Moderna posted an incredible earnings report yesterday. The company reported revenue of $571 million. Revenue is growing by leaps and bounds as new COVID-19 supply deals roll in. Vaccines from Moderna and Pfizer provide a pathway to reopening the economy. Everything hinges on an effective vaccine and both companies have demonstrated efficacy north of 94%. The problem for Moderna is that its $60 billion valuation hangs in the balance.
As Moderna’s valuation is in the spotlight, CNBC’s Jim Cramer is pumping the stock:
- Update 9:40am: Cramer updates his reporting.
- Moderna (NASDAQ:MRNA) shares gained 5% after CNBC’s Jim Cramer claimed that the company is working on potential candidates for a cancer vaccine that appears to work.
- Cramer cited two unidentified sources .
- Cramer said the work is at preclinical stage.
- Cramer said in update that preclinical may not work, it “could be wrong.”
- “The preclinical stuff that they are trying to do is what I said. That does not mean they can succeed,” Cramer said.
- “I want to be clear, they don’t have it, but they are trying,” Cramer added.
- With the Q4 2020 financial results, Moderna issued latest updates on its portfolio. The personalized cancer vaccine (“PCV”) (mRNA-4157) leads its experimental vaccines targeting cancer. The company and Merck share worldwide commercial rights for the candidate.
- For the adjuvant treatment of high-risk resected melanoma, mRNA-4157 is undergoing a Phase 2 clinical study in combination with Merck’s pembrolizumab compared to pembrolizumab alone.
- Phase 1 in multiple cohorts is also ongoing with the upsized head & neck cohort enrolling additional patients.
The stock is up in the single-digit-percentage range today. The stock rose in the single-digit-percentage range yesterday. It fell in after-market and was likely to fall further. Cramer’s PR stunt – make no mistake, that’s what it was – helped drive the stock higher. Cramer and his clients obviously have a stake in Moderna. It begs the question, “If management did not find the cancer vaccine important enough to discuss on the earnings conference call then why is Cramer pumping it now?”
Cramer is hinting what the Shock Exchange already knows – Moderna’s valuation is not sustainable. Otherwise, why pump it. Moderna’s 2020 revenue will likely fall hard, in line with the market for COVID-19 vaccines:
In my opinion, 2022 full-year revenue guidance could be even more important than 2021. I assume Moderna has $11 billion in revenue in the bag for this year. However, the $39 billion estimate for the entire COVID-19 vaccine market in 2021 is expected to fall about 40% to $23 billion in 2022. Practically, all of Moderna’s 2021 revenue is expected to be derived from vaccine sales. I expect that to be the case in 2022 as well. If the market for COVID-19 vaccine sales falls sharply, then Moderna’s vaccine revenue will likely fall Y/Y as well.
Secondly, Moderna is expected to garner about 28% of 2021 total industry vaccine sales. Novavax’s (NVAX) COVID-19 vaccine demonstrated 89% efficacy in clinical trials, while Johnson & Johnson’s (JNJ) vaccine demonstrated efficacy in the 66% range. Novavax proved its vaccine could potentially compete head-to-head with Moderna’s. JNJ’s one-shot vaccine also could disrupt the market. Whether Moderna can maintain its 28% market share in 2022 remains to be seen. Its first-mover advantage could dissipate by the end of this year, assuming Novavax and JNJ receive emergency use authorization for their vaccines.
Johnson & Johnson and Novavax also have vaccines that are expected to enter the market within months. Their vaccines do not have the same cold storage requirements of Moderna and Pfizer. Moderna’s market share will eventually fall by the second half of 2021. When the market realizes 2021 revenue is a high water mark, I look for Moderna’s share price to crater.