A product that generates about $200,000 in quarterly sales may not sound too exciting. But what if I told you that product was on the market for only two weeks in that quarter? And what if this product was a particular company's first ever to reach commercialization? Now it's probably starting to sound impressive.
As you might have guessed (thanks to the headline of this article), I'm referring to Moderna (MRNA -2.45%) and its coronavirus vaccine. Clearly, Moderna investors have reason to cheer. But the most important points in the recent earnings report don't have to do with earnings. Instead they're elements that show us how Moderna may stay ahead of rivals in this increasingly competitive market. The U.S. Food and Drug Administration (FDA) granted Johnson & Johnson (JNJ -1.15%) Emergency Use Authorization (EUA) for its single-dose vaccine on Feb. 27. And Novavax (NVAX -4.82%) expects to report data from the U.S. phase 3 trial of its potential vaccine in the coming weeks. Let's take a look at why, despite new market entrants, Moderna still is likely to hold on to a big share of the vaccine market.
Image source: Getty Images.
One of the biggest problems
New coronavirus strains are one of the biggest problems for vaccine makers right now. The Brazilian, U.K., and South African variants are gaining ground around the world. In vitro tests showed Moderna's vaccine can handle these strains so far, but its efficacy does decline.
Moderna isn't taking a wait-and-see approach. Instead, the company is exploring three ways of tackling new strains. Not one, but three. First, the company is testing a third dose of its vaccine to be used as a booster. The idea is to further strengthen the immune system's response. Moderna has already begun dosing a group of study participants.
Second, the company is looking to start a phase 1 trial of a strain-specific booster. The candidate focuses on the South African strain but could be adapted to another strain in the future. The National Institutes of Health's National Institute of Allergy and Infectious Diseases will launch the study as soon as the FDA gives the green light.
The third effort involves combining Moderna's already authorized vaccine and the strain-specific booster candidate. This would be used as a booster to be given at some point after the initial two-dose vaccine regimen.
The FDA recently said that companies with an authorized vaccine won't be required to conduct large-scale clinical trials for an updated product or booster, which will speed up their journey to market. And that's great news for Moderna's future.
The production plan
Moderna also may hold on to market share due to its production plan. The company has been successful so far. Last year, Moderna predicted it would produce 500 million to 1 billion doses of vaccine in 2021. It's already raised the low end of the estimate twice -- first to 600 million doses and most recently to 700 million.
The number of doses to be produced in 2022 will depend on the dosage needed for a booster. If an eventual booster requires only 50 micrograms of product, Moderna may be able to produce more than 2 billion vaccine doses. If the booster requires 100 micrograms of product, Moderna still expects to make about 1.4 billion doses. These figures include both initial vaccine and booster shots.
Recently, the U.S. government increased its order of Moderna and Pfizer (PFE -3.85%) vaccines. It bought enough to inoculate nearly all Americans by the end of the summer. And Moderna is set to meet delivery deadlines: The company expects to deliver the first 100 million doses by the end of March, the second 100 million by the end of May, and the final 100 million by the end of July. Meeting these deadlines will be crucial. Respecting delivery times should increase Moderna's chances of winning additional government orders down the road.
Long-term leadership
Moderna has the advantage of being one of the first vaccine makers to market. But that won't guarantee long-term leadership. Success at handling coronavirus variants and managing supply are key. Healthcare providers will favor the most efficacious vaccine. And national and local governments will renew orders from companies that fulfill orders smoothly and on time.
Moderna seems likely to excel in these two areas. That's because the company is being proactive and going about the business in a well-organized way. If Moderna continues on this path, billions of dollars in product revenue should steadily follow. And that's one big reason for this biotech stock to continue rising over the long term.
