For Moderna, Inventing The Jab Was The Easy Part...

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by Tyler Durden
Monday, Nov 08, 2021 - 08:47 PM

Moderna's stock crashed late last week as it was hit by disappointing vaccine sales and Pfizer's 'miracle' COVID pill news. Wall Street analysts panicked about a handful of factors, but while Moderna and its rivals managed to complete their groundbreaking vaccines in ten months (with government help, of course), inventing the vaccines actually wasn't the hardest part of the process.

Mass-producing enough jabs to innoculate the entire world (or, at least, the entire developed world) is a task of almost herculean proportions. And while Moderna rivals like Pfizer have factories already in place to produce various products already being sold by the pharma giant, Moderna and other rivals had to ramp up facilities on multiple continents and distributing the vaccine to countries around the world in the middle of a devastating pandemic.

But when Moderna revealed during its Q3 earnings that its FY2021 production target would be between 700MM and 800MM jabs, analysts - and by extension, investors - were none too pleased. It was this subpar sales guidance that, combined with the Pfizer news, that sent shares of the pharma contender (which had been relentlessly pumped on CNBC by investor Stephen Weiss) sliding.

That added to pressure on the stock that has been building for months. Since Aug. 9, Moderna has dropped 51%, wiping out almost $100 billion in market value.

Here's an example of Moderna's problem: the company says it has already produced enough bulk substance to create more than 900MM doses of its vaccine, which consists of messenger RNA coated in lipid nanoparticles.

However, Moderna apparently won’t be able to get all those doses into vials, where they need to be, before next year.

Speaking on a conference call with analysts, Moderna CEO Stephane Bancel tried to make the best of it, comparing the production delays to "teething problems" as Moderna attempts to expand from a "boutique" biotech firm in Cambridge, Mass. to a global vaccine distribution powerhouse.

To be sure, Moderna isn’t the first vaccine maker to run into production delay, which is why Moderna led shares of several vax-makers lower. J&J, AstraZeneca and Novavax lower after reporting Moderna's earnings. It seems like all vax makers, and their partners, have all hit production snags that have slowed rollouts of their vaccines at some point during the past year.

Novavax CEO Stanley Erck said in an interview Friday that his company had no factories of its own at the outset of the pandemic, and had to create a network of internal and external production facilities from scratch. Among other problems it encountered were shortages of things like filters and 4,000-liter bags needed for producing its vaccine in insect cells.

"Seemingly simple things ran out of global supply," Erck said. But now the problems are mostly solved and the company and its partners are able to produce 200MM doses a month by early next year.

Moderna has relied almost entirely on contract manufacturers to fill vials with its vaccine a process known as fill and finish.

As for the advantage enjoyed by Pfizer and BioNTech, long-term relationships with an extensive base of suppliers, as well as numerous supply-chain experts helping to plan for every possible contingency during production, were major assets for Pfizer and BioNTech, said Julie Swann, a health systems expert at North Carolina State University, which gave Pfizer a massive advantage over its rivals.

For example: Prior to the pandemic, Pfizer already had capacity to make 200MM vaccine doses a year, with 12 biologics and vaccine-manufacturing facilities in 10 countries. Moderna’s lone factory was a plant in Norwood, Mass., which had never produced anything at large scale before COVID.

The problems of scale are only going to get worse for Moderna, especially as it starts to ship more jabs abroad. Now, Moderna and its contractors have become major exporters of a heavily regulated drug. Each new market has its own set of rules that must be met and understood. Pfizer's global scale will make this somewhat easier.

But as one analyst said: “It’s not surprising that if someone had a problem, it would be [Moderna]," said Swann.