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HMGT 3311.001 spring 2021 – Project Description

Company Financial Analysis

Company Profile

Moderna Inc is a biotechnology company that specializes in drug discovery and

development of messenger ribonucleic acid (mRNA) vaccines and therapeutics. The mRNA

treatments are for cardiovascular, infectious and immune-oncology diseases. mRNA has

intrinsic characteristics that provide it with a strong foundation in producing a new class of

medicines (Moderna 8). The company was founded in 2010 and was formerly known as

Moderna Therapeutics but changed its name to Moderna inc in 2018. It is headquartered in

Cambridge Massachusetts. It has strategic partnerships and collaborations with various other

firms and institutions including Vertex pharmaceuticals, Defense Advanced Research

Projects Agency, Astrazeneca Merk & Co and the Bill and Melinda Gates foundation. Some

of the prominent competitors of Mmoderna in the Biotechnology Product Manufacturing

industry include regeneron pharamceuticals, Ilumina Inc, Biogen, and Gilead Sciences.

Industry Profile

The global biotechnology market value was $752.8 billion in 2020 and was expected

to grow at an annualized rate of 15.8% from 2021 to 2028. Around 4 out of every 10 drugs

are biotech derived highlighting the increased global demand for personalized medicine and
orphan drugs. Globally, the biotech industry growth is driven by favourable government

initiatives aimed towards modernizing the drug regulatory pathway, improving

reimbursement, expediting product approval, and standardizing clinical studies. In the US,

the biotech industry generates annual revenues in excess of $100 million. Since many

modern drugs are developed using biotechnology, there is usually an overlap between the

biotechnology and pharmaceutical industries. Established biotech firms face stiff

competition from major pharmaceutical firms and other smaller biotech firms.

Ratio Analysis

1. Liquidity Analysis;

 Current ratio – it assesses a company’s ability to settle short term obligations. It is

obtained by dividing a company’s current assets with its current liabilities.

Current ratio 2020 2019

Moderna 6297.8/4388.8 = 1.43 1128.8/143.1 = 7.9

Pharmaceuticals & 1.37 1.57

biotechnology

The sharp decrease in the current ratio between the two periods means that the company’s

ability to repay short term obligations was impaired within the two periods. However, the

ratio was still higher than the industry average meaning that the company’s liquidity was well

above industry standards.

 Quick ratio - it gives a clearer picture of a company’s ability to meet short term

obligations using its most liquid assets. It is calculated by deducting inventories from a

company’s total assets and dividing the result by current liabilities.

 Quick ratio 2020 2019

Moderna (6297.8 – 46.5)/4388.8 = (1128.8 – 0)/143.1 = 7.9

1.42

Pharmaceuticals & 0.96 1.18

biotechnology

There is no significant change in liquidity after deducting inventories. This means

that the company maintained its liquidity even after deducting inventories

2. Solvency

 Debt – to-asset ratio – it measures the extent to which a company uses debt to fund

operations. It is calculated by dividing total debts with total assets.

Debt ratio 2020 2019

Moderna 207.3/7336.7 = 0.03 132.3/1589.4 = 0.71

Pharmaceuticals & 0.36 0.35

biotechnology

The ratio significantly reduced between 2019 and 2020 meaning the company’s solvency

significantly increased within that period.

 Debt-to-equity ratio – indicates the proportion of a firm’s shareholder equity and debt

which has been used to finance its assets. It is calculated by dividing a company’s total

debts with total stockholder equity

Debt to equity ratio 2020 2019

Moderna 207.3/2561.3 = 0.08 132.3/1174.8 = 0.11

 Pharmaceuticals & 1.23 1.15

biotechnology

Moderna’s debt-to-equity ratio reduced from 2019 to 2020 meaning that the company

was less aggressive in financing growth with debt within that time period. The ratio

was below the industry average meaning that the company’s solvency was well above

the industry average.

3. Profitability ratio

 Return on equity - it measures the profitability of an enterprise relative to shareholder

equity. It is calculated by dividing company’s net income with stockholder equity.

2020 2019

Moderna -747.06/2561.3 = -30.15% -514/1174.8 = 43.8%

Pharmaceuticals & 18% 29.6%

biotechnology

The negative return on equity shows that Moderna realized losses in both time periods

therefore realizing no returns to shareholders. However, the reduction in losses

between 2019 and 2020 shows that the company was learning to manage its losses.

 Return on assets – it indicates the profitability of a firm relative to its assets. It is

calculated by dividing net income with total assets.

2020 2019
 Moderna -747.06/7336.7 = 10.18% -514/1589.4 = 32.33%

Pharmaceuticals & 5.4% 9.3%

biotechnology

The negative return on assets also shows that Moderna realized losses in both time

periods. Like the return on equity, this ratio has significantly declined between 2019

and 2020.

 Profit margin – shows the relative profitability of a firm after factoring in the costs

involved in producing and selling goods/services. It is calculated by dividing the net

income by revenues..

2020 2019

Moderna -747.06/803.9 = -92% -514/60.2 = -853%

Pharmaceuticals & -20% -13%

biotechnology

Just like the two preceding ratios, the negative profit margin shows that moderna was

unable to generate returns for its shareholders within the two periods.

Activity ratios

 Asset turnover – measures the value of a company’s revenues relative to assets. It is

obtained by dividing net sales by average total assets

2020 2019

Moderna 803.9/(1589.4 +7336)/2 60.2/(1589.4 +1962.1)/2 =

=0.18 3.39

Pharmaceuticals & 0.4 0.4

 biotechnology

The declining asset turnover ratio from 2019 to 2020 shows that the company was less

efficient in its use of assets within that time. It also declined below the industry

average within the same period.

SWOT Analysis

Strengths – some of the company’s strengths include its strong proprietary

infrastructure, its strategic partnerships with other firms in the acceleration of potential

MRNA treatments.

Weaknesses – One of the company’s major weaknesses is the lack of experience in sales

and distributions. One of the novel ways of addressing this is by developing creative

licensing and distribution relationships with major suppliers

Opportunities – There has been a rapid growth in e-commerce channels over the past

decade. The biotech industry has not been left behind and has seen growth in e-sales.

Moderna can tap into this market by increase its focus on electronic sales to capture a

greater market share,

Threats – Some of the threats the company faces includes the threats of new entrants

with Massa chutes being a booming biotech hub. There is also a potential MRNA new

class of medicines leading the company’s own patented medicines becoming

unprofitable
 Works cited

Moderna Inc. 2020 Annual Report, 2020. Web. 9 March 2021