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Moderna’s (MRNA) Bloated Market Cap & mRNA Vaccine Thesis Under Fire

Moderna’s (MRNA) Bloated Market Cap & mRNA Vaccine Thesis Under Fire
Written by
Chris Sandburg
Published on
August 27, 2021
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Shares of Moderna (NASDAQ: MRNA) recently spiked over $400, giving the mRNA vaccine maker a market cap of about $200 billion, greater than big pharma behemoth Merck (NYSE: MRK), for a few days. Investors must have bid up the stock anticipating the need for COVID-19 vaccine booster shots. However, that thesis is extremely flawed and it actually appears that MRNA shares are significantly overvalued. Other means of fighting the continually-evolving pandemic will be necessary, like antivirals that are agnostic to viral strain, as well as immunomodulators that target later stage disease.Another indication MRNA investors hang their hats on is oncology, specifically personalized cancer vaccines (PCV). As will be discussed, this is a worthy effort for Moderna, but PCVs don’t really address the elephant in the room with fighting cancer—the immunosuppressive tumor microenvironment.Investors would be safer off looking for less expensive alternatives for investments, or ones where investors haven’t already priced in billions upon billions in future cash flows using a technology with a checkered past of having to work around safety issues.

The Flawed Vaccine Thesis

The first reason MRNA's shares might be overvalued is because the vaccine thesis in COVID-19 is flawed. Vaccine immunity appears to be waning. For now, to patch up the situation, authorities are now weighing the possibility of needing a third COVID-19 vaccine booster shot, except for those who took the J&J (NYSE: JNJ) vaccine. But repeated doses of mRNA COVID-19 vaccines have shown to induce more and more significant side effects, and in past development of Moderna’s mRNA products, they had to pivot away from products using more than one dose due to safety issues. This is why Moderna pivoted into becoming a vaccine company, as opposed to its plans a few years ago whereby it attempted to be an Orphan Disease company (which would use mRNA products and perpetual dosing of mRNA encoding proteins for people who were missing them or had defective versions of them).There are also companies working on next generation vaccines that are highly promising, almost destined to outperform Moderna’s COVID-19 vaccine. These new vaccines in testing are designed to optimize immunity, target immutable sites on the virus, induce longer term immunity, or even generate memory immunity, such as Vaxart (NASDAQ:VXRT), Gritstone (GRTS), or Generex Biotechnology/NuGenerex Biotechnology (NASDAQ: GNBT). Some of these products are peptide vaccines which can be lyophilized and stored at room temperature and reconstituted with liquid at the time of administration.Regardless, for now, it also appears that vaccines will forever lag variants of the virus, and even with improved vaccines, the reality of the situation is that immunity may never last forever. Vaccines aren’t the only answer to the pandemic and Moderna’s vaccine could be eclipsed by better products with better efficacy and safety.

Moderna’s Checkered Past: Safety Issues and Strategic Pivoting

For now, at least, the vaccines that are being used prolifically, specifically Moderna’s, use technology that has had interesting safety hurdles.Some people don’t know the backstory of why Moderna is a vaccine company. The mRNA platform can be used to deliver to the body the mRNA encoding for virtually any protein—so why not focus on chronic disease whereby people are dosed consistently, and there’s more recurring revenue potential? Well, years ago, Moderna ran into safety issues with their products. Consistent dosing proved to be tolerated more and more poorly as the dosing continued. Will this be an issue with booster shots, or is it only an issue with weekly, biweekly or monthly dosing? An excerpt from another article on Moderna’s technology before it went public or had the COVID vaccine out reminds investors of the issues with mRNA:

“mRNA is a tricky technology. Several major pharmaceutical companies have tried [for decades] and abandoned the idea, struggling to get mRNA into cells without triggering nasty side effects. Bancel has repeatedly promised that Moderna’s new therapies will change the world, but the company has refused to publish any data on its mRNA vehicles, sparking skepticism from some scientists and a chiding from the editors of Nature. The indefinite delay on the Crigler-Najjar project signals persistent and troubling safety concerns for any mRNA treatment that needs to be delivered in multiple doses, covering almost everything that isn’t a vaccine, former employees and collaborators said. The company did disclose a new technology on Monday that it says will more safely deliver mRNA. It’s called V1GL. Last month, Bancel told Forbes about another new technology, N1GL. But in neither case has the company provided any details. And that lack of specificity has inevitably raised questions. Three former employees and collaborators close to the process said Moderna was always toiling away on new delivery technologies in hopes of hitting on something safer than what it had. (Even Bancel has acknowledged, in an interview with Forbes, that the delivery method used in Moderna’s first vaccines “was not very good.”) [...] In Moderna’s eyes, the one-in-million disease looked like an ideal candidate for mRNA therapy. The company crafted a string of mRNA that would encode for the missing enzyme, believing it had hit upon an excellent starting point to prove technology could be used to treat rare diseases. But things gradually came apart last year. Every drug has what’s called a therapeutic window, the scientific sweet spot where a treatment is powerful enough to have an effect on a disease but not so strong as to put patients at too much risk. For mRNA, that has proved elusive. In order to protect mRNA molecules from the body’s natural defenses, drug developers must wrap them in a protective casing. For Moderna, that meant putting its Crigler-Najjar therapy in nanoparticles made of lipids. And for its chemists, those nanoparticles created a daunting challenge: Dose too little, and you don’t get enough enzyme to affect the disease; dose too much, and the drug is too toxic for patients. From the start, Moderna’s scientists knew that using mRNA to spur protein production would be a tough task, so they scoured the medical literature for diseases that might be treated with just small amounts of additional protein.“And that list of diseases is very, very short,” said the former employee who described Bancel as needing a Hail Mary.Crigler-Najjar was the lowest-hanging fruit. Yet Moderna could not make its therapy work, former employees and collaborators said. The safe dose was too weak, and repeat injections of a dose strong enough to be effective had troubling effects on the liver in animal studies.”

These safety issues and long-term efficacy issues appear to be at least partially directly related to immune recognition of the parts of the mRNA payload. With pattern recognition receptors (PRRs) in cells that can recognise single stranded RNA and double stranded RNA, and which induce potent inflammation as well as potentially help the body clear subsequent doses of the mRNA (a key reason Moderna is sticking with vaccines rather than chronic disease), both the safety and efficacy of subsequent dosing is unclear. Also, the lipid nanoparticles (LNPs) that comprise the delivery mechanism for mRNA vaccines like Moderna’s have been found to be highly inflammatory, and it is also possible that these mRNA can infect central nervous system cells since the LNPs can diffuse throughout the entire body and potentially cause necroptosis, inflammatory programmed cell death, in basically any tissue. Neurons are known to not regenerate or divide. So, repeated doses of an mRNA vaccine encoding foreign proteins may have detrimental effects throughout the body including the central nervous system (CNS) including increasing chronic inflammation and necrotic cell death in cells that cannot be replaced or tissue that cannot regenerate.Therefore, a highly valued company whose future rests on an inherently poorly-tolerated platform technology that runs into significant safety and efficacy issues, especially with repeated dosing. This raises important questions for whether mRNA vaccine booster shots will be tolerated or efficacious.Aside from efficacy and safety concerns with multiple-dose infectious disease vaccines, there are also efficacy concerns for single-shot personalized cancer vaccines, one of Moderna’s other leading pipeline projects.

Personalized Cancer Vaccines

The key issue with Moderna’s PCVs is that these PCVs have the potential to do the opposite of what they are intended to do—induce immune activation against the tumor and subsequently shrink or clear it. The reason is that antigens/peptides expressed by a specific cancer can be immune stimulating (either to CD4+ T helper cells or CD8+ cytotoxic “killer” T cells) or they can actually be inhibitory to an immune response. A small competitor Genocea Biosciences (NASDAQ: GNCA) has the best immunogenicity data for its antigens. It uses a platform technology to test the person’s own immune system with every antigen, selecting only the most potent antigens and ruling out detrimental “inhibigens,” aka inhibitory antigens that can reverse the effect of the beneficial, stimulatory antigens. Competitors such as Gritstone Oncology, Neon Therapeutics (now part of BioNTech (NASDAQ: BNTX)), and Moderna, who utilize in-silico predictions of antigens without testing on the patient’s unique immune system, risk dosing with inhibitory antigens and cannot verify all the antigens are beneficial.

Genocea July 2021 Corporate Presentation

So to put the pieces together, Moderna’s PCV’s might not work in some patients and may be an inferior product compared to Genocea’s due to inclusion of inhibitory antigens, which can reverse the effects of the vaccine and actually promote tumor growth. According to Moderna,

“Moderna is creating individualized, mRNA-based personalized cancer vaccines to deliver one custom-tailored medicine for one patient at a time. Through next-generation sequencing, we identify mutations found on a patient’s cancer cells, called neoepitopes. Neoepitopes can help the immune system distinguish cancer cells from normal cells. Using algorithms developed by our in-house bioinformatics team, we predict 20 neoepitopes present on the patient’s cancer that should elicit the strongest immune response, based on unique characteristics of the patient’s immune system and the cancer's particular mutations. We then create a vaccine that encodes for each of these mutations and load them onto a single mRNA molecule." Once injected into the patient, the vaccine has the potential to direct the patient’s cells to express the selected neoepitopes. In turn, this may help the patient’s immune system better recognize cancer cells as foreign and destroy them.”

Of course, there is no mention of how this may backfire.There is also the issue of long-term memory formation. In order for a lasting immune response to be mounted against a recurring tumor, or for T cells sensitive against specific cancer antigens to persist, the helper T cells (CD4+, “Th” cells) must interact with the “killer” CD8+ T cells for the killer T cells to form immune memory against the cancer antigen, aka neoantigen. It’s clear that robust and specific CD4+ T cell activation is critical for memory T cell responses, and this actually applies to infectious disease vaccines like Moderna’s COVID-19 vaccine, as well as cancer vaccines.Memory T cell immunity requires cognate CD4+ T cells, meaning CD4+ cells that have seen and been activated by the same antigen as the CD8+ cytotoxic T cells. While CD8+ T cells can be activated by antigen presenting cells, they undergo a different differentiation pathway when they are activated in the presence of CD4+ cells. For example, the CD8+ T cells can become memory cells if activated in the presence of CD4+ cells, but cannot if CD4+ cells are not present. The need for CD4+ helper T cells in generating a complete immune response (with memory) is well established.In the context of COVID-19, it should be no surprise that the activation of the immune system from many, many antigens that make up the spike protein may not induce any robust T cell memory response, and therefore people should expect antibodies and cellular responses against COVID-19 and its variants to decrease significantly over time.In the context of personalized cancer vaccines, this means that Moderna’s algorithm of predicting which neoantigens will stimulate the best immune response, without verification of these effects in the individual person’s blood, may either not stimulate both CD4+ and CD8+ T cells, a process required for T cell memory responses, or it may even suppress an immune response as the inclusion of an “inhibigen” neoangtigen may counteract positive effects of correctly predicted antigens, even resulting in enhanced tumor progression for some patients.All in all, Moderna’s brute force strategy for PCVs raises a lot of questions as to whether the simple theory of selecting antigens and dosing the person with them will significantly improve clinical outcomes. Genocea’s process verifies the immunological response a patient will have before subjecting them to the vaccine, and their platform, ATLAS, identified “Inhibigens” that, on their own or when combined in a vaccine formulation,led to tumor growth that was comparable to, or in some cases surpassed, tumor growth in control animals. How can this be good for Moderna’s approach if they cannot verify immunological responses that otherwise might lead to cancer progression, and Genocea noted that other competitors with PCVs made using predictive algorithms ? It seems like Moderna needs Genocea or an approach like Genocea’s if they are going to make a best-in-class, multi-billion-dollar PCV product (which seems to be priced into its market capitalization already).

The Tumor Microenvironment - MDSCs and inhibitory proteins, not just stimulatory.

Moderna will tell investors that they are dealing with the tumor microenvironment by combining their PCVs with Merck’s (NYSE: MRK) Keytruda, aka pembrolizumab, an immune checkpoint inhibitor (ICI). For those not familiar with this concept, immune checkpoints are protein interactions that take place at the immune cell surface that can stop the immune cell’s attack function. Tumors will express the checkpoint proteins that bind to the immune receptors, turning off immune cells. Drugs like Keytruda block that interaction and boost immunity. However, ICIs are only part of the story. Within the tumor microenvironment (TME), there are many checkpoints as well as immune cells that have turned to the “dark side,” which promote tumor growth, immune suppression, and metastasis. These cells include myeloid-derived suppressor cells (MDSCs), cancer-associated macrophages (CAMs), and cancer-associated fibroblasts (CAFs). The cell considered most important is the MDSC, and these cells predict resistance to ICI therapy like Keytruda.Tumor neoantigens like the ones Moderna doses with may have a positive effect on the TME, but generally speaking, to reduce MDSCs, one must deal with chronic inflammation and the proteins and interactions that induce it. Three companies come to mind that have therapies in development that are known or intended to reduce MDSCs or CAMLs (cancer-associated macrophage-like cells): Galectin Therapeutics (GALT), INmune Bio (INMB), and CytoDyn (CYDY), all of which have extremely promising cancer immunotherapy drugs.These cells will further prevent drugs in development like Moderna’s mRNA-4157 from being efficacious, despite its beneficial effects in stimulating the immune system against cancer antigens.Moderna’s PCV platform may not be worth billions if it can’t be effective or tolerable, for the multiple reasons listed above. And while the COVID-19 vaccine might continue to rake in billions, that blockbuster will likely be on the decline, too. Vaccines aren’t the sole answer to COVID-19.McKinsey & Company

Beyond Vaccines: Additional, Robust Layers of Protection

The reality of the situation is that vaccines might not be necessary for many people, though herd immunity can always help. Further, for some people, vaccines may offer enough protection. Next, for some cases of infection or people, most likely those with comorbidities, health issues, or the immunocompromised, vaccines might reduce risk for old variants but antivirals will be needed to prevent morbidity or to downright save lives since vaccines won’t be enough. And for those people where even antivirals aren’t enough, immune modulators that take a dysregulated, autoimmune, or hyperinflammatory immune response and help induce immune homeostasis, will be needed in the later stages of infection and/or hospitalization, since the immune system and not the infection become the primary pathology after patients are in critical condition, on a ventilator.Therefore, it’s time for investors to put their focus elsewhere—antivirals and immune modulators—which can directly save lives and are not a point of political, social, or cultural contention. Investors can also find less expensive companies as opposed to Moderna—ones where large upside is still possible. There’s almost no way Moderna will return 5x from current valuations and be by far the most highly valued pharma company in existence. But when looking at a smaller biotech with, for instance, an $100 million dollar valuation, 5x, 10x, or even 50x become a much more plausible scenario, as there are many more pharma companies worth $500 million to $5 billion dollars. What companies that are developing therapies that can be used to combat COVID-19 have this potential? There are a few, both in antivirals and immune modulators.Todos Medical (TOMDF)One of the most promising COVID-19 antiviral targets is the 3CL protease, which is an enzyme that is absolutely critical for SARS-CoV-2 (the virus causing COVID-19) replication. Blocking this enzyme prevents the virus from replicating, and the enzyme is very specific to the coronavirus, so safety of blocking this enzyme is likely not an issue. Todos Medical is sitting at a market cap of $10-15 million with $18 million already invested in their 3CL protease inhibitor antiviral alone, despite their promising pipeline of cancer, Alzheimer’s, and COVID-19 diagnostics and automated, low cost, fast, high-throughput CLIA laboratory processing capabilities. Even big pharma giant Pfizer (PFE) recently highlighted their development of a 3CL protease inhibitor for COVID-19 in a recent conference call. Their compound is basically in the same stages of development as Todos, but they don’t have a readily available supplement version that consumers can buy right now. When a company like Pfizer bothers to highlight a pipeline candidate such as this when it has 100 pipeline projects, you know it's worth a lot more than $10-15 million. Todos therefore seems to be extremely overlooked based on its assets—and the data gathered from their clinical trials and 3CL protease dietary supplement use suggests that they have substantial confidence that their antiviral, whether in drug form or supplement form, is efficacious and well tolerated. Unrelated to COVID-19, over $50 million has also been invested into their highly specific and accurate blood-based breast cancer diagnostic test, Videssa. They are trading at a small fraction of their potential as well as total invested capital to date, presenting investors with a potentially very lucrative opportunity.CytoDyn, Inc. (CYDY)CytoDyn is developing its CCR5 antagonist, leronlimab, for COVID-19. The company has had encouraging data in its trials for treating mild-to-moderate COVID-19, as well as severe and critical COVID-19, where patients are on supplemental oxygen or full-blown intubated with a ventilator. The company was able to decrease mortality of these patients when adjusting for age, which has a very strong pull on the mortality rates. They are pursuing trials around the world, notably in Brazil where COVID-19 hospitalization cases are out of control.The company is also leading the pack in treating “long-COVID”, aka “long-hauler’s” disease, where COVID-19 symptoms have persisted weeks or even months past infection. This disease, formally known as post-acute COVID syndrome (PACS) looks a lot like chronic fatigue. Cytodyn has industry-leading data in this untapped, underexplored, massive market (estimated tens of millions of people) suggesting robust efficacy in reducing PACS symptoms and righting the underlying pathology.Leronlimab was originally designed as an HIV drug but the company has recognized its use in a wide variety of diseases such as various (CCR5-expressing) cancers—like Keytruda is efficacious in PD-L1 expressing cancers—as well as autoimmune disease, graft versus host disease (GvHD), now COVID-19, and potentially a lot more. The HIV BLA should be submitted to the FDA in the coming months and the company could receive approval and compete in the HIV space with arguably the best, safest, and most efficacious product.Athersys (ATHX)Athersys is developing an off-the-shelf allogeneic stem cell therapy for COVID-19 acute respiratory distress syndrome, aka ARDS (needing a ventilator in the ICU). They were actually developing their therapy, MultiStem, for all-cause ARDS before COVID-19 existed. Their phase 2 in all-cause ARDS showed to reduce mortality from 40% (placebo) to 25% (MultiStem), and this data was recently replicated by their Japanese partner Healios KK (HLOSF), who in-licensed MultiStem and completed their own phase 2, reducing mortality from 42.9% to 26.3%. Healios then added 5 COVID-19 ARDS patients (COVID-19 patients in critical condition) to the trial and demonstrated a 0% mortality rate. Athersys is now conducting an adaptive phase ⅔ trial for ARDS and COVID-19 induced ARDS in the United States. Healios intends to file for approval for MultiStem in Japan with the PMDA and Athersys could be receiving milestone payments and royalties soon.ATHXs’ cell therapy, MultiStem, also has promising data in GvHD, ischemic stroke, and is under investigation for major/multiple trauma, a large and underexplored, untapped market.Other companies developing anti-inflammatory drugs for COVID-19, with promising data, include Relief Therapeutics (OTCMKTS: RLFTF) and Humanigen (NASDAQ: HGEN).


The market is currently pricing in billions and billions in profits for MRNA, but will these anticipated profits ever be realized when better COVID vaccines are available? Will people still take covid vaccines if they are then associated with significant side effects? Are MRNA’s other pipeline candidates really best-in-class or differentiated compared to competition, and ready to generate significant revenues? It doesn’t necessarily appear so. As these doubts become reality or as the market becomes more skeptical, MRNA shares may deflate significantly. After all, MRNA’s orphan disease idea from years ago did not pan out at all.With competition using more precise vaccine technology on PCVs and COVID-19, and with MRNA’s other vaccines for infectious diseases and cancer being “sexy,” using their delivery technology, but probably lacking any significant competitive advantages with respect to translating into real clinical outcomes. MRNA’s valuation remains highly questionable for now. MRNA could go on to prove all these negative points wrong, but investors may be better off investing in MNRA’s less expensive competition with potentially better technologies, such as Genocea Biosciences (NASDAQ: GNCA), Generex Biotechnology (OTCMKTS:GNBT), Todos Medical (OTCMKTS: TOMDF), Athersys (NASDAQ: ATHX), INmune Bio (NASDAQ: INMB), Galectin Therapeutics (NASDAQ: GALT), and CytoDyn (OTCMKTS: CYDY). After all, the immense platform technology upside is there for most of these competitors, and the current valuations allow room for potential massive upside, compared with MRNA shares, which appear priced beyond perfection.


Disclosure: Insider Financial and its owners do not have a position in the stocks posted and have posted this article for free without editorial input. This article was written by a guest contributor and solely reflects his opinions.

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