Pay no attention to the net losses behind the curtain. 

Moderna Inc. kicked off its third-quarter earnings call with a cause to celebrate.

The biotechnology company announced Thursday it’d reached complete, diverse enrollment in phase three trials of its Covid-19 vaccine candidate—mRNA-1273.

“We’re very proud of the hard work of our clinical team,” Tal Zaks, Moderna’s Chief Medical Officer said, “that led to the successful recruitment of a diverse and representative study population.”

The glossy opening gave way to unimpressive financials: Moderna’s third-quarter results showed growing losses amid soaring research and development costs that overwhelmed revenue. 

Investors, however, did not care. Eyeing the payout of an approved vaccine, shareholders understand that Moderna’s small-fry sales and high operational costs are growing pains on the road to vaccine approval. The company’s stock closed 8.4% higher.

“Moderna’s earnings don’t really matter right now,” said Hartaj Singh, Senior Analyst at Oppenheimer & Co. Inc. “It’s all about the success or failure of the 1273 trial.”

Moderna reported a per-share loss of $0.59, steeper than analyst estimates of $-0.37 and the least profitable quarter since the company went public in December 2018.

Third-quarter revenue, bolstered by federal grants, soared 829% year-over-year to $157.91 million, nearly lapping analysts’ $82.5 million estimate. The company also nodded to future revenue streams, including $1.1 billion in deposits from government pre-orders for vaccines. 

Research and development—revved up to meet clinical trial needs—cost the company $344 million in the same period, overtaking revenue. 

Investors hope earnings will flip once MRNA-1273 earns Food and Drug Administration approval and vaccine sales surge.

Zaks said the company is in good shape to hit its first target—75% efficacy in trial participants—by November. After which, trials must meet an additional two marks before the FDA signs off.

When vaccines start disseminating in 2021, Singh estimates the company will rake in $2 billion to $5 billion in revenue. Paying $1 billion to $2 billion in operating expenses, Moderna will be poised to break even or better. 

“Now, the real question is: Can they break even on a consistent basis?” said Singh. “Staying there is actually huge.”

As Moderna expands into global markets, the company’s losses could become a problem

Company Filings

Company filings, source: YCharts

Smaller healthcare systems lack the funds to invest in a losing company, Singh said. Making money would secure Moderna more international investors. 

Moreover, Moderna’s capital expenditures will likely jump as they broaden their international reach. Overinvestment could send the company back to financial markets to raise capital and unavoidably, spark investor skepticism.

And if MRNA-1273 doesn’t work?

Moderna has other drugs in the pipeline, including a vaccine to treat Cytomegalovirus, a virus in the herpes family, which Zaks said should enter phase three trials in 2021. A Zika vaccine is on the docket for phase two trials.

But as long as the pandemic rages, no other vaccine can rival the revenue nor earnings promised by Moderna’s Covid-19 candidate.

“Without MRNA-1273, it’s probably back to being a $20 stock,” said Singh.