Moderna (NASDAQ:MRNA) Artificial intelligence (AI) is nothing new: Biotech companies best known for their multi-billion-dollar coronavirus vaccines have been using the hot technology for years to save valuable time in their labs.
For example, Moderna uses AI to generate mRNA for researchers to use, so researchers no longer have to manually create mRNA to run experiments.
And last year, we signed a contract. international business machines The company is looking to use AI and quantum computing tools to advance biotech research — CEO Stéphane Bancel has spoken frequently about its work on the technology, and it even launched an AI academy to train employees how to incorporate AI into their daily work.
But its latest AI announcement may be its biggest yet. A few weeks ago, Moderna announced an expanded collaboration with OpenAI, and that the collaboration is paying off. Not only does the company hope that AI can help advance the drug discovery process, but it says the technology is already improving efficiencies across the company.
This biotech could be a future AI winner, but does this make the stock a buy? Let's find out.
Moderna's vaccine revenue peaks
First, a quick summary of Moderna's current situation: The company is making billions of dollars in revenue from its coronavirus vaccine, and at its peak, annual sales exceeded $18 billion.
But as we move toward a post-pandemic world, demand for vaccines is decreasing, and with it, so are revenues. In the most recent quarter, management reported vaccine sales of $167 million and expected full-year product sales of $4 billion.
But Moderna never planned to be a single-product company, and the company's solid late-stage pipeline shows it has what it needs to continue moving toward its goals. It shows. Bancel aims to launch up to 15 products over the next five years, including vaccines in the respiratory field, such as treatments for respiratory syncytial virus (RSV) and influenza, and other therapeutic areas. It states that this includes products such as
Moderna says these products could generate as much as $30 billion in annual revenue in a few years. Even if the company partially achieves this goal, it is expected to see significant revenue growth over the long term.
Meanwhile, the company has focused on investing in AI, which led to its collaboration with OpenAI. Moderna has implemented AI in every department to increase efficiency. Just a few months after signing on to ChatGPT Enterprise, the biotech has built over 750 large-scale language models used for a variety of tasks such as legal issues and payment processes.
Selecting the optimal vaccine dose with AI
The technology is also making a difference in the lab, with ChatGPT's analytical tools helping Moderna select the optimal vaccine dose for clinical trials, for example. This is a critical decision that will determine whether a particular candidate vaccine succeeds or fails in development. Therefore, this technique saves time and increases the chances of success.
This recent and ongoing investment in AI is already paying off, reducing Moderna's need for purchased services and outside consulting, which led to a 10% reduction in selling, general and administrative expenses in the first quarter.
Given that the company has only just begun working with ChatGPT Enterprise, it is likely that the efficiency gains and cost savings are still in the early stages, with more to come. At the same time, Moderna's use of ChatGPT tools and collaboration with IBM may also improve the drug development process.
All of this means that, at the very least, investing in AI will make your business more efficient and reduce costs. In the best-case scenario, companies may be able to develop better products and bring them to market faster. Either way, we expect a win.
Is Moderna a buy?
But does this make Moderna a buy? I wouldn't buy this stock just to invest in AI. It's also important to look at a biotech company's pipeline and its potential to bring some of its candidates to market. As mentioned above, these indicators seem to be working positively for the company.
Investors may now be starting to focus on this long-term potential. After several years of weakness, the stock is up about 40% this year. With strong momentum likely to pick up again, now is a great time to join this innovative biotech company and benefit from all potential products that could deliver sustained revenue growth. be.
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool recommends International Business Machines and Moderna. The Motley Fool has a disclosure policy.
Moderna announces big news regarding AI. Should you buy this stock? This article was originally published by The Motley Fool.
