I personally began investing in Moderna in Feb24, however have been tracking it for some time. As I find myself increasingly liking the stock I try to keep myself grounded by keeping the "negatives" front & center, so perhaps unusually I'd like to draw your attention to these first.
Negatives:
– It’s projected to makes losses for 2024 & 2025, but it has c.$13bn (covid-cash) reserves.
– Covid proved its system/platform, with it now tackling cancer, flu, CMV, HIV etc all of which are colossal markets. Having so many programmes mean they don’t all have to succeed for the company to thrive, however any failure (particularly phase 3) will disappoint the market’s sale/profit projections, this is exacerbated all the more by it (currently) having just ONE approved product (CV19).
– There are outstanding patent infringement lawsuits (e.g Pfizer & BioNTech, Alnylam, Arbutus and National Institute of Health).
– A great unknown is the industry wide impact of Biden's IRA act, allowing Medicare to negotiate some drug prices.
– A moderately large short position. Although this can also be considered a positive, if better than expected news leads to a short squeeze.
– All this makes it seriously volatile. If you are looking for a smooth stock, avert your gaze!!
– This isn’t a ST stock.
Positives:
A BRIEF INTRO as to what Moderna believes mRNA provides…
1) A large product opportunity: Numerous verticals/modalities using one centralised platform.
2) Higher probability of technical success: Drug design through their digital/AI platform.
3) Accelerated R&D timelines: The “R” in particular is shortened with numerous pre-clinical “construct” tests, generating highly targeted first attempts which can then be further “tweaked.”
4) Greater capital efficiency over time vs. recombinant technology: Points 1-3 & building up “data assets” which loops back into software learning which in turn enhances. future drug designs AND of course its flexible manufacturing.
A BRIEF PODCAST SUMMARY of a short podcast that I thought was pretty informative (Jan24 Yahoo Finance -Vaccines: There's 'so much noise' around facts: Moderna CEO), with “at” time stamps to allow easy checking. This includes some forward looking statements which of course may not come to fruition.
At4.30 This year we are going to see a firework of amazing data.
At5.00 RSV should be approved very soon in a few months, we filed last summer.
At5.10 We have positive phase 3 data for flu & it should be filed in the coming months to regulators as our 3rd product.
At5.15 We should get very soon the Flu/Covid results around midyear, when we get that data, I believe it will be very positive as phase 2 was very strong, we've never seen in a vaccine when phase 2 was great not to then be successful in phase 3. We will file these potentially by the end of the year.
At5.40 then CMV which is in phase 3.. the phase 2 CMV data is phenomenal, we are waiting for phase 3 this year. As soon as we get the data, assuming its positive, we'll file it & go for approval.
At6.30 and with INT we now have great 3yr survival skin cancer data, a 50% improvement versus the best drug in the market, that's also going to be filed.
At6.45 & then the rare genetic disease, I anticipate this year we're going to go into pivotal studies, the last step before getting the final data to share with the regulator.
If I've still got your attention!
My own INVESTMENT CASE SUMMARY,
– Note: The "[date pod] at xx.xx" bit refers to particular podcast dates & times, as I like to track were I got my information.
1) IT’S ALL ABOUT THE PLATFORM: It's a centralised technology platform ("the Goose") with their apps ("golden eggs") being mRNA drugs, which are entirely designed in silicon on a computer (A, T, C & G rather than zeros & ones).
B) As it's entirely digital (big data, boosted by AI / machine learning), they have a trove of 10+yrs of “Data Assets” which greatly assist in driving a higher probability of technical success, hence its rapidly expanding clinical-trial drug portfolio across SEVEN modalities (e.g Respiratory, cancer, latent diseases etc).
B.1)[16Jun21 Pod].. At30.35 Moderna's competitive advantage is that once you think of DNA as code, whoever has got the most wins. This, coupled with capital intensity [re its platform & $300m+ plants], has them well ahead of competitors & difficult to catch.
C) You get rapid & iterative development ("tweaks" to improve the code), bringing down drug cycle time from Pharma's 6-8yrs down to Moderna's c.2yrs.
D) The above, with its flexible manufacturing (each site can “print” all their drugs, aided by robotics & digital tools), implies greater capital efficiency over time.
2) [09Jan24 Pod] At45.40 The central insight is that [in Moderna’s case] success in one thing [CV19], makes success in other related areas much more likely (with their platform, “success begets success”); At40.45 The attraction is the breadth [of disease that can be treated] with their technology [the range of applications is almost unlimited]; At47.10 There are huge areas of unmet clinical need that their technology will be able to address, a small fraction of that society value will translate into an enormous business opportunity; At3.30 It’s just how transformational this technology will be if they’re successful with it.
3) Drive and ambition: Stéphane Bancel’s (CEO) vision is, “Predictable, Replicable Drugs, In Abundance”; [25Oct21 pod].. At1hr22 In 10yrs time could Moderna have >100 drugs in development, I think so, could Moderna have several dozen drugs approved, I believe so; 23Jun23 BostonGlobe.. If you think about a 5-10yr time frame, could Moderna be one of the five top pharmaceutical [makers] in the world. It’s something I believe has a high probability of happening;
4) Our sole focus is on mRNA, this is a new field, there’s a lot to invent & that’s all we do!; [16Jun21 Pod].. At29.50 They’re ahead of other people & are pursuing all the low-hanging fruit [e.g. people are missing a protein: Historically difficult/expensive, now less so]. At27.10 The magic of therapeutics is that the demand is always there!
So there you have it, thanks for reading.
As I already own the stock & plan on buying more over the next few months, I’m perhaps oddly interested in factual negative news/analysis. I’m personally less swayed by generic short selling “fear” statements or chartist / technical analysis which I consider more focused on the short term, whereas I try to focus on at least the next 3-5years. However, I’m up for the debate!
All the best with your own personal investments,
BullBear2024
