Is it time to buy Moderna shares?

Moderna shares have lost nearly 15% of their value over the last week. So is it time for me to buy this vaccine maker?

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Moderna (NASDAQ:MRNA) shares made headlines during the pandemic. Shares in the biotech stock soared when its mRNA Covid-19 vaccine progressed well during trials and became one of the first shots rolled out around the world.

But demand for Covid-19 vaccines is falling. And so is the Moderna share price. Biotech stocks often trade on future profitability, but Moderna is a slightly unusual case.

It’s currently making billions, but the Covid-19 vaccine is its only commercial product. So investors are weighing up waning demand for Moderna’s lead vaccine and the future commercialisation of products in development.

Having dropped nearly 15% in the last few days, is now the time to buy Moderna stock?

Demand for its Covid-19 vaccine

Moderna’s Spikevax vaccine saw the biotech firm generate $18.4bn of revenue in 2021. The figure represents a massive 2,191% jump from 2020. Moderna is expecting another good year, with $21bn in revenue forecast for 2022.

However, demand for its key vaccine is certainly slowing. There were only $2.5bn of deals between January and March – which equates to around $830m a month. That’s slower than the previous rate of sales.

In fact, some analysts think Spikevax revenue could fall as low as $2bn in 2024. I agree. This is a very expensive vaccine and as governments try to move on beyond Covid, I only foresee a small Western market for this shot.

Moderna pipeline

As I’ve said, Spikevax is Moderna’s only commercial product. And it’s unclear from its pipeline when the next product will come online. It’s important to remember that vaccines can take over a decade to become commercially ready.

But Moderna does have a number of exciting products in development, although it’s by no means guaranteed they will be effective, or pass safety requirements. Vaccines in development include a combined influenza and Covid-19 shot, a personalised cancer vaccine, and an HIV jab.

However, the personalised cancer vaccine and the HIV jab are still some distance from being commercialised. Its only non-Covid vaccine in Phase 3 trials is the CMV shot.

Phase 3 is the last stage of trials before it seeks regulatory approval and commercialises the product. However, even these trials can take years to complete.

Competition

Moderna isn’t the only the only company using the highly-rated mRNA technology. Pharma giant Pfizer has indicated it will develop mRNA vaccines.

One of Moderna’s next commercial products is likely to be its influenza/Covid combo vaccine, while Novavax is also likely to bring its combo vaccine to market soon. Novavax is also using more traditional technology, which some people might prefer.

So should I buy Moderna stock?

I’m concerned about Moderna’s revenue falling in the coming years as demand for its Covid vaccine wanes. And I think it might be some time before Moderna has another commercial product success.

However, mRNA technology has huge potential. And because of that, I’d expect it to trade at a premium to other biotechs.

I still think Moderna stock has further to fall. So I’m not buying yet. But I do think there is long-term potential here.

RISK WARNING: should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice. The Motley Fool believes in building wealth through long-term investing and so we do not promote or encourage high-risk activities including day trading, CFDs, spread betting, cryptocurrencies, and forex. Where we promote an affiliate partner’s brokerage products, these are focused on the trading of readily releasable securities.

James Fox has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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