The big question I have is what should RVX’s valuation look like with a successful Phase 2 for Covid and successful Emergency Use Authorization?

To attempt to bookend this question, I looked at Moderna’s 2021 quarterly earnings and the EPS multiple they have been trading at.  2021 is the start of Moderna’s revenue generated from vaccine sales.  In Q1-2021, Moderna estimated they would produce between 800 Million and 1 Billion doses.  Est’d gross 2021 revenue was $18 Billion.  Moderna has not reported Q4-2021 so I have used estimates based on their guidance.

So, throughout 2021, Moderna has delivered on their 2021 guidance and I’m showing ~$18B in revenue and $11.8 Billion of net earnings.  Using Jan. 28th’s stock price of $160 shows Moderna trading at a very low P/E multiple of ~5.8X.  For comparison Pfizer trades at 15.5X EPS.

Now, being in RVX since 2007 I am obviously an optimist, glass half full point of view.  Beware, the numbers are about to get into the “too good to be true” range.

Big assumption is Apabetalone meets the Phase 2 trial endpoints and Emergency Use Authorization is granted in Canada and Brasil by Year End 2022.  Health Canada orders 1,500,000 doses initially, matching the quantity they have reserved from Pfizer for Paxlovid.  Brasil’s population is 212 Million or ~5x larger than Canada. I’m penciling in an order of 7,500,000 doses.  I’m assuming one dose of Apabetalone is a 14 day treatment @ 2 pills per day @$7 per pill. $196 and I’m rounding up to $200 to make it easy.  I’m assuming CDN$ even though RVX talks USD$ frequently.

So, if all of the above happened, RVX generates $1,800,000,000 in Revenue and using Moderna’s Cost of Sales (35%) for comparison, RVX has $1,170,000,000 in net earnings.  I’ll make another assumption that RVX has 275,000,000 shares out in 2023 and that gives RVX $4.25 EPS. 

Apply Moderna’s 5.8X multiple and you have a 2023 share price of $24.65.  I’ll caution everyone reading this that EPS multiples can have very large ranges and are not consistent across sectors or within sectors.  In this case the EPS multiple is historical.  Other analysts will use future P/E ranges instead.  I’m not suggesting one or the other is better.  I’m explaining how I did this specific estimate.

Reminder:  the critical milestones that must be met to get there are:

1.      Phase 2 Covid trial exceeds endpoints and is successful.

2.      Emergency Use Authorization is granted in Canada and Brasil

3.      RVX and Eversana build a supply chain capable of producing and delivering 10 Million + doses in 2023.

Mega upside is available with a successful Phase 3 trial in the US.  The US Gov has ordered 20 Million doses of Paxlovid so far.  That’s $10.6 Billion @ $530 USD per dose.  The EU just approved Paxlovid as well.

If RVX secures a 20 Million dose order in 2024, that’s worth $4 Billion gross and $2.6 Billion net.  EPS of $9.45.  Use Moderna’s multiple again and you have $55 per share in 2024.  The challenge again will be supply chain.  It’s great to receive the order.  Then they have to produce and deliver it on schedule.

Is RVX the next Moderna?

Time will tell, good luck all

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