What happened

Shares of Moderna (MRNA -1.11%) are sliding 5.9% lower as of 11:49 a.m. EDT on Monday. This drop appears to be a continuation of the sharp decline that began last week after Merck (MRK -0.94%) and Ridgeback Biotherapeutics announced positive results from a late-stage study of COVID-19 pill molnupiravir.

So what

Other vaccine stocks also are continuing to fall in response to Merck's good news. However, this appears to be an overreaction. The availability of a safe and effective oral therapy for COVID-19 isn't likely to cause the U.S. or other countries to change their focus on vaccinations.

A person with hands on hip looking at a screen showing coronavirus with a city in the background.

Image source: Getty Images.

In its second-quarter update in August, Moderna reported purchase agreements for its COVID-19 vaccine of roughly $12 billion for delivery in 2022. In addition, those agreements included options for another $8 billion.

Since then, the company has made another supply agreement with Canada to provide 20 million doses per year in 2022 and 2023. Canada also has options to buy 15 million more doses per year plus up to 35 million doses in 2024. Moderna recently inked a deal with Peru as well to supply 20 million doses next year.  

Merck's positive results probably won't change anything with Moderna's vaccine sales over the next couple of years. However, it's appropriate that investors are taking a hard look at the stock's valuation in light of the uncertainty related to ongoing COVID-19 vaccine sales after the pandemic ends.

Now what

The next big thing to watch with Moderna is the upcoming U.S. Food and Drug Administration and Centers for Disease Control & Prevention review of boosters for the company's COVID-19 vaccine. Data should also be released in the near future about the use of Moderna's vaccine in mix-and-match studies with other vaccines.