Moderna stock toppled Wednesday after the company withdrew its application for a combination Covid and flu vaccine.
The news comes a day after the Food and Drug Administration laid out a new framework for Covid vaccine approvals. The framework requires placebo-controlled studies to win approval for Covid shots in younger adults. In people age 65 and older, simply showing the vaccines generate Covid-blocking antibodies should be sufficient for approval.
Vaccine stocks rallied on the news. The guidance is "less restrictive than feared," William Blair analyst Myles Minter said in a report. Moderna had previously disclosed expectations for an extended timeline for its Covid/flu vaccine, but complete withdrawal of the application for approval "reintroduces some data risk," Leerink Partners analyst Mani Foroohar said.
"It's not entirely clear whether the combo will have to meet the burden of proof established in the flu framework, Covid framework, or eventually be evaluated based on a separate framework," he said in a client note.
Moderna Stock Falls With New Goal Line For Covid Vaccines
After rallying 6.1% on Tuesday, Moderna stock fell 7.8%, closing at 25.80 on the stock market today. Shares briefly retook their 50-day moving average on Tuesday, but closed below that mark and fell further on Wednesday.
Moderna was seeking approval for its combo vaccine in people age 50 and older. The company plans to resubmit its application with data from a final-phase study of its stand-alone flu shot this summer.
But there's a chance the FDA will require a placebo-controlled study for patients ages 50 to 65.
Further, the Covid vaccine framework highlights a mismatch in how the FDA views Covid vaccines vs. flu shots — namely, that the agency doesn't see the benefit of annual Covid vaccination. And, Covid can also be spread during the summer, which is less likely with influenza.
Foroohar has an underperform rating on Moderna stock.
"The combo vaccine remains a key driver of any path to profitability later this decade, and we remain skeptical on long-term commercial viability for the program," he said.
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