Downside at Moderna.
Downside at Moderna.
Why I think this "vaccine company" is flashing red. $MRNA
In late 2021, I interviewed Georgi Dinkov AKA Haidut about a wide array of health-related matters. We touched upon Covid and vaccines, especially MRNA technology for vaccine development, genetic determinism, pharma company profitability and quality of life in modernity, amongst other things. INTERVIEW.
Easy access links from the interview:
Genetic Determinism, the idea that all diseases are a consequence of your genetics.
General Electric’s Cancerous CT scanners that earned GE millions but took human lives in the process. And how companies can still make crazy money even if their product isn’t a net positive to society.
Pfizer Covid Pill and much more in this must-read piece.
This chart minted a few billionaires… 👇
It’s nice to be the CEO or executive of a company that returns a 25X in two years — but lets see if the Board is managing this company as they should.
Insider Trading, not that bad? 🤔
The CEO Stéphane Bancel is now a billionaire. In the past 3 years he sold shares worth north of a billion dollars. Must be nice!
Noubar Afeyan, co-founder at Moderna, has sold ~$1.6 billion of stock in the past 3 years. He still personally owns 2.2mln shares, his VC fund which helped launch Moderna owns another 13mln. The stock is now hovering around $160 a share.
Juan Andres and Stephen Hoge have only cashed out $230mln and $270mln respectively. You might think executive compensation isn’t such a bad thing if it’s proportional and if it aligns incentives between shareholders and management. But does it?
In the past 3 years, Moderna insiders have sold $3.4bln worth of stock. Comparatively, for the same time period, Apple insiders have sold $800mln worth of stock! Not a good look Moderna…
Some historical context 💉💰
The company was loss making until 2021 when Covid vaccine sales gave them blowout earnings of 30$ and 21$ EPS (earnings per share) for 2021 and 2022 respectively. Reminder that the stock was selling for $20ish just as Covid struck.
Table showing the hockey stick post 2020.
And what did Moderna go and do with all that cash? Share Repurchases!
$857 million for 2021 and $3.3 billion for 2022. The company held ~$18 billion of cash y/e end 2022, and really hitting the bid on that share buyback. But why?
The future as Moderna sees it… 🙄
It’s obvious to Moderna that the profits of 2021 and 2022 are never to be seen again — as per the chart below showing Daily Covid Vaccines administered across the globe, of all Vaccine manufacturers.
Moderna is a one product company, a one-hit wonder. For H1 2023, guidance is for $2 billion (only) in product sales, and currently contracted vaccine sales for the full year are just $5 billion. Even in this weak business environment, R&D is expected to be $4.5 billion, up from $3.3 and $2.0 in 2022 and 2021 respectively.
It’s clear Moderna is entering a prolonged period of serious cash burn, where it tries to find its way post-Covid and trying to build a narrative for their future. Personally, I believe there is none — but enough about me… 🦉
The Desperado Strategy 💥
There’s only one word for a business strategy so desperate, and at the same time so destructive for a company — Desperado.
Small Recap:
Moderna never made money before Covid.
Had two blowout years and is now burning the cash for highly speculative R&D projects and desperate M&A activity.
Covid sales are falling (i.e. have fallen) off a cliff.
Executive team has been cashing out heavily all through out.
Company has been buying back shares aggressively, for reasons that I have yet to understand… 🤯🤨
The story is that Moderna will use its technology to build vaccines for other diseases, like Cancer.
So who owns Moderna today?
In July 2021 MRNA was admitted to the S&P500. Not great timing for passive investors, but great for MRNA as they benefit from seemingly infinite passive flows, keeping their share price elevated.
A number of garden variety mutual fund providers like Vanguard and State Street also have positions — and then we have our futuristic, business innovation type investment management companies like Bailie Gifford and it’s “Health Innovation Fund” (which owns ~12% of the company) who has a whole thesis around the company and its future pipeline.
"We invested in Moderna because we were excited about mRNA as a delivery mechanism because it's effectively like computer codes that instruct the cell. It's a naturally occurring process, but you can reprogramme that messenger RNA to do what you want and then put it into the body and use it for a multitude of indications," Torrance states.
This is their thesis, basically..
A cure for cancer! I won’t get into the weeds of the potential of this to work or not, but I can tell you that MRNA has >90% downside if this pipeline of RNA-technology vaccines proves to be a dud.
Further Reading
Georgi Dinkov AKA Haidut on Vaccines, mRNA therapies, Genetics, Transhumanism, Metaverse, Cancer Stocks, Big Pharma/Tech, Coffee, Metabolic Diseases, Stress and Fatigue. INTERVIEW.
Peak American Empire - The weaponisation of currency and how the Dollar’s reserve currency status built a whole empire. LINK.
Investing is an endless poker game. LINK.