Moderna (MRNA) - Get Report tumbled Tuesday after an analyst at SVB Leerink cut his rating on the biotech company to underperform from market perform and slashed his price target to $41 from $58 over concerns about fierce competition for a coronavirus vaccine.
Shares of the Cambridge, Mass.-based company were down 11.2% to $55.74.
"As we are in the midst of a global buildout of capacity analogous to a Manhattan project for vaccines, we see excess capacity, high competitive intensity, and limited pricing power as likely long-term structural features of vaccine end-markets, presenting secular challenges to a sub-scale player such as MRNA," Leerink analyst Mani Foroohar said in a note to clients.
Foroohar said MRNA-1273, the company’s vaccine candidate, "represents the bulk of the company’s revenue opportunity and our valuation, making it the key driver of share performance."
The analyst said he ascribes a high probability of approval to MRNA-1273, given the permissive regulatory environment surrounding vaccine candidates, and expects meaningful revenues, with a substantial early bolus of patients, but he doesn't see a clear path to above-consensus sales in the first quarters of launch.
"Elsewhere in the pipeline, we see little near-term news flow to drive share outperformance for a company of MRNA’s market cap," the analyst said. "Consequently, we don’t see a clear and probable catalyst to reset shares higher, current valuation and expectations offer an unattractive risk/reward to investors following torrid stock performance YTD."
While Moderna was the first COVID-19 program to enter Phase 3, Foroohar said the lead the company built into the third quarter evaporated over the last month with Pfizer (PFE) - Get Report and BioNTech (BNTX) - Get Report and AstraZeneca (AZN) - Get Report entering pivotal Phase 3 trials.
BioNTech said on Monday it widened an ongoing pivotal global study of its COVID-19 vaccine candidate to include testing in its home country of Germany, Reuters reported.
The FDA will be convening an advisory committee on Oct. 22 for a general discussion of COVID-19 vaccine related topics, including potential licensure of vaccines in general terms, Foroohar said.
Last week, Moderna announced a slight deceleration of enrollment in its clinical trial of the vaccine to ensure Moderna has enough minorities, who are most at risk of the disease.