Investors could easily conclude that the worst is over for Moderna (MRNA 1.04%). The stock plunged more than 70% from its peak last summer. However, since March 7, 2020, Moderna's shares have rebounded by over 35%.
Renewed fears about COVID-19 have caused many to rethink their view of Moderna's prospects. However, any consideration of buying the vaccine stock needs to look beyond the near-term COVID-19 surges in China and Europe. And looking farther down the road, Moderna could have a big problem on its hands.
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Good news, bad news
Moderna held its third annual Vaccines Day last Thursday. The company had some good news to discuss. On Wednesday, Moderna reported that the phase 2/3 study evaluating COVID-19 vaccine Spikevax in children ages 6 months to 6 years met its primary endpoint. This was understandably a key part of the company's presentation at its Vaccines Day.
In addition, Moderna announced interim results from a phase 2 study of flu vaccine candidate mRNA-1010. This study compared three dosing levels of the company's experimental messenger RNA (mRNA) vaccine against Afluria, a leading flu vaccine marketed by CSL.
Again, there was some good news. Moderna reported that mRNA-1010 produced similar antibody levels as Afluria for influenza B at day 29 of the study. The antibody levels produced by the mRNA vaccine at day 29 were higher than those of Afluria for influenza A.
But there was bad news as well. Roughly twice as many individuals receiving mRNA-1010 experienced side effects as did those taking Afluria. This glaring discrepancy was seen across all age groups and for both local and systemic adverse reactions.
Why it's worrisome
Let's assume that mRNA-1010 advances into phase 3 testing and ultimately wins regulatory approvals. Would physicians prescribe a flu vaccine that causes twice as many side effects as a proven existing vaccine does? Would patients want to get the new vaccine?
Leerink analysts don't think so, calling the safety profile of mRNA-1010 a "non-starter." The analysts even believe that it would be a "poor use of resources" for Moderna to continue developing the experimental flu vaccine.
The potential implications for Moderna are bigger than just potentially missing out on the lucrative flu vaccine market. Moderna is also developing a combination COVID-19/flu vaccine and a combination COVID-19/flu/respiratory syncytial virus vaccine. It's quite possible that the future of the COVID-19 vaccine market is in such combinations.
Novavax (NVAX 7.85%) is ahead of the pack in developing a combo COVID-19/flu vaccine. The company expects to report results from the phase 1 portion of a phase 1/2 study of its combo vaccine in April.
The longer-term worry for Modern is that its combo vaccines have similar side effect issues as mRNA-1010 has experienced. If Novavax and/or other rivals successfully develop effective combo vaccines with significantly fewer side effects, Moderna's current lead position in the COVID-19 vaccine market could be threatened.
The big picture
It's way too soon to predict a dismal future for Moderna. Novavax and other competitors could stumble with their efforts to develop combo vaccines. Moderna might still achieve success with mRNA1010 and its own combination vaccines.
More importantly, Moderna has plenty of other viruses to target. The company noted in its Vaccines Day presentation that there are more than 225 viruses that infect humans but only around 25 of those viruses currently have vaccines.
The potential for Moderna's mRNA platform also extends beyond antiviral vaccines. Moderna's pipeline includes cancer vaccines and therapies as well as programs targeting other diseases.
Moderna really could have a big problem on its hands. But investors also have a bigger picture to consider as well.
