Moderna: R&D Day Reveals Potentially Superior Flu Vaccine as Well as Oncology, Rare-Disease Promise

In conjunction with its research and development day, Moderna MRNA announced positive data for its flu vaccine and rare-disease treatments, additional insights into its oncology strategy, and aggressive goals for moving 15 new products to market and 50 new candidates to clinical trials over the next five years. We’re maintaining our $266 fair value estimate. While investors reacted positively to the announcements, we still see the shares as significantly undervalued, with too much focus on the near-term COVID-19 vaccine sales decline and not enough focus on the multiple avenues of longer-term growth. We’ve removed smaller, earlier-stage programs that have been discontinued but added in new programs in phenylketonuria (rare disease) and norovirus (latent vaccine). We’ve also slightly boosted our long-term assumptions for R&D spending to fit guidance.

We’re encouraged by recent data for several important programs. We’ve raised our probabilities of approval for the firm’s rare-disease programs and boosted our long-term growth assumptions for its flu vaccine (better odds of superiority in the long run) and Moderna/Merck’s individualized neoantigen therapy (more confidence in extension to lung cancer). Altogether, our respiratory vaccine sales assumption for 2027 remains at the low end of the firm’s $8 billion-$15 billion guidance range. However, we assume $11 billion in respiratory vaccine sales by 2032 along with $5 billion in additional vaccines (mostly latent viruses), $4 billion in oncology sales, and more than $1.5 billion in rare-disease sales. We think these assumptions fit well with the firm’s guidance for $10 billion-$15 billion in annual sales from new products within five years of a 2028 launch. While we do not yet think Moderna has an economic moat, each progress update puts more distance between it and potential future mRNA entrants, boosting the likelihood that the firm will develop long-term competitive advantages.