A Jab Well Done Or A Shot In The Dark

Moderna (MRNA), the wunderkind of the COVID vaccine era, is facing a bit of a hangover. Remember when this biotech darling was riding high on vaccine sales? Well, those days are looking as distant as your last booster shot.

The company's stock had a decent first half, climbing about 20%. They even scored a win with their new RSV vaccine approval. But hold your horses, because things are getting a bit dicey.

Last month, Moderna had to revise its COVID vaccine revenue downward. Translation: people aren't lining up for jabs like they used to.

And just last week? They dropped another bombshell: Moderna's planning to slash its annual R&D spending by over $1 billion starting in 2027. On top of that, they're also pulling the plug on five programs.

But wait, there's more. Remember when Moderna was supposed to break even in 2026? Well, now they're saying it'll be 2028. That's like telling your date you'll be there in 5 minutes, then showing up two hours later.

Now, let's talk numbers. The consensus for 2025 sales was sitting pretty at $3.9 billion. Moderna's new projection? A potential downside of $2.5 billion, with a best-case scenario of $3.5 billion. As for 2024, they're looking at $3 to $3.5 billion.

And here's another head-scratcher: Despite 800,000 people over 65 in the U.S. being hospitalized last season, only 41% of this population has the COVID vaccine. Compare that to 74% with the flu vaccine. It looks like people trust the old-school flu shot more than the new kid on the block.

So, what's Moderna's game plan? They're focusing on delivering 10 products over the next three years. That's down from their previous bold claim of 15 new products in five years.

Here’s what CEO Stéphane Bancel has to say about this: "The size of our late-stage pipeline combined with the challenge of launching products means we must now focus on delivering these 10 products to patients, slow down the pace of new R&D investment, and build our commercial business."

In other words, they bit off more than they could chew and now they're trying to swallow.

Moderna's slashing its R&D investment for 2025 through 2028 by 20%, down to $16 billion. That's a $4 billion haircut.

But here's the twist - they're actually increasing investment in oncology, presumably to hopefully build a portfolio that could rival the likes of Roche (RHHBY), Novartis (NVS), and Bristol Myers Squibb (BMY).

Now, before you start thinking it's all doom and gloom, let's look at the silver lining.

Moderna expects its respiratory vaccines to be profitable this year and beyond. They're also aiming to file for approval of three new products by year-end: a next-gen COVID vaccine, a combo flu/COVID vaccine, and an RSV vaccine for younger high-risk adults.

Now, is Moderna a buy or a sell? Well, that really depends on your investment style.

Moderna's in a tight spot, but it's not game over. They're trimming the fat, focusing on what works, and betting big on oncology.

Plus, they actually have the cash to see this strategy through. So, they won't need to pass around the collection plate to reach their break-even goal. Their current situation is admittedly not pretty, but it's not a death spiral either.

For most of us, this is where the rubber meets the road. If you're up on Moderna, consider taking some profits, but don't bail completely. This could be a classic "buy the dip" opportunity for the bold.

Remembert, biotech is boom or bust, and Moderna's loaded pipeline needs just one hit to soar. Their combo vaccines could be game-changers if they pan out. And let's not forget, they cracked the mRNA code - that's not small potatoes in the world of drug development.

Bottom line: If you're risk-averse, look elsewhere. But for those with iron stomachs and long-term vision, this might be your chance to snag a potential biotech giant on sale.