Moderna's Next-Gen COVID-19 Vaccine Gains FDA Approval Amid Evolving Vaccination Landscape

Moderna has secured FDA approval for its next-generation COVID-19 vaccine, mNEXSPIKE, positioning the biotech company for the 2025-2026 respiratory virus season. This development comes amidst shifting attitudes towards mRNA technology and COVID-19 vaccination policies, creating a complex landscape for vaccine manufacturers and investors alike.

FDA Approval and Market Implications

The FDA's approval of mNEXSPIKE covers adults aged 65 and older, as well as individuals aged 12 to 64 with at least one underlying risk factor. This aligns with the agency's new approval framework for COVID-19 vaccines announced weeks prior. Jefferies analysts described the approval as an "incremental positive" for Moderna, noting that it was "largely expected" despite initial concerns about the FDA's stance on mRNA and COVID-19 vaccines.

The on-time approval has been interpreted as a positive signal for other products awaiting authorization, including Moderna's respiratory syncytial virus (RSV) vaccine and drugs from companies such as Denali Therapeutics, Gilead Sciences, Regenxbio, and Replimune. However, Jefferies analysts maintain their prediction of falling vaccination rates due to "vaccine fatigue and lower public interest in general."

Technical Advancements and Market Strategy

mNEXSPIKE represents a significant technical advancement over its predecessor, Spikevax. The new vaccine offers protection at one-fifth of the Spikevax dose and boasts improved storage capabilities. It can be stored between 2°C to 8°C for up to 90 days, compared to Spikevax's 60-day limit, and maintains stability at 8°C to 25°C for twice as long.

These enhancements stem from a redesigned approach to encoding viral proteins. While Spikevax encodes the full-length spike protein, mNEXSPIKE focuses on the receptor binding and N-terminal domains. This shorter mRNA length is associated with increased stability, potentially offering logistical advantages in vaccine distribution and storage.

Moderna plans to sell mNEXSPIKE alongside Spikevax in the upcoming respiratory virus season, leveraging its diversified product portfolio to address varying market needs.

Evolving Vaccination Policies and Market Uncertainty

Recent announcements regarding COVID-19 vaccination policies have introduced uncertainty into the market. HHS Secretary Robert F. Kennedy Jr.'s statement that routine COVID-19 vaccination for healthy children and pregnant women would be removed from CDC guidelines was later clarified, with updated CDC schedules still listing COVID vaccination for healthy children if agreed upon by parents and doctors.

These policy shifts have created what Moderna CEO Stéphane Bancel describes as "confusion" and "skepticism" in the market. However, Bancel remains optimistic, stating at a recent Bernstein event, "If this administration is going to really try to push vaccination for people at high risk, I'm in, because this is potentially a larger market than some of the confusion we have seen in the past."

Despite this optimism, Jefferies analysts note "some risk" to Moderna's $1.5 billion to $2.5 billion sales guidance, reflecting the uncertain impact of evolving vaccination policies on market demand.