Aside from making coronavirus vaccines, Moderna (MRNA -2.45%), Pfizer (PFE -3.85%), and Novavax (NVAX -4.82%) have one big thing in common; whatever happens in June will be critical for their share prices. But June isn't when the trio will be reporting earnings or when they're scheduled to be dropping big announcements; rather, it's when regulators at the U.S. Food and Drug Administration (FDA) are slated to weigh in on their jabs.
If these companies get a green light, it'll mean more revenue in the near future. If regulators rebuff them, it'll be devastating for their shareholders. Let's look at exactly what's on the docket next month so that you'll know whether it might make sense to prepare to make a fresh purchase -- or perhaps a near-term sale to avoid the considerable risk exposure.
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Moderna and Pfizer angle for pediatric approvals
For Pfizer and Moderna, the looming issue in June is whether regulators will approve their coronavirus jabs to be used in children under age 5. The dates for investors to watch closely are June 8, June 21, and June 22, which is when regulators will be discussing and ultimately ruling on the safety and efficacy of the jabs. Though the FDA had initially floated the idea of considering the data packages from both companies in parallel for the sake of comparison, that won't be happening, and each will be evaluated on its own.
If everything goes as investors hope, the two companies will get their vaccines cleared for sale and proceed to compete in the pediatric coronavirus shot market in the U.S. as they have for adults and adolescents. Considering that the age group hasn't had any access to vaccines produced by any manufacturer up to this point, it's safe to say that there's a fair amount of pent-up demand for vaccination from concerned parents. The catch is that in the U.S., the government is responsible for purchasing vaccines rather than consumers.
So Moderna and Pfizer probably wouldn't actually realize any new revenue immediately, as the government has likely already put in its orders for all of the doses to be delivered this year. Nonetheless, assuming that advance purchase agreements for next year will account for the additional demand required to vaccinate the newly eligible demographic, the inflows will make it to the income statement eventually.
If, on the other hand, one of the businesses fails to convince regulators that its shots are safe and effective for children, the market will likely deal its shares a blow, especially if the other company succeeds. Furthermore, the revenue lost to being (likely temporarily) excluded from the pediatric market would be a bigger problem for Moderna than for Pfizer, as Pfizer's base of revenue is extraordinarily diversified in comparison to the biotech's lone product on the market.
After all, nearly all of Moderna's trailing 12-month total of $18.4 billion in revenue comes from sales of its Spikevax, so increasing the size of its addressable market at the margin could yield a couple of billion more, which would be a significant increase proportionally. In contrast, Pfizer sold more than $81.2 billion of its medicines in the same period, and this year it expects to make around $32 billion from its vaccine alone. Adding a few more billion to Pfizer's top line from a pediatric approval of Comirnaty might not even move the needle for shareholders.
Will Novavax have trouble with regulators?
As Moderna and Pfizer race neck-and-neck for their pediatric approvals, Novavax is on track for what might be an even larger event: Its jab's first approval in the U.S. On June 7, the FDA will meet with its advisory committee regarding an Emergency Use Authorization (EUA) for Novavax's candidate. Though its manufacturing issues and delays have left it trailing behind in terms of accessing the U.S. market, Novavax's vaccine is already approved in quite a few countries around the world. And the coronavirus jab market in the U.S. is largely occupied by the likes of the pair discussed earlier.
That means the approval in the U.S. isn't going to have as large of an impact on Novavax's share price as investors might wish, assuming it actually happens. Though management is confident that its candidate will be approved, investors should be a bit cautious. As of mid-April, regulators still hadn't received data about the company's manufacturing process, which has been a major stumbling block and source of trouble with regulatory filings in the past.
Per its latest earnings update on May 9, it has only manufactured 31 million out of the 2 billion doses it is scheduled to deliver this year, meaning that it is behind schedule. With luck, that won't be a factor in the FDA's decision, but if regulators give it a thumbs-down in June, it's hard to see how shareholders will avoid a severe shellacking, even when considering the stock's drop of more than 60% so far this year.
