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After Moderna’s medical miracle, some investors step back

It was briefly the most highly valued biotech stock in Massachusetts. But is the company’s market value too lofty?

Moderna delivered a COVID-19 vaccine in just 11 months.Greg Lovett/Associated Press

Moderna performed a miracle last year: The Cambridge biotech company, which hadn’t put a product on the market since it was founded in 2010, delivered a coronavirus vaccine in just 11 months.

Investors — including company executives — were richly rewarded. The stock soared by more than 700 percent from Jan. 22, when Moderna disclosed it was working with the government to develop a COVID-19 vaccine, through Dec. 8, when the price peaked and the company briefly surpassed Vertex Pharmaceuticals as the biggest biotech in Massachusetts, by market value.

But on Wall Street, which is always looking for the next miracle, some investors are concerned that Moderna’s market capitalization has grown too lofty. The shares have lost almost a quarter of their value since last month’s plateau at nearly $170. Of the 17 stock analysts covering the company, six carry a “hold” rating (a.k.a. “don’t buy”) and two rate it a “sell,” according to Bloomberg.

It’s a common dynamic among biotech and drug stocks that’s called “sell the launch,” said Mani Foroohar, who covers Moderna for SVB Leerink in Boston and has a “sell” recommendation on the stock. “Broad market excitement” that builds during development and testing “often leads to disappointment” once the product is on the market, he said.


But there’s is more behind the sell-off than investors taking their outsize profits off the table. Here are some key questions analysts are asking:

Will Moderna be a one-hit wonder?

The company’s COVID-19 vaccine, known as mRNA-1273, is a true blockbuster.

It will generate $7.4 billion in revenue this year, pushing Moderna’s earnings, excluding some items, to $11.27 a share, according to analysts’ forecasts tracked by Bloomberg. In 2020, the company posted a comparable loss of $1.16 a share on revenue of $528 million, analyst estimates show.


The company has more than two dozen products in the pipeline based on its technology, which uses a type of molecule called messenger ribonucleuc acid, or mRNA, to direct cells in the body to make proteins to prevent or fight disease. Those furthest along include a vaccine for the cytomegalovirus virus, which can cause birth defects in babies, a so-called personalized cancer vaccine, and a treatment for ovarian cancer.

While the success of the COVID vaccine has boosted confidence in Moderna’s mRNA technology, it doesn’t guarantee other products will make it through clinical trials and receive federal approval.

Can Moderna ramp up production of the COVID-19 vaccine?

The company forecasts it will deliver 600 million to 1 billion doses of its two-shot COVID vaccine. It’s a massive undertaking for any company, but it’s especially challenging for one shipping its first product.

Being a global competitor in vaccines requires manufacturing and distribution capabilities, as well as support skills such as government relations and managing the bidding process for government contracts.

Moderna “must execute, and this is a critical issue for 2021 for a young company,” Michael Yee, an analyst at Jefferies who has a “hold” rating on the stock, wrote in a Jan. 5 note to investors. “The risk around delivering a product and ramp up is of course a risk for all companies. . . . But they have done a great job so far.”

What’s Moderna’s profit potential?


The company is working on products ranging from treatments for rare genetic diseases to those for cancer and cardiovascular disease to vaccines for the flu, Zika, and other viruses.

Unlike a rare disease drug, which can command annual prices in the six figures, vaccines typically run from $25 to $60 per dose. Many vaccine markets generate high sales volumes, but price competition can be fierce.

For Moderna’s COVID vaccine, per-dose prices range from about $16 in the United States to $18 in Europe and $32 in Japan, according to Yee’s research. That’s with just one competitor, Pfizer and its partner BioNTech. But others are poised to enter the market, including the teams of Johnson & Johnson-Beth Israel Deaconess and AstraZeneca-Oxford University.

“Longer term, it’s not hard to see pricing and volume going down,” said Foroohar, the SVB Leerink analyst.

Even after the recent sell-off, Moderna’s market value of $51.3 billion is second only to Vertex’s among the state’s biotech companies. Vertex, which recorded net income of $2.1 billion in the first nine months of last year, carries a market value of $58.7 billion.

Whether Moderna can reclaim the Massachusetts biotech crown from Vertex will hinge not only on sales of its COVID vaccine, but its success with other mRNA-based vaccines and treatments in the years ahead.


Larry Edelman is a Globe columnist. He can be reached at larry.edelman@globe.com. Follow him on Twitter @GlobeNewsEd.