Booster shots and a big jump in market value: 3 takeaways from Moderna’s Q2 earnings
In December 2018, what was then an eight-year-old biotech named Moderna had a record-setting Nasdaq IPO. It was the biggest public offering in the biopharma space in history, raising more than $600 million for Moderna and valuing it at a mammoth $7.5 billion—all without a single approved drug on the market and a highly experimental mRNA-based tech platform that had legions of skeptics among the investor and life sciences crowd.
Fast-forward to summer 2021 and how quaint those early milestones seem with Moderna’s COVID vaccine slinging its financial fortunes into the stratosphere. The drug maker easily bested Wall Street expectations in the year’s second quarter, according to Moderna’s Q2 2021 earnings report released Thursday, with $4.4 billion in total revenues over the three-month period ended on June 30 versus $67 million over the same period last year. The company also reported net income of $2.8 billion.
But Moderna’s earnings call with investors and the media Thursday morning also provided key insights into the future of the company’s broader pipeline and, critically in the short- and long-term, for how long its COVID vaccine stays effective and whether or not booster shots will be a public health necessity down the line in order to deal with more evolving strains such as the highly contagious Delta variant.
Here are three major takeaways from Moderna’s earnings and what it could mean for the company’s financial future and the fight against coronavirus alike.
1. Vaccine sales: Billions with expected windfalls for years
First let’s dig a bit deeper into the money. The difference between $67 million in topline sales between the ends of March and June 2020 and $4.4 billion during the analogous timeframe in 2021 is, well, pretty substantial.
That’s obviously a byproduct of Moderna’s breakthrough success with its COVID vaccine, which leverages its mRNA platform to create a set of genetic instructions that then induces an immune response that homes in on the “spike protein” the novel coronavirus uses to latch on to your biological machinery. Moderna became the second company to receive Food and Drug Administration (FDA) emergency authorization for use of a COVID vaccine in the U.S. on December 18, 2020.
Just how many shots have gone out (and been sold under contracts with government entities and payers) since then? According to Moderna, the $5.9 billion in product sales reaped in the first half of 2021 stemmed from 302 million COVID-19 vaccine doses, 199 million of which occurred in the three months ended June 30.
Groups such as the Biomedical Advanced Research and Development Authority (BARDA), housed under the U.S. Department of Health and Human Services (HHS), also gave Moderna hundreds of millions in boosts for R&D. “The increases in grant revenue of $101 million and $291 million for the three and six months ended June 30, 2021, respectively, were primarily driven by increases in revenue from BARDA related to the Company’s COVID-19 vaccine development,” the company stated in its earnings report.
With the pandemic still raging as new variants emerge, and much of the global population in developing nations still clamoring to get their hands on more COVID jabs, Moderna expects these vaccine sales to be a steady source of income in the near- and mid-term as it continues to work on its pipeline of other mRNA-based therapeutics, including for a variety of other prophylactics such as influenza vaccines, cancer vaccines, and regenerative treatments to tackle heart disorders such as myocardial ischemia. The firm will also follow in Pfizer/BioNTech’s footsteps and file for full FDA approval, rather than just emergency authorization, of the shot this month. Pfizer submitted its own application for full approval on May 7 and is expected to win it by early September.
Beyond just growing the global market for the COVID vaccine itself under deals set up with governments and medical NGOs, as well as by testing the jab in younger age groups, the likely need for booster shots to preserve longer-lasting immunity and protection against variants like Delta is also expected to fuel Moderna’s revenue stream. The outlook is rosy for now: The biotech says it’s received $20 billion in COVID vaccine orders for 2021, expects a similar revenue level from that space in 2022, and has begun initial discussions for more supply in 2023.
2. Moderna’s COVID vaccine is highly effective for months. But you’ll probably still need a booster for variants
Moderna emphasized that its COVID vaccine remains highly effective, to the tune of 93%, against the novel coronavirus even four to six months after someone has been fully immunized with the two-dose regimen. But that doesn’t mean you won’t need a booster shot to increase the vaccine’s staying power against more contagious strains like the Delta variant. In fact, Moderna expects that booster shots will start becoming a necessity for those who are vulnerable or were immunized earlier in the year before year’s end, when COVID will brush up against the flu and other winter ailments.
“While we see durable Phase 3 efficacy through 6 months, we expect neutralizing titers will continue to wane and eventually impact vaccine efficacy,” said the company in a statement. “Given this intersection, we believe dose 3 booster will likely be necessary prior to the winter season.”
To that end, Moderna touted results from a phase 2 clinical trial alongside its earnings report finding “robust antibody responses” from its COVID booster shot. The data have yet to be published in a peer-reviewed medical journal, but Moderna says that three separate COVID booster vaccine candidates were tested in participants who had already received two full doses of the original jab with encouraging results. Those boosters, according to the biotech, produced strong antibody levels against three coronavirus mutations including the Delta variant. The antibody response was reportedly as strong as that experienced by unvaccinated individuals who then received two shots of the Moderna COVID jab.
Earlier evidence has also suggested that vaccines like Pfizer’s and Moderna’s are effective against the COVID Delta variant when it comes to preventing most serious illness, hospitalizations, and deaths, but that even vaccinated people can become COVID symptomatic with a breakthrough infection as the antibody response wanes over time.
3. Moderna’s market value has shot past some of Big Pharma’s biggest players
It’s difficult to overstate just how much Moderna’s COVID vaccine has shifted its place in the biopharma pecking order—or at least for now. The company announced $1 billion in stock buybacks to take place over two years during Thursday’s earnings call. And Moderna’s skyrocketing stock and market value probably has a little something to do with that.
Since its 2018 IPO, Moderna stock has soared nearly 2,140% with individual shares now trading at more than $410. That growth has slung the firm’s market capitalization past the $167 billion mark, meaning Moderna has now leapfrogged the likes of Big Pharma giants like Sanofi and Bristol Myers Squibb in valuation.
It still may be no Johnson & Johnson (market value: about $460 billion) or Pfizer (market value: about $250 billion). But surpassing longtime industry giants such as Sanofi and Bristol-Myers is no mean feat for a biotech company many had written off for years as a pipedream with nothing but hype behind its investor appeal. Moderna is now even within shooting distance of pharma giant Merck’s $191 billion market cap.
How long the ride can last is an open question. Will COVID vaccines be the only rabbit Moderna manages to pull out of its hat? Or will other drugs in its experimental pipeline also defy the odds and become unlikely medical and financial success stories? Only time will tell, but for the next few years at the very least, the bitoech seems prepared to take full advantage of this pandemic wave.
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