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Moderna Is Doing This to Avoid a Major Risk on the Horizon

By Adria Cimino - Jun 5, 2021 at 6:00AM

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An effort now could guarantee vaccine delivery later.

When we try to guess which companies will be long-term leaders in the coronavirus-vaccine space, most of us look at the orders that have been rolling in. We also pay attention to the company's statements on planned capacity, and that's the right thing to do. Both of those elements are key to maintaining a top position.

But one more element will play a big role, and it has to do with avoiding a risk that could make life difficult for any company in this space. Moderna (MRNA 2.31%) is doing something to work on this right now that could ensure the biotech-company's vaccine success well into the future. Let's take a closer look.

Two researchers hold out vials of coronavirus vaccine.

Image source: Getty Images.

Meeting deadlines

First, what is this big risk? It's the potential lack of raw materials needed to actually make the vaccine.

If a company hopes to meet deadlines to fulfill orders, it must have the necessary supplies ready and available. If supplies aren't ready for use, the company will fall behind on delivery, and it may be difficult to catch up. And late delivery may mean a particular customer won't order again. Supplies could be anything from plastic liners for reactors used in the production process or vaccine ingredients such as lipids.

Big pharma company AstraZeneca came under fire earlier this year due to lagging vaccine delivery. Part of the reason? Supply shortages. So this problem can even hurt the biggest companies that have manufactured products in volume for years.

What is Moderna doing to make sure it can produce doses in a timely manner? It says its production partnerships in the U.S., Europe, and Asia will help it stay ahead. The company's efforts should "result in an increase in safety stock of raw materials and finished product used to deliver committed volumes," the company said this week.

Moderna announced that its partner Lonza has agreed to open a new production line in Europe, which will help it produce an extra 300 million doses of its booster candidate at a 50-microgram dose. (The vaccine requires more material since it's dosed at 100 micrograms.) With contributions from Lonza and Spain's Rovi, Moderna expects to produce 600 million booster doses annually in the European Union.

Moderna also has inked deals with companies including Sanofi, Thermo Fisher Scientific, and Samsung Biologics to fill and finish manufacturing of its vaccines in the final stages of vaccine production. It literally means the filling of vials and packaging of the product. These agreements will help Moderna produce its vaccine in various locations worldwide -- and work to reach its goal of making 3 billion vaccine doses next year.

Investing in manufacturing

Back in April, Moderna said it would make significant investments in its manufacturing capacity. Those investments include a doubling of the drug-substance production capacity at Lonza's Switzerland facility. They also include a more than doubling of the fill/finish and drug-substance capacity at Rovi's facility -- and a 50% increase of Moderna's own drug-substance abilities in the U.S.

How will all of this help Moderna? The safety stock of raw materials is key, so if there's a shortage of a particular product worldwide, it may not impact Moderna. The company will have the stock it needs to continue making vaccine -- and deliver on time.

The various fill-and-finish deals also are important. By building a global network of facilities, Moderna increases its chances of producing massive numbers of finished product -- and bringing those doses to market.

So far, Moderna hasn't had any major production problems or supply shortages. But Moderna's work now may prevent those potential problems from arising in the future.

The biotech company has made a habit of staying ahead of the game. For instance, when its coronavirus vaccine showed efficacy against variants in in vitro tests, Moderna still made an immediate and aggressive plan to better handle new strains.

This organized and proactive way of doing business is one more reason to be positive about Moderna's future as a commercial-stage company -- and the future of its share performance.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool recommends Moderna Inc. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Moderna, Inc. Stock Quote
Moderna, Inc.
MRNA
$175.14 (2.31%) $3.96
Sanofi Stock Quote
Sanofi
SNY
$43.68 (-1.55%) $0.69
AstraZeneca PLC Stock Quote
AstraZeneca PLC
AZN
$10,962.00 (2.33%) $250.00
Thermo Fisher Scientific Inc. Stock Quote
Thermo Fisher Scientific Inc.
TMO
$603.50 (0.05%) $0.29
Lonza Group Ltd Stock Quote
Lonza Group Ltd
LZAGF
$613.87 (2.05%) $12.32

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

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