billion in global annual profits based on 1 billion vaccines per year. Even if we double that, that would mean somewhere between $10 and $20 billion of annual Covid-19 profits.
As of this morning, $MRNA is trading at a $36 billion valuation. Assuming an industry-standard 10x EBITDA multiple, $MRNA is “fairly priced” if you assume that they take and hold 15-30% of the Covid-19 vaccine market.
$MRNA will eventually have fierce competition from Pfizer ($PFE), Johnson & Johnson ($JNJ), Merck ($MRK), AstraZeneca (AZN:LN), and others, so their post-pandemic market share is very uncertain. Furthermore, Moderna’s vaccine needs to be stored and transported at -4 degrees Fahrenheit (-20 degrees Celsius), while some competitors are developing room temperature vaccines.
$MRNA stock doesn’t look like a particularly attractive “investment” since the company has such a wide array of profit outcomes, yet the stock is priced to be a material Covid-19 market share winner into the future. Some might invest in the stock because they believe in the lucrative future of mRNA technology to solve other markets, but for now, I am on the sidelines. Pfizer ($PFE) and Johnson and Johnson ($JNJ) are probably better risk-adjusted investments with diversified and stable revenue streams and trading at 11.3x and 12.7x forward EBITDA, respectively.