One of the biggest topics these days among coronavirus investors is vaccine efficacy. Especially against variants. The delta variant has gained ground across the globe and become dominant in the U.S. And even though more than 54% of the U.S. population is fully vaccinated, delta continues to spread -- and cause breakthrough cases in vaccinated individuals.
In fact, the president of vaccine maker Moderna (MRNA +4.47%) recently made a comment about how the variant is changing the vaccine landscape. Do these words from Moderna president Stephen Hoge signal difficult times ahead for vaccine makers?
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Spotlight on weaknesses
The delta variant is "so good at infecting people and replicating that it raises the bar on how good vaccines have to be," Hoge told CNBC. He also said the variant has put the spotlight on vaccines' weaknesses more quickly than expected.
So, does this mean today's vaccines aren't working and researchers should go back to the drawing board? Not at all. Vaccines from Moderna and rival Pfizer (PFE +0.30%) are playing an important role in countering the pandemic. But neither company plans to stop with these initial vaccines. They've both spoken about the necessity of boosters. And they're both working on future vaccine candidates.
Hoge's comments don't mean trouble for vaccine makers. Instead, they highlight the idea that much opportunity lies ahead. Getting a primary series of the current vaccine once isn't going to be enough to eliminate the coronavirus. Individuals will need boosters and next-generation vaccines further down the road.
Both Moderna and Pfizer are prepared. Moderna has asked regulators to authorize a third shot of its vaccine at a smaller dose. That would serve as a booster for those who received the primary series earlier this year. And the company is working on other booster candidates it hopes to launch in the future. The idea is to develop boosters against today's and tomorrow's variants of concern. The company has tested three candidates -- targeting the delta and beta strains -- in a phase 2/3 clinical trial. And it's set to launch a fourth candidate in trials imminently.
A next-generation vaccine
Moderna also is working on a next-generation vaccine candidate. This potential vaccine targets portions of the coronavirus spike protein necessary for neutralization such as the receptor binding domain. The RBD helps the virus attach to receptors and enter cells. This vaccine candidate also would be stable at refrigerator temperatures. Moderna's current vaccine can only be kept at those temperatures for 30 days.
Pfizer likely will be the first to commercialize a coronavirus vaccine booster. A U.S. Food and Drug Administration advisory panel last week said Pfizer's booster should be authorized for people 65 and older.
Pfizer also is working on an updated version of its vaccine to target the delta variant. That candidate is entering clinical trials. In an earnings call earlier this year, Pfizer said it's creating a regulatory pathway of 100 days to update its vaccine to handle variants. That speediness could be crucial when it comes to controlling new variants.
Revenue ahead
Hoge is right when he says delta is raising the bar for vaccines. But that isn't necessarily a bad thing for companies' revenue. In fact, if Moderna and Pfizer are successful with their upcoming programs, coronavirus vaccine revenue may continue to climb. The better the product, the more governments will commit to big orders, especially if the companies show they can pave a rapid pathway to authorization for targeted vaccines. Pfizer's vaccine is set to generate more than $33 billion in revenue this year. And Moderna's will bring in about $20 billion.
The coronavirus vaccine race wasn't just one event. Instead, it was the start of something much bigger. Most experts predict the coronavirus will stick around. So, the world will need vaccines and/or boosters to handle the virus as the situation moves from pandemic to endemic.
Today's vaccines aren't perfect. But leaders Moderna and Pfizer are already well on the way to reshaping them to knock out the coronavirus of tomorrow. And that's great news for investors in these vaccine stocks.
