“Before the Covid-19 pandemic, Moderna’s market cap was about $6 billion, and as of writing it’s around $46 billion. In the biotech industry, $6 billion is a pretty high valuation for a company which hasn’t brought any drug to market. So pre-pandemic there was already a lot of optimism about Moderna’s technology. In the pipeline, Moderna has several other vaccine candidates in addition to more ambitious therapeutics, such as cancer treatments. Biotechs generally don’t earn much revenue from vaccines. Perhaps the market is optimistic about using the mRNA platform for treatments with higher margins (i.e. cancer therapies).
Moderna’s role in fighting the pandemic provided some significant benefits. Operation Warp Speed provided Moderna with $1.53 billion to help its R&D and production capacity. The new supply chain will be reusable after the pandemic and Moderna should be able to produce new therapies at scale much quicker. Additionally, now that an mRNA therapy has been approved, it should ease the testing and approval process for future products.
A $46 billion market cap only makes sense if Moderna continues to develop products with the same demand as the Covid-19 vaccine. With biotech, there’s always plenty of uncertainty around future scientific developments. Due to Moderna’s first success and supply chain, they’re well-positioned. Nevertheless, there is likely much speculative premium baked into this “story stock” already.”
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