In two years, the biotechnology firm has turned its mRNA technology from experiment to medical blockbuster. At $94 billion on Wednesday, its market value is over 10 times what it was before Covid-19 emerged. But analysts expect just $12 billion of revenue in 2023, according to Refinitiv, as demand for Covid shots wanes. Put that on a multiple of 4, in line with where big drugmakers trade, and discount it back two years, and it’s worth just over $40 billion, or less than half of Moderna’s current market value. And that may be optimistic if there’s not much need for further Covid booster shots.
The rest of Moderna’s worth lies in cash – analysts polled by Refinitiv expect it had $14 billion at the end of 2021 – and hope. For example, there’s the possibility of an mRNA influenza vaccine, which Chief Executive Stéphane Bancel hopes might be combined with the Covid shot. But the market for flu vaccines is only around $6 billion a year. Moderna also hopes to apply its technology to many other conditions, but none are close to commercial viability.
Blowout success stories aren’t unheard of in biotech. Genentech went public in 1980 worth $530 million and sold to Roche in 2009 for $106 billion, based on success with monoclonal antibodies. But Moderna is unusual in that it is already valued like a company much further along in its development. Bancel’s company has a market value almost one quarter that of Johnson & Johnson, the world’s biggest pharmaceutical firm, but with less than one-fifth the sales and only one product to speak of.
Like Tesla, whose valuation is predicated on it dominating an autonomous vehicular future that’s still mostly theoretical, Moderna already faces competition too. Pfizer and BioNTech, which created their own mRNA vaccine, said on Wednesday they hope to apply the technology to a shingles vaccine. That doesn’t mean Moderna won’t come out on top. But Covid shot aside, investors are taking on a small company with a big valuation and determined rivals, which suggests much volatility ahead.