What happened

Shares of Moderna (MRNA -2.53%) fell 7.9% on Wednesday after health regulators authorized Novavax's (NVAX 3.97%) COVID-19 vaccine, Adjuvanted, as a booster for adults. 

So what

The Centers for Disease Control and Prevention (CDC) will allow Novavax's vaccine to be used as a first booster shot for people aged 18 and older who would rather take it than initial boosters offered by Moderna and Pfizer (PFE -2.09%). Novavax's vaccine is protein-based, while Moderna's and Pfizer's vaccines were developed with mRNA technology.

"According to CDC data, almost 50% of adults who received their primary series have yet to receive their first booster dose," Novavax CEO Stanley Erck said in a press release. "Offering another vaccine choice may help increase COVID-19 booster vaccination rates for these adults."

More choice means more competition for booster-related sales and profits. Shares of Pfizer and its partner, BioNTech, in turn, declined on Wednesday along with those of Moderna.

Now what

Moderna's COVID-related revenue has already come under pressure from lower-than-expected demand for booster shots. Even Moderna's new bivalent shot that's designed to be more effective against the fast-spreading and currently dominant omicron variant has met with lower uptake than many analysts and investors anticipated.

Novavax's entrance into the market could further dent Moderna's sales, which are predicted to fall sharply in 2023 with vaccine sales set to decline. 

Moderna is hoping to offset this downturn in COVID vaccine sales by using its mRNA technology to develop new drugs targeted at other diseases, such as influenza, HIV, and cancer. The biotech's success in this regard will largely determine the long-term performance of its stock.