Is Moderna stock set for an explosive rise in 2023?

Modern Shares (NASDAQ: MRNA ) are rising today after the biotech company reported positive results from one of its phase 3 clinical trials. As I type, the stock is up 8%.

The company said data from trials for vaccine candidate mRNA-1345 showed 83.7% efficacy against respiratory syncytial virus (RSV) in adults. Based on these results, Moderna intends to submit the vaccine for regulatory approval with the US Food and Drug Administration (FDA) in mid-2023.

modern, Pfizerand GSK now the race is on to get the RSV vaccine to market first.

What is messenger RNA?

Moderna uses messenger RNA (mRNA) to train the body’s cells to produce proteins that can prevent or fight disease. In essence, the technology turns human cells into drug factories.

We know this technology works in humans because of the coronavirus. This comes after the new mRNA vaccine was quickly approved by regulators during the pandemic.

Needless to say, the idea of ​​programming the body like software is revolutionary. And that is very disturbing if it can be used beyond the current use for Covid. Now there is a lot of evidence that it can.

Personal cancer vaccine

Last month, Moderna reported that its personalized mRNA cancer vaccine was effective for advanced melanoma. In this phase 2 clinical trial, the vaccine – in combination with MerckImmunotherapy drug Keytruda – reduces the risk of relapse by 44%.

However, this potential treatment is different from the Covid vaccine. This is because it cannot be applied before the disease, only after. Cancer is different from person to person. This means that each vaccine must be tailored to each patient’s tumor, which increases complexity and risk.

And even if successful, it will be years before Moderna can commercialize the treatment. A phase 3 study in melanoma patients will begin this year, before other tumor types are targeted.

Reduce revenue

Indeed, Moderna designed a Covid vaccine in just two days, without having to touch the virus directly. This shows the speed and power of the platform.

But it must quickly extend the 36 ongoing clinical studies to complete the sale of the Covid vaccine. The result for 2022 is expected to be $18.4bn. Then sales will drop to about $9bn in 2023.

This makes it difficult for me to accurately value Moderna stock today. If sales were to halve by 2023, the current price-to-earnings (P/E) ratio of 7.3 would rise to about 47. But with potentially revolutionary technology, the P/E ratio may not yet be appropriate. .

A stupid takeaway

No one knows how much demand the company’s Covid vaccine will have – or exactly how much it will cost – when it enters the private market. Moreover, Moderna is not the only biotech company developing this technology. Pfizer, with its partners BioNTechactually delivered the first official mRNA vaccine in the US.

Indeed, there is an ongoing patent dispute between Moderna and the two companies regarding the use of mRNA technology. This could present a risk, depending on the outcome of this legal battle.

All this makes me suspect that today’s rally in the stock may prove short-lived. I have a position in the stock, which I like to continue.