(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)


NEW YORK - Moderna may have produced one of the world’s biggest medical products in creating an effective vaccine for Covid-19, but it has also landed itself with a problem a bit like the one facing $1.2 trillion electric-vehicle maker Tesla. Moderna’s market capitalization has rocketed, but only a fraction of its current worth reflects the value of products it actually makes today. The rest is made up of faith in markets yet to exist.

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.



- Drugmakers Pfizer and BioNTech said on Jan. 5 that they would develop a vaccine for shingles based on the mRNA technology used in their Covid-19 vaccine. The companies expect to begin clinical trials in the second half of 2022.

- Rival pharmaceutical firm Moderna also produced its Covid-19 vaccine using mRNA technology. The company’s shares have increased more than 10-fold since the beginning of 2020, and Moderna had a market capitalization of $94 billion at the market’s close on Jan. 4.

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

(Editing by John Foley and Amanda Gomez) ((For previous columns by the author, Reuters customers can click on CYRAN/ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe | robert.cyran@thomsonreuters.com; Reuters Messaging: robert.cyran.thomsonreuters.com@reuters.net))