Moderna Earnings: Progress With Influenza and Rare Disease Programs Supports Our $266 FVE

We’re maintaining our $266 fair value estimate for Moderna MRNA following first-quarter results that keep the firm on pace with our expectations for the full year. Covid vaccine revenue of $1.8 billion represented a 69% decline from the first quarter of 2022, as Moderna works through prior contracts that have rolled over from 2022. We expect a significant further drop in sales to roughly $200 million in the second quarter before new and existing contracts tied to an updated vaccine for the 2023/2024 season come into play in the second half of the year. Management maintained guidance for more than $5 billion in sales for the full year, and our own forecast stands at $7.4 billion assuming roughly $1.75 billion from a new U.S. contract, to be negotiated in the second or third quarter (using an average $70 net price and 25 million doses, or roughly 25% of a potential 100 million dose market). We think the firm’s lead in mRNA technology and expanding evidence of efficacy across multiple therapeutic areas could support an economic moat, if the firm stays on track to launch several new vaccines over the next few years.

In the pipeline, we were encouraged by updates from both influenza and rare disease programs. Moderna has started a new phase 3 study with an updated formulation that is intended to increase efficacy against influenza B, as the original version failed to show non-inferiority to current flu vaccines in influenza B in the phase 3 immunogenicity study that reported in February. We expect data from this study in the fourth quarter and a launch in time for the 2024/2025 flu season, keeping the firm on track with our original estimates. In addition, Moderna will present data from a phase 1 trial of propionic acidemia drug candidate mRNA-3927 later this month, and we think advancement into the dose expansion phase of the trial looks like a good sign for the firm’s ability to find a dose that could be both safe and effective in this rare disease.