Moderna, Inc.  

MRNA Details

MRNA Inks 10-Years Strategic Deal with Lonza: Moderna, Inc. (NASDAQ: MRNA) is a clinical stage biotechnology company pioneering messenger RNA therapeutics along with few prophylactic vaccines and cancer vaccines for patients. On 1 May 20202, the company announced a strategic partnership agreement for 10 years with Lonza Ltd. to facilitate larger scale manufacture of Moderna’s mRNA vaccine (mRNA-1273) to fight the novel coronavirus (SARS-CoV-2). According to the deal, both MRNA and Lonza plan to manufacture mRNA-1273 by building manufacturing sets at Lonza’s facilities in the US and Switzerland. 

MRNA Submits IND With FDA Against COVID-19 Virus: On 27 April 2020, the company submitted a new-drug application with the U.S. Food and Drug Administration (FDA) to assess the vaccine candidate, mRNA-1273, against the novel coronavirus in Phase 2 and late-stage studies. The phase 2 study will analyse the well-being and unfavorable reactions of the soon to commence two mRNA-1273 immunizations provided 28 days apart.

MRNA Signs Agreement With BARDA: In another update, the company stated that it has signed an agreement with the Biomedical Advanced Research and Development Authority ("BARDA"), per which the agency has committed to pay up to $483 million to accelerate the development of its mRNA-based coronavirus vaccine candidate, mRNA-1273.

4QFY19 Financial Highlights for the Period ended 31 December 2019: During the period, the company reported total revenue at $14.1 million, down from $35.4 million reported in the year-ago quarter, owing to lower partnership sales, particularly with AstraZeneca and Merck. The company reported a net loss at $124.2 million as compared to a loss of $141.4 million in the year ago period. Net loss per share for the quarter stood at $0.37 as compared to the net loss per share of $1.14 for the corresponding period last year. At the end of 31 December 2019, the company’s cash balance stood at $1.26 billion. Net cash used in operating activities stood at $459 million, up from $330.9 million in the year-ago period.  

 4QFY19 Key Highlights (Source: Company Reports) 

Key Risk: The company has not experienced any revenue from the sale of potential mRNA medicines to date and expects the losses in the coming quarters. These losses are likely to see an uptick due to higher R&D expenses. As of now, the majority of the revenue comes from the collaboration with third-party – AstraZeneca, Merck, Vertex. Key risks for MRNA are - Limited sources of revenue generation, higher R&D costs, ability and willingness of third-party collaborators, commercialization and operational risks, subject to the success of strategic alliances.

Stock Recommendation: The stock of MRNA closed at $47.93 with a market capitalization of $15.8 billion. The stock made a 52-week low and high of $11.54 and $56.38 and is currently trading at the upper band of its 52-week trading range. The stock has gained ~133.69% in the last three months and 61.54% in the last one-month period. Looking at the 5 days price movement, the stock has corrected ~5.09%. The company estimates net cash used in operating activities and purchases of property and equipment to remain flat year over year in FY20 and lie in the range of $490 million and $510 million. With the coronavirus pandemic rising by each passing day and affecting millions of people across the globe, the emphasis is rising on pharmaceutical and biotech companies for any potential drugs or vaccines to help curb COVID-19 impact. Moderna’s mRNA-1273 vaccine applicant, is one of the leading candidates in this struggle.

Notably, the company is set to report its 1QFY20 results on 7 May 2020. On the TTM basis, the stock is trading at a P/B multiple of 13.7x, higher than the industry median (Biotechnology & Medical Research) of 5.1x. Considering the fundamentals, returns on the stock, current trading levels and valuation, we are of the view that most of the positive factors have been discounted at the current levels. In light of the scheduled 1QFY20 earnings that are unlikely to be very encouraging, and excellent returns in the last three months, we suggest investors to take out profit opportunities,  and in view of  the risks around the drug trials, we recommend a “Sell” rating (particularly, in the interest of risk-averse investors) on the stock at the current market price of $47.93, up 4.22% on 1 May 2020.

MRNA Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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