Moderna (MRNA +2.57%) recently gave an update on its pipeline and future goals, and the biotech had a lot to say. Today, everyone knows the company for its blockbuster COVID-19 vaccine -- it's only product. But in the coming five years, Moderna aims to launch as many as 15 new products across indication areas.
This doesn't mean Moderna is forgetting about the coronavirus vaccine though. In fact, this market giant announced something that could impact smaller rival Novavax (NVAX 1.61%). Both companies are vying for a share of the post-pandemic vaccine market, and both of them are working on a type of product that could wow the crowd. Let's take a look at the latest message from Moderna and whether it means bad news for Novavax.
Early leaders in the vaccine race
First, a bit of background. Novavax and Moderna both were early leaders in coronavirus vaccine development, but Novavax fell behind, and its product entered the market a year later than Moderna's. As a result, Novavax missed out on the biggest revenue opportunity.
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Today, both companies are preparing for the coronavirus market of the future. And this leads me to Moderna's recent comment, which had to do with its combined-vaccine candidates. It's working on four, each meant to cover either coronavirus and flu or flu and respiratory syncytial virus (RSV) -- or all three. Novavax is working on a combination candidate to address coronavirus and flu.
In its update, Moderna said it aims to ready a combined candidate as early as 2025. The company's most advanced one -- a flu/covid shot -- is in phase 1/2 trials, about the same stage of development as Novavax's. Novavax has generated positive trial data, but the company hasn't yet said when the shot may be ready.
Of course, if we look at the stage of development of each potential product, it's very possible both will enter the market around the same time. And in this case, Moderna and Novavax could win if demand for the product is strong.
Using flu shots as a guide
Though it's impossible to predict demand with complete accuracy, we can look at clues that may point us in the right direction. We may use the flu vaccine as a guide, and here, about half of the U.S. population opts for an annual shot. It's likely this population would go for a vaccine that not only protects against flu but also against the coronavirus.
Patients would like it because it means just one jab and broad coverage against infection. And healthcare providers would like it because one shot is quicker, resulting in more efficiency for them. So, it's fair to say a combined vaccine could be a more popular product than vaccines targeting just one virus.
NASDAQ: NVAX
Key Data Points
Now, let's get back to our question: Is Moderna's progress bad news for Novavax?
Novavax says it plans on making progressive investments in its combined candidate to prepare it for late-stage development and is even considering the possibility of a partnership. At the same time, though, Novavax is in the middle of a restructuring program, cutting its workforce by 25% and making other efforts to reduce costs by as much as half by next year. The company aims to bring its cost structure in line with the current vaccine's revenue opportunity.
So, right now is a complicated time for Novavax, and that could add some bumps to the path ahead for its combined-vaccine candidate, regardless of clinical-trial performance. The company may not be able to bring its candidate to the next step as quickly as Moderna, and this might delay a potential product launch.
Of course, Moderna, too, could fall behind in its timeline. But so far, its track record has been good when it comes to meeting product-development goals.
Something to watch
All of this means Moderna's forecast for combined-candidate commercialization may not be bad news for Novavax just yet, but it's something investors should keep an eye on. If Novavax falls behind on the path to commercialization, we could see a repeat performance of its original coronavirus vaccine launch -- and another missed opportunity.
What does this mean for you as an investor right now? If you're a cautious investor, it's still too early to buy shares of Novavax. You may want to wait for more progress in the cost-cutting plan and clarity on its ability to fund the combined-vaccine program all the way to the finish line.
If you're an aggressive investor, though, considering Novavax's solid science, you may see the stock's declines as a buying opportunity -- and pick up a few shares. Novavax still has a chance of making it big in the long-term coronavirus vaccine market, and that could score a significant win for investors down the road.
