Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Crazy Stocks

How Much Money is Moderna making?

Investors are looking at Moderna Inc. (NASDAQ: MRNA) because of the biotechnology company’s vaccine research.

Moderna is the first company conducting human trials of a coronavirus vaccine in the United States. In detail, CBS claims the two doses of Moderna’s vaccine could make a person immune to COVID-19. To elaborate, Moderna started a Phase III trial of its vaccine in July.

Notably, the U.S. federal government is covering the $1 billion cost of developing Moderna’s vaccines. However, CBS claims Moderna plans to charge $74 for two doses of the vaccine.

Moderna Faces Political Heat

I think Moderna could make money from the vaccine because governments or health insurance will pay for the vaccine. Moderna could face criticism for the vaccine because it will charge the government twice for the vaccine.

To explain, the federal government paid for the healthcare of 142.7 million Americans in 2020. In detail, Statista estimates 75 million Americans received Medicaid in 2020. Meanwhile, another 67.7 million Americans were on Medicare in 2020, the Kaiser Family Foundation estimates.  

I predict Moderna will face intense political criticism for charging the government twice for its vaccine. Notably, Public Citizens alleges taxpayers will cover 100% of the cost of the Vaccine development. To explain, taxpayers paid for Moderna’s research and development and could pay for the vaccination of 331 million Americans.

Moderna Conducts Phase III Vaccine tests

Consequently, I think politics and popular sentiment will force Moderna to cut the price of its coronavirus vaccine. However, the vaccine will need to work first.

Moderna claims over 1,290 people had enrolled in the vaccine’s Phase III test on 31 July 2020, CBS claims. Moderna hopes to enroll 30,000 people in the test in the United States.

In the phase test, each participant will receive two doses of the vaccine 28 days apart. Hence, I think could several months or longer to test the vaccine. Thus I do not think the results of the test will be available until 2021.  

Moderna is Losing Money

Moderna is losing money despite the vaccine development effort under Operation Warp Speed.

For instance, Moderna (MRNA) reported a quarterly net loss of -$124 million on 31 March 2020. Moreover, Moderna reported a quarterly operating loss of -$130.86 million on the same day.

Sadly, Moderna reported quarterly revenues of $8.39 million on 31 March 2020. However, Moderna reported a quarterly gross profit of $8.39 million on the same day.

Moderna is Burning Cash

Hence, Moderna is losing money and making little or no revenue. In addition, Moderna is burning cash instead of generating it.

For example, Moderna reported a negative quarterly operating cash flow of -$106.19 million on 31 March 2020. However, Moderna did report a quarterly ending cash flow of $403.54 million on 31 March 2020.

Unfortunately, most of that “cash flow” came from borrowing. To explain, Moderna reported a financing cash flow of $578.05 million on 31 March 2020. Hence Moderna borrowed $578.05 million to stay in business.

However, Moderna reported $1.219 billion in cash and short-term investments on 31 March 2020. In addition, Moderna reported $2.068 billion in total assets on the same day.

How valuable could a Coronavirus Vaccine be?

Consequently, I think Moderna has no value other than the potential vaccine. However, I think a coronavirus vaccine could be valuable.

For instance, I calculate Uncle Sam could pay Moderna $24.494 billion if the federal government buys two doses of Moderna’s vaccine for all 331 million Americans. Note: I base this figure on the government buying the vaccine at a rate of $74 for two doses for each person.

I think there will be political pressure to vaccinate all Americans because Worldometers estimates 165,628 people had of coronavirus died in the United States as of 10 August 2020. Moreover, governments all over the world will buy the vaccine.

For instance, the National Health Service (NHS) will buy enough COVID-19 vaccine for all 66.65 million residents of the United Kingdom. Even if the NHS pays a 10th the normal price for the COVID-19 vaccine, Moderna could make money.

Furthermore, the market for a vaccine could be permanent because some scientists think COVID-19 will never go away, National Public Radio claims. Thus, Moderna could develop a product it could market for decades.

Moderna has no value

So yes, a coronavirus vaccine could have enormous value. However, Moderna (MDRNA) itself seems to offer little value. For example, Moderna pays no dividend.

However, Mr. Market thinks Moderna could offer enormous value. In fact, Moderna’s share price grew from $19.23 on 2 January 2020 to $72.65 on 10 August 2020.  I think the vaccine news is driving Moderna’s stock.

I think investors need to stay away from Moderna because MDRNA could lose all its value overnight. For example, I think Moderna could lose most of its share value if the coronavirus vaccine fails. In addition, Moderna’s stock could collapse if somebody else; such as GlaxoSmithKline (NYSE: GSK), markets a vaccine.

Moderna is a Speculative Investment

Consequently, I view Moderna as a speculative investment because there is no evidence either its vaccine or its mRNA technology works. The hope at Moderna is to use Messenger ribonucleuc acid (mRNA) to reprogram the body’s cells to perform specific actions.

Theoretically, Moderna’s mRNA vaccine could reprogram white blood cells to destroy COVID-19, for example. Unfortunately, this claim could be an unproven theory.

On the other hand, mRNA could make Moderna enormous amounts of money if it works. Moderna could use mRNA to develop vaccines for other diseases, including malaria and AIDS, for example.

In conclusion, I advise investors to avoid Moderna Inc. (NASDAQ: MRNA) until they prove mRNA works.