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0:00
Hello. I'm Dr. Michael McDonald.
I'm a professor of finance at
Fairfield University
in Fairfield,
Connecticut and today
I want to talk to
you about a very unique
corporate case study.
That is the case of Moderna;
dividends, share buybacks,
R&D, and shareholder value.
0:19
At the end of 2019,
the world was introduced
to a new event,
COVID-19, and in
2020 it went global.
In a lot of cases, new
things can be fun.
COVID, I think we can all agree,
did not fall into that category.
Pharmaceutical companies
Moderna and Pfizer
developed vaccines to help
protect against COVID-19.
Both companies made boat loads
of money from solving what had
become a global pandemic and
a major issue for
billions of people.
Essentially, the COVID pandemic
turned everyone around the globe
into a potential or
even likely customer
for these two firms.
1:04
Pfizer had been a
major company in
the pharmaceutical
space for decades.
COVID was certainly a
boon to the company.
It helped to turbocharge
their profitability,
but it wasn't a game changer.
Pfizer was a very large company,
an enormous company
before COVID,
it was an enormous
company after COVID.
COVID might have added 25%, 50%,
even 100% to the firm's profits,
but Pfizer was always
a big company and has
been for decades.
In contrast, Moderna
had essentially
no meaningful revenue
before their COVID vaccine.
Certainly as an early stage
pharmaceutical company,
they had a very promising
product portfolio
and they were publicly traded.
So in a sense, they
were a big company,
but they didn't really
have any revenue.
They just had a very
exciting and unique approach
to making new
pharmaceutical products
using their mRNA technology.
But they weren't a big company
by most people's standards.
If you don't have any revenue
and don't have any profits,
you're not really a big
company in some sense.
So as a result of this,
the COVID crisis and the
vaccine that Moderna developed
in response were
transformational to the firm.
One quick note here and
this is a side comment.
There are a lot of folks that
critique Pfizer and Moderna
for investing capital,
taking a risk, and then earning
a profit off of their
COVID vaccines.
There are many other
companies that
tried to do this and failed.
So Pfizer and Moderna
were uniquely successful
in this regard.
I'm not among those
that critique
the company for taking a
risk and earning a profit.
But regardless of
your particular view
on the ethical issues here,
that's not the focus
for today's talks.
We want to understand what
Moderna could and should do,
given the financial reality
that they're in today.
We can save the ethical
debate for another time.
So with that said,
let's look at their financials.
