Moderna (MRNA) Down as Pfizer Paxlovid EUA May Fuel Competition
Moderna's (MRNA) COVID-19 vaccine may face stiffer competition following the FDA's emergency approval of an oral COVID-19 pill, Pfizer's Paxlovid, which may result in lower sales.
Shares of popular COVID-19 vaccine-maker, Moderna MRNA were down 6.3% on Wednesday, following the news of emergency use authorization (“EUA”) for Pfizer’s PFE promising oral COVID-19 pill, Paxlovid, in the United States.
The FDA granted authorization to Pfizer’s Paxlovid for use to treat mild-to-moderate COVID-19 in adult and pediatric patients (12 years and older and weighing at least 40 kg) at increased risk of hospitalizations or death. The EUA was granted based on data from a phase II/III study, which demonstrated that treatment with Paxlovid reduces the risk of hospitalization or death by 89% or 88% compared to placebo when administered within three or five days, respectively, of symptom onset.
The availability of Paxlovid is not likely to remove dependence on vaccines to fight against COVID-19. However, it may hurt their importance going forward.
Moderna’s COVID-19 vaccine, mRNA-1273, has helped the company skyrocket 139% so far this year against the industry’s decline of 19.5%. The performance of the company’s shares in 2022 will continue to depend on its vaccine’s performance amid rising competition.
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Pfizer stated that its oral COVID-19 pill inhibits a particular enzyme, SARS-CoV-2 main protease (Mpro), which is needed for the replication of the coronavirus. It is believed that the coronavirus is unlikely to mutate in such a way that will change its dependence on the same enzyme for replication. This suggests the potential of Paxlovid to be effective against current COVID-19 variants as well as any new variants that may appear in the future. In-vitro antiviral studies have shown consistent effectiveness of Paxlovid against all previous variants of concern including the Delta. A recent in-vitro study showed that Paxlovid potently inhibited the Mpro associated with rapidly spreading Omicron variant, suggesting the pill’s potential in maintaining robust antiviral activity against the variant.
President Biden called Paxlovid a “promising new treatment option” that will lower rates of hospitalization and death in a statement issued after the FDA’s EUA.
Impact on Vaccine-Makers
The authorization for at-home administration of Paxlovid has the potential to alter the treatment landscape for COVID-19 going forward. The drug can now be used in individuals after the onset of COVID-19 infection and can be used without any physician intervention.
Unlike Paxlovid, any authorized COVID-19 vaccine in the United States — Moderna’s mRNA-1273, Pfizer and BioNTech’s BNTX Comirnaty, and J&J’s JNJ COVID-19 vaccine — needs to be administered in infected as well as uninfected individuals and that too following a visit to a hospital or any physician. Like Moderna, shares of BioNTech also declined on Wednesday by 4.3%. However, shares of pharma giant J&J, with diversified revenues sources, remained unaffected.
Pfizer and BioNTech developed Comirnaty, an mRNA-based vaccine like mRNA-1273, under a collaboration agreement and share revenues from its sales. J&J’s COVID-19 vaccine is a single-shot, adenovirus-based vaccine.
Moreover, there is a faction of people actively advocating against the use of vaccines due to several factors, including the unavailability of long-term safety data for any vaccines. With the availability of easy-to-use pill like Paxlovid, these individuals may prefer using the drug over a vaccine as it will be used only in infected people.
Although COVID-19 vaccine and drugs work differently, investors of vaccine makers are concerned that the availability of Paxlovid may lead uninfected individuals to avoid a vaccine or booster dose, hurting their demand going forward. Moreover, another oral COVID-19 pill made by Merck is under review with the FDA for EUA. The availability of multiple oral COVID-19 pills will likely lead to more competition for vaccines.
Moderna is currently dependent on its COVID-19 vaccine for a major portion of its revenues. Other sources of revenues — grant and collaboration revenues — generated less than 5% of total revenues in the first nine months of 2021.
Moreover, its leading pipeline candidate — the Cytomegalovirus vaccine — entered a pivotal study in October 2021. A phase II/III study to evaluate the respiratory syncytial virus vaccine candidate is likely to start by year-end. However, these candidates are a few years away from commercialization, subject to the successful completion of late-stage studies.
Although Moderna has supply agreements with different countries worth up to $20 billion for 2022, any setback to demand for its COVID-19 vaccine with an increasing supply of Paxlovid and similar pills will significantly hurt Moderna’s share price as it has no other commercialized product. Moreover, several new COVID-19 vaccines are expected to be authorized in 2022, which should increase competition for Moderna’s mRNA-1273.
However, we note that Pfizer has announced that it expects to produce 120 million courses of Paxlovid treatment in 2022. With the rise in infections, 120 million courses are not likely to be enough, thanks to the Omicron outbreak in many countries. This should help vaccines remain the primary protection against COVID-19 infections.
Pfizer’s Paxlovid is currently authorized in the United States and may get authorization in Europe shortly. However, a vast number of countries are not likely to get the drug soon. The countries without a COVID-19 pill will continue to use vaccines to protect citizens.
Moderna is currently developing an Omicron-specific booster dose, which is likely to enter clinical study in early 2022. The company’s authorized booster dose has also elicited robust antibody levels against the Omicron variant in a pseudovirus test. These encouraging developments are likely to help Moderna to fight against the rising competition in the COVID-19 space. Moreover, the company needs to accelerate the development of its other pipeline candidates to remove its dependence on mRNA-1273 for revenues.
We note that Moderna has significantly boosted its cash resources so far in 2021 following a surge in revenues from the sale of its COVID-19 vaccine. The company now has enough cash to continue the development of its pipeline candidates without any external funding for a few years. Any rise in competition for its COVID-19 vaccine is thus likely to hurt the near-term prospects of the company. The promising pipeline candidates continue to boost its long-term prospects.
Moderna currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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