Moderna, a front runner in the Covid-19 vaccine race, saw its stock drop by about 30 per cent over the last month, dropping from nearly $95 per share on July 17 to about $67 at the moment. What drives the sell-off? It’s because of two factors.
First, it looks like vaccines Covid-19 won't be nearly as lucrative as initially estimated by investors. Moderna will be pricing its vaccine at an average of $15 per dose or about $30 for a two-dose course per a recent US government deal. While prices for smaller-volume purchases are likely to be higher, the general trend in vaccine pricing has not been too encouraging for investors. Various vaccine courses have been priced from $20 to $42 per person in the US based on announcements so far. It's unlikely that Moderna's Covid-19 vaccine will be a major money-maker given the high development costs (which were partly funded by the government). We estimate that Moderna's Covid-19 vaccine will add less than $5 per annum to Moderna's EPS in 2021 and 2022
Second, there is also mounting competition for a vaccine. Although Moderna had an early lead in the clinical timeline, starting human trials ahead of others, the company is now one of seven players conducting phase 3 trials, which will test a vaccine's efficacy on a large scale. Other noteworthy players with Phase 3 candidates include Oxford-AstraZeneca and Pfizer-BioNTech. [1] Phase 2 trials also feature around 15 candidates. A larger number of successful candidates could reduce Moderna's vaccine volume potential.
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