A Blog by Jonathan Low

 

Aug 19, 2020

The Reason A Chinese Vaccine Is Causing Moderna's Shares To Fall

First mover advantage is going to be important for Covid vaccines. The Chinese effort is considered far more credible than the recently announced Russian candidate, widely derided as 'vaporware.'

If a Chinese vaccine is granted regulatory approval and proves to be effective, even at a higher price per dose than Moderna and other western products, it could become the medical and financial standard for all subsequent developments. JL

Eric Volkman reports in the Motley Fool:

Chinese pharmaceutical company, Sinopharm, on Tuesday set a price range for its two COVID-19 vaccines. Moderna. considered to be the leader of coronavirus stocks at the moment, fell by 3.9%. Like Sinopharm, Moderna is in late-stage testing of a vaccine. The Chinese company's announcement of a price range could imply it's candidates will soon be ready for regulatory review. The price is above Moderna's range of $32 to $37 per dose, and it's higher than other pricing targets. But first-mover advantage is going to be significant with coronavirus/COVID-19 vaccines, and Moderna could face a serious challenge in trying to compete as a runner-up.
Moderna (NASDAQ:MRNA), considered by some to be the leader of the pack of coronavirus stocks at the moment, fell by 3.9% Tuesday on what was generally an up day for the broader stock market.
The most likely reason for this is the pronouncement of a Chinese pharmaceutical company, Sinopharm, which on Tuesday set a price range for its two COVID-19 vaccine candidates.

So what

Like Sinopharm, Moderna is in late-stage testing of a vaccine candidate, the quite promising mRNA-1273. Moderna investors might have been spooked by the Chinese company's announcement of a price range, as it could imply that one or both of Sinopharm's candidates will soon be ready for regulatory review.
Probably almost immediately after that -- given the vast need for a vaccine -- it would be made available for public consumption.
Sinopharm's chairman, Liu Jingzhen, told China's Guangming Daily that his company's vaccines would cost less than the equivalent $145 for two doses, if either or both receive regulatory approval. Liu didn't specify whether he meant the list price or out-of-pocket-cost.

Now what

That price is well above Moderna's stated "budget" range for mRNA-1273 of $32 to $37 per dose, and it's also higher than other Western developers' pricing targets. But first-mover advantage is going to be significant with coronavirus/COVID-19 vaccines, and a relatively small biotech like Moderna could face a serious challenge in trying to compete as a runner-up.

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