Moderna’s (NASDAQ:MRNA) (-6.61 percent) shares were down by more than 6.7 percent at 2:45 p.m. E.T. on Thursday, after the biotech company said that Canadian regulators had approved its Spikevax coronavirus vaccine for use in toddlers aged six months to 5 years. While the approval is good news, it was likely overshadowed by even better news from a soon-to-be big competitor, Novavax (NASDAQ:NVAX) (-26.20 percent), which received an Emergency Use Authorization (EUA) for its jab in the United States for people 18 and older on the evening of July 13.
With Novavax’s candidate in play, Moderna will now encounter a tougher fight for vaccination market share in the United States, which might mean fewer sales in the coming years or being compelled to increase research and development expenditure to remain to be competitive. Spikevax revenue for 2022 is expected to be at least $21 billion, derived from the sale of booster shots as well as doses for initial immunization, according to management. For the time being, Novavax’s entry is only approved for primary series immunization rather than as a booster dosage. Therefore, Moderna will continue to share the U.S. booster market with Pfizer for the main time.
To compete with Novavax, it may be necessary to beat it to the market with variant-specific booster doses, one of which, mRNA-1273.214, is already in late-stage clinical testing. However, if the updated jab is not considerably more effective than the competitor’s recently approved non-updated candidate, it will be a strong headwind that will lower sales, maybe dramatically.
Moderna will announce its second-quarter earnings before the market opens on August 3. Investors should be on the lookout for any talk of how the variant-specific vaccine is doing in clinical trials since this will be a significant consideration for government purchasers in the future. Another huge coronavirus outbreak could be on the way for Americans. In May, the Biden administration warned that there could be 100 million COVID-19 infections this fall and winter. However, the Food and Drug Administration (FDA) in the United States has cleared the way for omicron-targeting boosters to become accessible this fall. These supplements should provide further defense against coronavirus infection.
This should be very beneficial to Moderna. The vaccine stock has fallen over 70% from its 52-week high. But, with omicron boosters on the way, is Moderna now a no-brainer buy? A no-brainer option is one that takes almost no mental effort. I believe we may safely conclude that some mental effort is required when purchasing Moderna. After all, the business must yet overcome two obstacles before its omicron booster can be successful. Moderna must first acquire FDA Emergency Use Authorization (EUA) for its omicron booster. The FDA’s recent decision simply recommended vaccine producers that an omicron component should be included in boosters to be used beginning this autumn. It did not, in fact, authorize any specific omicron boosters.
Moderna’s second challenge is acquiring a new supply contract with the U.S.U.S. government that incorporates omicron boosters. On June 29, Pfizer (PFE -0.77%) and BioNTech (BNTX -7.30%) announced a new supply deal with the United States. The U.S.U.S. government will spend $3.2 billion on 105 million doses of the Pfizer-BioNTech COVID-19 vaccine. These doses could contain the omicron-targeting vaccination version developed by the two companies.
With Moderna securing a new contract in the United States, there remains a potential hiccup. The present agreement between Moderna and the United States is for 500 million doses. However, only about 286 million doses have been distributed thus far. Before placing an additional order, the federal government had many more doses left on its contract with Moderna than it did with Pfizer and BioNTech.
Featured Image: Megapixl @Stigalenas
