Shares of Moderna (MRNA) have been falling this week after the biotech company pushed back its break-even goal by two years and predicted 2025 sales to come below its forecast for the current year. Moderna also delayed the timeline for developing key products, sending shares close to a four-year low.

Jefferies biotech analyst Michael Yee joins Market Domination to discuss why he downgraded Moderna to Hold and the company's outlook within the competitive sector.

Yee points to several factors impacting his decision to downgrade Moderna. He first notes that the company lowered its 2024 guidance for its COVID and RSV segments and that RSV scripts came in much lower than expected. He also explains that the delay in the company's break-even point is disappointing and argues that its new timeline may not even be possible:

"Two things are going to occur. One is that they are going to burn a significant amount of cash in that time point. We're calling for the potential risk of needing to raise capital... And the second is that we believe there's concerns over some of their projections as it relates to the pipeline. And so we just don't think that that revenue or break-even timeline is possible. We think they're going to have to raise money."

While Moderna's mRNA technology has been proven to work, Yee acknowledges that the company operates in a "very competitive space." He adds, "We think it works. But things have been pushed out and they are spending way too much money. That is the problem. The revenues do not match the expenses. They are burning the cash and like many companies... we need to really adjust to the post-COVID time."

However, Yee held off on giving Moderna a double downgrade to Sell, arguing that while there has been a "significant pullback" in the stock, a lot has already been priced in. "Our call is more 12 months; we're going to see some more problems. And then also there is this potential for the CMV vaccine which is going to have positive Phase 3 data coming up. So I would just say that we definitely have some structural concerns over the medium to longer term," he explains.

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This post was written by Melanie Riehl