Moderna and its investors have been on a wild ride amid the COVID-19 pandemic, starting with initial vaccine research back in January that progressed to a phase 3 trial this summer at record speed. All the while, share prices climbed as investors and analysts started projecting blockbuster revenue potential from the company’s mRNA vaccine candidate.
Analysts with SVB Leerink, though, see major hurdles ahead, and they're cautioning investors to the risks. In a note downgrading Moderna’s stock to underperform, analyst Mani Faroohar wrote that multiple developments could hurt the biotech's vaccine market outlook, including success for competitors and decreased demand for COVID-19 vaccines amid Americans' skepticism around the development process.
A positive phase 3 update and emergency use authorization in the fourth quarter are “broadly expected,” the analyst wrote, but Moderna will also be sharing the spotlight with rivals. Data, contracts and launches for rival companies threatens to "dominate news flow," which could weigh on Moderna's share prices.
Consensus estimates predict around $4 billion to $5 billion in annual COVID-19 vaccine sales for the biotech over the next decade, but the SVB Leerink team only foresees around $2 billion or less annually.
“As we are in the midst of a global buildout of capacity analogous to a Manhattan project for vaccines, we see excess capacity, high competitive intensity, and limited pricing power as likely long-term structural features of vaccine end-markets, presenting secular challenges to a sub-scale player such as [Moderna],” the analysts wrote.
Moderna shares were down about 8.5% on Tuesday morning, but they’re still up nearly 200% for the year. The company started on COVID-19 vaccine research way back in January, and in March, it entered human testing in record time. Moderna has never developed an approved, marketed product, though, and it's facing off against Pfizer, AstraZeneca and other pharma industry heavyweights in the COVID-19 vaccine race.
Throughout the process, the company has received significant financial backing from the U.S. government. Moderna scored nearly $1 billion for its R&D work and $1.53 billion for scale-up and delivery of 100 million doses. Under the latter deal, Moderna could earn much more for timely deliveries or add-on orders.
The company is now in phase 3 testing in the U.S., along with Pfizer and AZ. It’s unclear exactly when the first vaccines will be available, but the CEOs for those companies and others on Tuesday signed a joint pledge not to seek FDA approvals or emergency use authorizations without solid phase 3 data.