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Moderna and Other Coronavirus Vaccine Makers to Take Reduced Payments If Approval Milestones Not Met

By Eric Volkman – Aug 14, 2020 at 8:19PM

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Vaccine candidates need to garner regulatory approval by Jan. 31, 2021, or else.

If Moderna (MRNA 3.15%) and its peers take too long to get their current coronavirus vaccine candidates fully developed and approved, they could pay the price. The government is mandating that they meet ambitious targets for this. If not, they'll receive reduced payments from public-sector entities.

Moderna, for example, will receive $1.5 billion from the government if its MRNA-1273 candidate is approved for use by Jan. 31, 2021. If not, that payout will be chopped to $1.2 billion.

Reuters reported on Friday that similar conditions are in place for other companies busy developing and testing vaccine candidates to block the SARS-CoV-2 coronavirus and/or the disease it causes, COVID-19.

A syringe being filled with a vaccine from a vial.

Image source: Getty Images.

It didn't specify any amounts or deadlines, but did say that big pharmaceutical company Pfizer (PFE 1.07%) admitted it will receive its payment from the government only in the event its BNT162b2 candidate -- in development with Germany-based BioNTech (BNTX 0.62%) -- wins approval.

No coronavirus/COVID-19 vaccine candidate has yet to be approved by a major national regulator for use. Moderna's, which is currently in phase 3 clinical trials, is considered by many to be the front runner to get a major regulatory green light first.

Both Moderna's and Pfizer's efforts are included in the government's Operation Warp Speed program, a set of financial and support incentives aimed at getting an efficacious vaccine out to the public within months.

The possibility of Moderna receiving less for its hard work didn't seem to deter investors on Friday, as they pushed the company's stock up by nearly 2%, while the S&P 500 ticked down marginally. Pfizer's shares slipped by almost 0.3% on the day, while BioNTech fell 3.3%.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Pfizer Stock Quote
Pfizer
PFE
$50.24 (1.07%) $0.53
Moderna Stock Quote
Moderna
MRNA
$179.00 (3.15%) $5.46
BioNTech Se Stock Quote
BioNTech Se
BNTX
$162.63 (0.62%) $1.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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