Moderna (MRNA) shares surged in early trading on Thursday after posting better-than-expected fourth-quarter results. The biotech company reported a surprise profit in the quarter, with CEO Stéphane Bancel telling Yahoo Finance Live that "last year was a transition year" for the company.
Oppenheimer & Co. Biotechnology Analyst Hartaj Singh argues that investors should focus less on the Covid-19 business and more on the company's pipeline, given that this should be "a trough year" for Covid-19 vaccine revenues. Singh believes that over the next 6 to 9 months, there will be "a relentless discussion" around the company's pipeline, which he says is "great" given that he thinks "this should be a five-product company in 2026."
Watch the video above to hear why Singh says Moderna is the "kind of stock you want to own."
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Stephanie Mikulich.
Video Transcript
- Shares of Moderna up just about 6.5% this morning after reporting better than expected sales when it comes to the estimates that we got here from the street. Now, all of this coming despite the fact that sales for its COVID-19 vaccine pulled back just about 43% from a year ago.
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Yahoo Finance spoke with Moderna CEO, Stéphane Bancel, about the decline in COVID vaccines. And here's what he had to say.
STéPHANE BANCEL: I think we can do much better as a company and also working with public health leaders to increase vaccination rates. Americans need to know, if you are 65 and above, you have five times more chance to get hospitalized because of COVID than because of flu. And as you know, many more people take a flu shot than a COVID shot, so we have to do better there.
- All right, for more on these results, we want to bring in Hartaj Singh, he's Oppenheimer's biotechnology analyst. Hartaj, it's great to see you here. So I'd love to get your reaction to what we just heard from Stéphane Bancel and also just putting this in perspective for us. Because over the last couple of quarters, we've talked about the fact, the risk of the decline in the uptake here of COVID-19 vaccines, what that risk or challenge them poses here to Moderna. Are we starting to see that narrative shift just a bit as we get more positive results on RSV? And also some of the excitement surrounding its cancer immunotherapy.
HARTAJ SINGH: No, thank you, Seana. And I really appreciate you all having me as always. You know, look, here's the thing, this has been a story around COVID-19 vaccines, the sales, and the underlying trends. When we upgraded earlier this year, we basically said that, look, this is a story that this year will change from COVID-19 vaccine trends and COVID-19 vaccine revenues to basically a pipeline story and with the company being potentially a five product company in 2026.
And I think today what you saw was they reported COVID-19 vaccine revenues that were in line with what we were expecting. This probably should be the trough year. On the call, the company reiterated their guidance for the full year of 2024. And especially I think in January and February, it didn't seem like there was any big change to vaccination trends one way or another. That should give us pause that this should be a trough year for COVID-19 vaccine or COVID vaccine revenues.
The second part to your point that more and more, the conversation is coming up on their pipeline. On conference calls, investor calls, 70%, 80%, 90% of the questions used to be on COVID-19 vaccine revenues. Now, people are talking about flu. Phase two will read out this year. The combination flu and COVID-19. A phase three will read out later this year. CMV cytomegalovirus, this is for pregnant women. That will hopefully read out later this year. And cancer vaccines, rare diseases, those are trials that are initiating.
So you can already see suddenly the change happening where we're going from discussing COVID-19 revenues and vaccination trends relentlessly like Stéphane was talking about to now really talking about the pipeline.
- Well, the shares right now down by about 41%, investors waiting for that pipeline story to really ring through to some of the financial results. So where are we in the mRNA platform, messenger RNA as a platform and iterating on top of what they already have to really bring some of these new solutions, treatments to market?
HARTAJ SINGH: Yeah, but so the mRNA platform is a really good question, and it matters in a way. So as a biotech analyst, what does a platform mean to me?
A platform means that the company has an approach with either a type of a molecule. For Regeneron with antibodies. Gilead, infectious diseases. Vertex, they're agnostic but they go after understanding disease pathology. With Moderna, it's the mRNA. And what does that mean? What that means is you should be able to shorten development times, increase the probability of success for your development candidates that follow the first approval, in which in this case, it was the COVID-19 vaccine revenues. Sorry, vaccines.
If you go back to the R&D slides from last year, you'll see that that's exactly what they're doing. As they're developing products in RSV, in flu, in combo vaccines, in cancer vaccines, in rare diseases, they're shortening the development times and they're increasing their probability of success.
So we're already seeing that this is a company that's beating historical estimates. And that's the kind of stock you want to own if you're a kind of a mid to long-term holder because that means that every product will just get on market faster with a higher degree of certainty.
- Right. Cutting down some of the R&D costs as well along the way here. So for investors that are looking around that time horizon, how far out should they be looking?
HARTAJ SINGH: Look, the first six to nine months here is really just going to be all about the pipeline. We're not going to see COVID-19 sales until-- the insights there until about the second quarter call in late July or even the third quarter call in late October.
So really, the discussion about next six to nine months are going to be all centered around the pipeline, which I think is great because people are now going to start getting comfortable with the idea that they should have a flu vaccines approved next year, RSV approved this year, a combination vaccine flu and COVID-19 approved next year. Cytomegalovirus vaccine possibly approved next year. The readout is good later this year.
So what we're going to see now is a relentless discussion next six to nine months around the pipeline and these projects. So we should start seeing it very quickly. And our upgrade stated in January, a couple of months ago, that this should be a five-product company in 2026. And the update today underlined our conviction there.
- Oppenheimer analyst, Hartaj Singh. Hartaj, thanks so much for taking the time here today to break down the Moderna results. Certainly appreciate it.