The rally in shares in Moderna Inc. jumped through news late Tuesday that the U.S. government ordered 100 million doses of its COVID-19 vaccine candidate on Wednesday as analysts waited for what the order meant for prices.
Modern MRNA,
is widely regarded as a front-runner in the race to develop a COVID-19 vaccine, as it currently registers patients for a Phase 3 trial, after a Phase 1 trial produced neutralizing antibodies – thought an important benchmark for an effective coronavirus vaccine – in all 45 participants.
The government has agreed to pay the biotech $ 1.525 billion including incentive payments, and has an option to purchase an additional 400 million doses of the vaccine. That brings the total commitment of the government to Moderna to $ 2.48 billion, or $ 15.50 a dose.
Analysts at SVB Leerink said that “material below” is their model of $ 22 per dose, and below the implied price in the delivery agreement that Pfizer Inc. PFE,
and its partner BioNTech SE BNTX,
have with the government of $ 19.50 a dose.
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Because the Moderna Prize includes incentive payments for current delivery, part of that prize prize would be jeopardized if Moderna failed to secure emergency use authorization (EUA) from biological license application approvals by January 31, 2021, wrote the Leerink analysts in a letter to clients.
Nevertheless, “we see EUA through this time horizon as likely, given the flexibility of US and global regulators regarding SARS-CoV-2 vaccine candidates, although it would introduce an element of downside risk. Modern delays should be seen in conducting clinical trials as disappointing interim data from their ongoing Phase 3 study later this year, ”the note said.
The lower price point and risk-sharing with the U.S. government are more evidence of building competitive pressure in the COVID-19 vaccine market, which is driving price erosion, she wrote. It is also consistent with Moderna’s comments that larger government contracts would be materially lower priced than the $ 32-37 / dose disclosed for initial supply agreements at smaller volumes.
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While the decision to cut discounts is rational in the competitive landscape – and appropriately given the amount of government funding that goes to fax development – “we continue to see more downside than upside risks to our base assumptions for the stock,” the analysts wrote.
Leerink expected the stock market to behave as it did, initially rising, despite the negative implications for pricing. The company rates the stock as a market performer and has a stock price target of $ 58 to $ 60, which is below the current price of about $ 69.
The stock was up just 0.3%, but has soared more than 250% in the year to date, bringing its market capitalization ballooning to above $ 27 billion from about $ 6.90 billion at the end of January, before the pandemic broke out all over the world. The stock has outperformed the iShares Nasdaq Biotech ETF IBB,
that is up 11% year on year, and the S&P 500 SPX,
which has 4.7% profit.
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Moderna, which was founded in 2010, is considered a preclinical company because it does not market approved medical products. “As we pivot to a commercial stage, we recognize the need for responsible pricing in the face of the pandemic,” said CEO Stephane Bancel in an early August update on the Phase 3 trial of the vaccine company.
Moderna expects to complete registration for the pivotal Phase 3 trial in September.
Morgan Stanley analyst Matthew Harrison said the price per dose of the Moderna vaccine would rise to about $ 25 once BARDA funding is included. BARDA, as the Biomedical Advanced Authority and Development Authority, is a division of the Department of Health and Human Services, and the National Institute of Allergy and Infectious Diseases, as NIAID, a division of the National Institutions of Health.
BARDA provided Moderna with $ 483 million in April to support its fax development program and followed up with another $ 472 million in July. Morgan Stanley rates the stock as overweight with a price target of $ 90 that is 30% above its current level.
Chardan Global Insights said the investment leaves Moderna’s fax “at the top of the range of public deals, and above our expectations of” mid-high teenagers “prices.
“We are now waiting for visibility on what agreements with other countries may look like, but see the news as a positive signal: the potential entry of Moderna into a commercial space often dominated by big-cap,” analysts led by Geulah Livshits wrote in a note.
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