Moderna (MRNA 1.50%) investors and potential investors have one big worry these days: that the company's billion-dollar coronavirus vaccine sales may drop. About 67% of the U.S. population now is fully vaccinated. So the concern is major demand for the company's vaccine may be over.
As a result, demand for Moderna stock has declined. The shares have slipped more than 35% so far this year. But there's a sign investors' concerns may be overdone. And that's a new billion-dollar vaccine order from the United States. Could this news change everything for Moderna? Let's find out.
66 million booster doses
First, some details about the order. The U.S. signed up for an initial 66 million doses. This isn't for the original coronavirus vaccine. Instead, it's for Moderna's new booster candidate targeting the original coronavirus and the omicron BA.4 and BA.5 strain.
The U.S. will pay Moderna as much as $1.74 billion for the delivery of those doses this year. The deal also includes options to purchase as many as 234 million more doses.
NASDAQ: MRNA
Key Data Points
When could delivery start? Moderna has said its candidate will be ready by the end of August -- in time for the fall vaccination campaign. The U.S. Food and Drug Administration (FDA) must authorize the candidate, though, before Moderna can actually start fulfilling the U.S. government's order.
This will be a point to watch in the coming weeks. There's reason to be optimistic about an authorization. Moderna has reported positive data from clinical trials of the booster candidate. And an FDA advisory committee in June voted in favor of including an omicron strain in vaccines for the fall.
Now, here's why this is so important. This is a clear signal Moderna's vaccine orders aren't about to dry up. Instead, we're moving into the next stage of coronavirus vaccine sales. And that's the booster market.
An order for rival Pfizer
Moderna isn't alone here. The U.S. government in June ordered more of Pfizer's coronavirus vaccine -- and the deal included potential omicron boosters. This is another positive sign because it shows a big investment in the vaccine market overall; the government still sees the value of investing in coronavirus shots for the population. We may use the quote "a rising tide lifts all boats" to describe the eventual impact on vaccine makers.
As we've seen over the past two years, coronavirus cases have climbed in the fall and winter seasons. It's possible that may happen again this year.
Of course, demand may drop to a certain degree now that so many people have received a primary vaccination series. Even some vaccinated individuals may not opt for annual boosters. But if only the at-risk population goes for boosters, that still represents a significant market. Moderna has said this population includes 1.7 billion people worldwide.
It's also important to note the price of Moderna's vaccine has gone up from the initial deal with the U.S. government. At that time back in 2020, the U.S. paid just over $15 per dose.
The new order prices each dose at a little more than $26. And once Moderna eventually shifts to a private market -- selling directly to pharmacies -- the price could go up to $60 a dose, Moderna has said. That means the price per dose may compensate for at least some potential declines in demand.
What does this mean for investors?
Moderna may be heading for a new wave of growth in the coming months. And this trend could repeat itself each fall in the years to come. This year and the next may help us determine exactly how much revenue this represents for the company. But as mentioned earlier, even if demand declines somewhat, revenue still could remain at high levels.
Despite this recent news, Moderna's shares may not soar as they did in the past. Investors are no longer flocking to vaccine stocks. So the news might not change everything for Moderna overnight. But over time, it could. If Moderna successfully fulfills this new government order and maintains vaccine or booster sales over time, investors may come back to this innovative biotech stock.
Moderna's share price gains probably aren't over. They just may happen at a slower pace. And that's perfectly fine for long-term investors.
