Shares of major COVID-19 vaccine makers sank on Thursday. Pfizer (PFE -2.12%) shares were down 2% at 11:06 a.m. ET. Shares of the Pfizer partner, BioNTech (BNTX -6.41%)they fell 6.1%. modern‘s (mRNA -5.80%) shares had fallen 6.8% lower.
But all three companies actually had good news. On Wednesday, an advisory committee to the US Food and Drug Administration (FDA) voted unanimously to recommend Emergency Use Authorization (EUA) for COVID-19 vaccines in young children: ages 6 months to 4 years for the Pfizer-BioNTech vaccine and from 6 months to 5 years for the Moderna vaccine.
So why are vaccine stocks falling? Blame the market in general. All major stock indices fell sharply as investors fretted about the economy.
Most stocks fall when the stock market crashes. However, it can be argued quite well that shares of Pfizer, BioNTech and Moderna should not be affected much in the overall market sell-off. The fortunes of companies don’t really depend on what happens to interest rates, inflation, or the economy in general.
BioNTech and Moderna currently generate all of their revenue from their respective COVID-19 vaccines. Pfizer derives a significant amount of its revenue from the COVID-19 vaccine it developed with BioNTech. The company also has an extensive line of other profitable drugs and vaccines. Sales of these products should not be greatly affected by macroeconomic headwinds.
On the other hand, there is also the argument that the good news of the FDA advisory committee recommendations should not have been much of a catalyst for these actions. Why? So far, the US government has distributed less than 445 million doses of the Pfizer-BioNTech vaccine and less than 282 million doses of the Moderna vaccine. But its existing supply agreements with companies, especially Moderna, include a significantly higher number of doses.
Sure, the US government could choose to order more doses if the FDA grants EUAs for these vaccines in younger children. However, it is also possible that the country will transition to a private market for vaccines.
The FDA does not have to accept the recommendations made by its advisory committee. However, the agency is likely to soon grant EUAs for the Pfizer-BioNTech and Moderna COVID-19 vaccines in young children. The Centers for Disease Control and Prevention must also give the go-ahead, which also seems like a pretty safe bet.
The most important thing to consider for Pfizer, BioNTech and Moderna, however, is the dynamics of the COVID-19 pandemic itself. Companies are struggling to complete testing of versions of their vaccines that target the omicron variant of the coronavirus. The emergence of a new strain of the virus could complicate matters.
There could also be a new rival on the way. Novavax (NVAX -8.66%) awaits a US decision from the FDA for its COVID-19 vaccine. Unlike the Pfizer-BioNTech and Moderna vaccines, the Novavax vaccine is not based on messenger RNA technology. Instead, it uses protein subunits, an approach also used with vaccines other than COVID-19 that have been available for years.
Additionally, the general market turmoil could continue to weigh on the performance of Pfizer, BioNTech and Moderna shares. Although the business models of these companies largely insulate them from issues plaguing other businesses, investors often don’t make those distinctions when they’re worried about losing money.