Key Points

  • Moderna and rival Pfizer expect phase 3 safety readouts later this month.
  • Pfizer this week said interim phase 3 efficacy data show its vaccine candidate was more than 90% effective.
  • Moderna hasn't yet reported phase 3 efficacy data.

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Moderna (MRNA -0.87%) has been a stock market favorite since the start of the coronavirus vaccine race. That's probably because back in March, Moderna became the first to launch human trials of its COVID-19 vaccine candidate. But now, the clinical stage biotech is not alone at the top of the heap of companies working on vaccines. Pfizer (PFE 1.80%) and its German partner BioNTech (BNTX -0.40%) are not only are close to bringing a safe and efficacious vaccine to market, but they may have taken the lead. On Monday, the pair announced interim phase 3 efficacy results. The partners said that their investigational vaccine candidate was more than 90% effective at preventing COVID-19 infection.

Moderna hasn't yet reported its interim phase 3 efficacy data. But results from earlier studies have so far been positive. There isn't less reason to be optimistic about Moderna's chances, despite the fact that Pfizer and BioNTech have pulled ahead. We all have a good idea of what will happen if Moderna wins the coronavirus vaccine race outright: Its shares will climb, with reliable revenue right around the corner. But what happens if Moderna doesn't reach the finish line first? Let's take a look at two possible scenarios.

A researcher holds up a dose of coronavirus vaccine.

Image source: Getty Images.

Scenario 1: Pfizer wins an EUA first

The U.S. Food and Drug Administration (FDA) may grant Pfizer and BioNTech an emergency use authorization (EUA) based on phase 3 data, even if their trial isn't totally complete. The regulatory agency requires companies to submit two months of follow-up safety data for consideration. Pfizer says it will reach that point in the third week of November. The latest report covered initial efficacy results only. As for Moderna, the biotech expects its safety data the following week, by Nov. 25.

This means Pfizer may be slightly ahead of Moderna from a timeline perspective. If all goes well for both companies, they may apply for EUAs within days of each other. I would expect a bigger one-day share increase if Moderna wins an EUA first. But if Pfizer scores the prize, that doesn't mean Moderna's share gains and dreams of vaccine success are over.

The global need for a vaccine means there is room for more than one player to succeed. If the FDA grants Moderna an EUA after it awards one to Pfizer, Moderna's revenue and shares will still benefit. The company has already signed supply agreements with various countries, including a deal for 100 million doses with the U.S. government. So, in the long run, it might not matter if Moderna crosses the finish line first, second, or even third.

Scenario 2: Moderna's program stumbles

If Moderna's phase 3 efficacy or safety data disappoint, expect share declines. Here's why: News about the coronavirus vaccine program has guided the stock's performance this year. Moderna shares, which traded between $12 and $27 throughout their stock market history, have soared 353% this year to about $88 on optimism about the company's coronavirus vaccine work. The company has nine other programs in the pipeline, with the most advanced being in phase 2. The phase 2 candidates include vaccines for cytomegalovirus and melanoma.

There also is a difference between a small setback and program failure. A setback, such as unexplained illness of a trial participant, might hurt the shares in the near term, but wouldn't throw the entire program into jeopardy. A few months down the road, Moderna could still catch up on revenue and share performance. Failure, however, would be the worst-case scenario. Failure occurs if the candidate doesn't show efficacy or isn't safe for use. If that happened, it wouldn't be surprising to see the shares return to their pre-coronavirus levels or worse.

How likely is each possibility (including the possibility of success)? 

Right now, we don't have reason to predict a failure or even a setback. But it's important to consider it. That's because anything can happen in a clinical trial -- even in the final stages. And anything can happen during regulatory review. Even when a company is confident about study data, the FDA still may view the results differently and reject the product candidate. Could Moderna still beat Pfizer? Possibly. Pfizer hasn't yet reported its two-month follow up safety data. If Moderna's safety and efficacy data are superior to that of Pfizer, it could win this race. After all, the companies' submissions for EUAs may be only days apart. 

If the success of Pfizer's messenger RNA (mRNA) vaccine technology suggests anything, it's that Moderna's mRNA technology might work too. That's part of the reason why Moderna's share rose 8.7% while Pfizer's rose 7.6% in day-of trading on the day of Pfizer's announcement. If nothing upsets Moderna's smooth path so far, it's likely this biotech company will be first or second in line to request an EUA. Investors should keep an eye out for any possible phase 3 efficacy reports from Moderna in the coming days and safety data later this month.