Moderna's Comeback Is Finally Taking Shape -- and There May Be More Upside Ahead

After several years of lagging the market due to a weakening coronavirus business, Moderna (NASDAQ: MRNA) is finally getting its mojo back. The company's shares are up 402% this year, as of writing, thanks to significant clinical and regulatory progress. Yet Moderna likely hasn't peaked and may see further gains as it continues to advance its mRNA vaccine platform.

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Fantastic clinical trial results

On Aug. 5, Moderna announced that the U.S. Food and Drug Administration (FDA) had approved mFLUSIVA, a flu vaccine. In clinical trials, mFLUSIVA proved more effective than marketed flu vaccines. It could help address an unmet need in this area. The current options aren't very good. Efficacy numbers range between 40% to 60% during the flu season, according to the U.S. Centers for Disease Control and Prevention.

This leaves many patients, particularly the elderly, at a significant risk of developing severe cases of the disease, potential hospitalization, and even death. mFLUSIVA could help improve things. The progress Moderna has made with mFLUSIVA this year contributed meaningfully to its strong performance.

But the biotech company hit another, arguably even more important, milestone. On Aug. 19, Moderna posted strong phase 3 results for its investigational personalized cancer vaccine, intismeran autogene. In the trial, intismeran autogene was administered alongside the cancer drug Keytruda in patients with advanced melanoma, and it led to a meaningful improvement in recurrence-free survival compared to Keytruda alone.

Moderna's shares soared by more than 100% on this news. That may seem odd, considering intismeran autogene had already posted encouraging phase 2 clinical trial data. However, a phase 2 win doesn't always translate to a strong performance in late-stage trials. Just as important, this trial win isn't just about intismeran autogene's potential. It also demonstrates the power of Moderna's mRNA platform and its ability to succeed beyond COVID-19 -- and beyond infectious diseases altogether.

What the future holds

Intismeran autogene is being investigated across several other cancers, including non-small cell lung cancer -- one of the leading causes of cancer death -- renal cell carcinoma, and bladder cancer. It could become an important product in oncology and generate significant revenue for Moderna, although it will have to share the profits with Merck (NYSE: MRK), its partner on this program. Further clinical wins across these other indications may push the stock even higher. Moderna also has a deep pipeline beyond intismeran autogene. The company is developing potential vaccines and therapies across other infectious diseases and cancers.

Some of its targets include HIV, Lyme disease, norovirus, multiple myeloma, and more. Moderna won't see every single one of these products be successful. No biotech company can achieve 100% success in developing novel medicines. But the company should see a decent success rate and transform its approved portfolio within five years. Moderna will then be able to move beyond its coronavirus business and deliver consistent revenue and earnings thanks to newer launches.

However, is the stock still attractive at current levels? After all, in addition to Moderna's poor financial results -- revenue growth has been unimpressive while the company remains unprofitable -- the stock now has a market cap of almost $63 billion. That said, it's important to remember that the market is valuing Moderna's entire pipeline, which features several potential breakthrough products even beyond intismeran autogene. The risk of occasional clinical setbacks is real, but the company's deep pipeline helps mitigate it.

Even with a modest 25% success rate for the company's current phase 2 programs, Moderna should be able to launch enough new products over the next five years to improve its financial results. So, the stock remains a buy, at least for investors willing to hold onto Moderna's shares for at least five years.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck and Moderna. The Motley Fool has a disclosure policy.