Maintaining Our $266 Moderna Fair Value Estimate Following Promising Phase 3 RSV Vaccine Data

We’re maintaining our $266 fair value estimate for Moderna following positive phase 3 data from the first interim analysis of the firm’s respiratory syncytial virus vaccine, mRNA-1345. While we’ve raised our assumed probability of approval for the vaccine to 70% from 50%, we’ve also boosted our long-term assumptions for annual research and development expenses following the firm’s massive $4.5 billion guidance for 2023 R&D expenses at a recent healthcare conference. This spending would be significantly above the roughly $3.3 billion spent in 2022, so we’re boosting our long-term annual R&D expenses to roughly $3.5 billion annually from our prior estimate of $3 billion (still roughly 20% of sales by 2031). The positive RSV data comes on the heels of positive data for Merck and Moderna’s personalized melanoma vaccine. We continue to think the market underestimates the potential of Moderna’s mRNA technology to address multiple types of diseases in both prevention and treatment. However, we think Moderna is still in the process of building a moat, as multiple other firms could have the technology to compete, and the overall market opportunity remains unclear. We look forward to more early-stage data from Moderna’s rare-disease programs this year, which we think could open up a very broad opportunity, but due to the higher-risk nature of the programs, we currently assume only a 25% probability of approval.