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A stock jumped 14% in my ISA portfolio yesterday (30 October). Normally this would be great, but strangely I felt nothing.
That’s because the share — Moderna (NASDAQ:MRNA) — was already struggling badly. In fact, even after this double-digit rise, I’m still down 78% on my investment.
It’s fitting that it’s Halloween today, because this one has been a horror show for me. But at least it might now be coming to an end.
Pipeline problems
Moderna made a fortune from its mRNA vaccine during the pandemic. With this windfall, it invested heavily to develop and commercialise more blockbuster drugs across a range of areas, including infectious diseases, rare diseases, and immuno-oncology.
But with Covid vaccine sales dwindling, it has struggled to translate pipeline promise into actual money-making drugs. Its approved RSV vaccine has struggled to gain commercial traction, while it recently scrapped a trial to prevent CMV (a virus that can cause birth defects).
The most promising treatments are in immuno-oncology, where Moderna is using its technology to harness the body’s immune system to identify and kill cancer cells. These experimental cancer vaccines are used to treat the disease, not prevent it.
In a mid-stage trial last year, its lead candidate mRNA-4157 cut the risk of recurrence or death by 49% in melanoma patients when used with Merck‘s immunotherapy drug Keytruda.
Not only is mRNA-4157 now in late-stage trials, but it has been extended to lung, bladder and kidney cancers. So these experimental vaccines could be game-changing, both for Moderna and cancer patients.
High stakes
As exciting as this sounds, these treatments might not succeed. This is a key risk, because the company needs its pipeline to start delivering sooner rather than later.
What’s more, a personalised vaccine means it’s customised for each patient based on their unique tumour mutation profile. So Moderna must design and manufacture a custom mRNA strand.
Therefore, they could be very costly to both make and sell, turning them into a niche product. And with Moderna’s revenue expected to fall around 40% this year to somewhere between $1.5bn and $2.2bn, alongside a massive loss, the stakes could not be higher.
The company did have $7.5bn in cash and equivalents at the end of June. But that was down from $12.2bn at the end of March 2024.
The end could be nigh
Perhaps this financial ticking clock is why Moderna is looking at its options, according to a STAT News piece widely reported yesterday. This could involve bringing in a large pharmaceutical partner to help shoulder the financial burden of continuing with its oncology pipeline, or even a takeover.
Now, this is just speculation as the company has not officially commented yet. But Moderna’s Q3 results are due on Bonfire Night, so I would expect management to address this then, if not before.
Which would I prefer? Well, an acquisition would put me out of my misery, allowing me to crystallise a big loss. A significant partnership would presumably soothe investors’ nerves about cash burn, depending on the details.
Ideally, I would prefer to hop in the TARDIS and not have invested at all. But that’s a different matter.
I’ll wait to see how things play out. In the meantime, I’ll look to invest in safer UK stocks.
