Moderna's Flu Vaccine Struggles: Is Novavax Stock Now a Better Buy?

Moderna (MRNA 0.89%) knows that it needs new products. And the company recognizes the importance of those new products more than ever with sales for the company's COVID-19 vaccine set to decline significantly this year.

The good news is that Moderna has three vaccine candidates in late-stage testing. The bad news is that one of them isn't faring as well as hoped. Moderna reported more disappointing results for its experimental flu vaccine last week. 

But it's often true in the biotech world that one company's pain is another company's gain. With Moderna's ongoing flu vaccine struggles, is Novavax (NVAX -0.95%) stock now a better buy?

B-strain pain

In February 2023, Moderna announced interim results from a late-stage study of mRNA-1010 conducted in the southern hemisphere. Those interim results showed that the experimental flu vaccine didn't meet the non-inferiority threshold for the influenza B/Victoria- and B/Yamagata-lineage strains.

On April 11, Moderna provided information about the late-stage study of mRNA-1010 conducted in the northern hemisphere. Unfortunately, the story didn't change very much. Moderna said that an interim analysis found that the vaccine demonstrated superiority against both influenza A strains but again didn't meet the statistical threshold of non-inferiority against the two influenza B strains. 

Moderna said that it has already developed an update to mRNA-100 that it thinks will improve the vaccine's immunogenicity against influenza B strains. The company plans to kick off a phase 3 trial featuring this updated version this month.

In Moderna's fourth-quarter conference call in February, the company's president, Stephen Hoge, stated that it was possible that the company could seek U.S. regulatory approval of mRNA-1010 even if it didn't achieve non-inferiority against influenza B strains. Influenza A is more problematic in the U.S., leading to more than 95% of hospitalizations in the last flu season.

However, Hoge acknowledged that any decision to move forward with a regulatory filing would hinge on conversations with the U.S. Food and Drug Administration (FDA). Meanwhile, Moderna has four other flu vaccine candidates in clinical development.

Great news for Novavax

If you had any question as to whether or not Moderna's flu vaccine struggles are great news for Novavax, just look at Novavax's share price over the last month. The vaccine stock is up more than 50% in recent weeks after getting off to a dismal start in 2023.

There's a simple reason behind Novavax's newfound strength: The company's lead in the race to develop a combination COVID-19/flu vaccine appears to be widening. Novavax reported positive results for its own flu vaccine way back in early 2020. The vaccine, called NanoFlu, outperformed Sanofi's already-approved flu vaccine FluZone Quadrivalent. 

Novavax has also already made significant progress with the development of its combo COVID-19/flu vaccine. In December 2022, the company announced that it had begun a phase 2 study of its COVID-19/influenza combination (CIC) vaccine in adults ages 50 to 80. This study will also include arms evaluating the flu vaccine by itself. Novavax expects to announce topline results from the phase 2 study by mid-2023.

Pfizer and BioNTech are also in the race. However, the two partners lag behind Novavax. They initiated a phase 1 study in November 2022 evaluating a combination COVID-19/flu vaccine. Pfizer has told investors that it doesn't expect to launch a combo vaccine until 2025. 

Buy Novavax stock?

Does all of this make Novavax stock a good pick to buy right now? Not necessarily. Remember that Novavax has several hurdles of its own to jump before it can be in a position to launch a combo vaccine. The company's track record with advancing pipeline programs without delays hasn't been great.

Also, even if Novavax sails on to win FDA approval for its combo COVID-19/flu program, there's no guarantee that the company will be able to dominate the market for very long. Even though Pfizer/BioNTech and Moderna are behind Novavax, they could be formidable rivals when they do make it to market. 

But do Moderna's flu vaccine challenges make Novavax stock a better pick than it was earlier this year? It's hard to argue otherwise. Novavax's position in the COVID-19/flu combo race has been strengthened as a result of Moderna's issues. If Novavax can sustain this lead, win FDA approval, and gain a commanding market share, it's possible that the stock could have a lot of room to run.