What happened

Shares of Moderna (NASDAQ:MRNA) are slumping today, down 3.9% as of 11:29 a.m. EDT. The biotech reported its second-quarter results before the market opened. However, they don't appear to be the reason behind the decline in Moderna's stock. Instead, the main factors seem to be news from two rivals in the race to develop a COVID-19 vaccine: Novavax (NASDAQ:NVAX) and Johnson & Johnson (NYSE:JNJ).

Novavax announced positive phase 1 results for its COVID-19 vaccine candidate NVX-CoV2373 after the market closed on Tuesday. Earlier today, Johnson & Johnson announced a deal with the U.S. government to supply 100 million doses of its experimental coronavirus vaccine Ad26.COV2.S for around $1 billion.

Gloved hands holding four vials labeled "coronavirus vaccine"

Image source: Getty Images.

So what

Moderna beat Wall Street estimates on both the top and bottom lines in the second quarter. Late-stage testing of COVID-19 vaccine candidate mRNA-1273 is on track. The company even reported that it has received around $400 million of customer deposits related to deals to potentially supply mRNA-1273. This was all good news that wouldn't cause its shares to dip. 

But Novavax's positive phase 1 results could mean that mRNA-1273 might play second fiddle to NVX-CoV2373. Analysts gushed about the development. Cantor Fitzgerald's Charles Duncan hinted that Novavax's vaccine could be "class-leading." J.P. Morgan's Eric Joseph expressed his view that the immune response for NVX-CoV2373 "looks best-in-class."

How did Johnson & Johnson's deal negatively impact Moderna? It comes down to pricing. J&J is getting around $10 per dose in its deal with the U.S. government. Moderna said in its Q2 conference call that its small-volume agreements so far have fetched between $32 and $37 per dose for mRNA-1273. J&J's at-cost price could put pressure on Moderna to go with a lower price per dose in a supply agreement with the U.S. government.

Now what

What really matters for Moderna is how well mRNA-1273 performs in late-stage clinical testing. The biotech stock will almost certainly soar if those phase 3 results are overwhelmingly positive. However, it will be several months before any data is available. And today's slide underscores that competitors' success and pricing will matter quite a bit for Moderna, too.