Moderna: Rare Diseases Could Be an Underappreciated Long-Term Opportunity, Says Morgan Stanley

While Moderna (MRNA) has seen enormous success for its Covid-19 vaccine mRNA-1273 (Spikevax), to-date it is still its only approved product. And with the pandemic waning in most parts of the world, the company needs to pull another rabbit out of the hat to prove it is more than just a one-trick pony.

That is something the company hopes to address via its varied pipeline. And Morgan Stanley analyst Matthew Harrison thinks that upcoming data from two programs could point to future success.

“We expect Moderna to present initial data in rare diseases PA (Propionic acidemia – mRNA-3927) /MMA (methylmalonic acidemia – mRNA-3705) in 2022. Initial proof of concept could unlock a broader rare disease pipeline because management can easily replace one mRNA with a new mRNA to target a new disease. While we expect initial data to be directional, we believe rare diseases could be an underappreciated long-term pipeline driver for Moderna,” Harrison wrote.

The potential lies in how the new technology differs vs. the traditional approach. A faulty protein is the root cause of numerous rare diseases but conventional methods with exogenous enzymes have limitations in terms of the kinds of proteins they may target, their cost, and the potential side effects a patient may experience from the foreign protein. mRNA therapies’ ability to create functional copies of those damaged proteins has the potential to offer real clinical benefit.

As such, Harrison believes that if the Ph1/2 PA/MMA studies can show safety and functional proteins (reflected by biomarkers) for longer than 6 months, it would be the “first dataset that can largely de-risk mRNA therapeutics under chronic repeated dosing for other rare disease programs.” And that would demonstrate that Moderna could have more to offer beyond Covid and the “base value” presently attributed to prophylactic vaccines.

For now, however, Harrison sticks with an Equal-weight (i.e. Neutral) rating and $199 price target. Nevertheless, should that figure be met, investors are still looking at 12-month returns of ~41%. (To watch Harrison’s track record, click here)

All in all, the Street’s analysts are split down the middle on this one, although the bulls have the edge; based on 5 Buys and Holds, each, and 1 Sell, the stock qualifies with a Moderate Buy consensus rating. On where the share price is heading, the outlook is more conclusive; the forecast calls for 12-month gains of ~56%, given the average target stands at $221. (See Moderna stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.