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Moderna's (MRNA) Stock Falls on Omicron Variant Concerns

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Shares of Moderna (MRNA - Free Report) declined 4.4% on Tuesday after soaring nearly 35% in the previous two trading sessions due to uncertainty about the risks of the new, highly transmissible COVID-19 variant, Omicron. The decline in shares continued during after-market hours wherein the stock was down 1.4%.

Last week, Moderna came up with strategies to fight against the Omicron variant, which has several mutations in the spike protein. The company had stated that it will develop an Omicron-specific booster candidate, mRNA-1273.529. Management believed that it will be able to replicate their previous progress with the Beta- or the Delta-specific booster candidates and will be able to advance mRNA-1273.529 to clinical testing in two to three months. Moderna also plans to test its authorized booster candidate and two clinical-stage multi-valent candidates, by testing sera from participants, to see if the doses provide neutralizing protection against Omicron.

However, per a Financial Times article published on Nov 30, Moderna’s chief executive officer (“CEO”) Stéphane Bancel is worried that several mutations in the spike protein may reduce the effectiveness of its authorized COVID-19 vaccine or booster dose against the new mutant. He expects that there will be a significant drop in the effectiveness of available COVID-19 vaccines in protecting infections by the new variant. In the same article, Moderna CEO stated that it will take several months before an Omicron-specific booster can be made available in large quantities to vaccinate a large number of citizens.

Please note that the existing advance purchase agreements for Moderna’s COVID-19 vaccine with different countries include delivery of its authorized vaccine and booster doses along with the supply of any new booster candidate following an authorization/approval.

This year so far, Moderna’s shares have gained 237.3% against a decrease of 15.2% for the industry.

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The potential high risk related to the Omicron prompted the World Health Organization to add it to its “Variant of Concern” list on Nov 26, two days after starting monitoring it. Vaccine-makers and other related-organizations are still gathering data on the new variant that was first reported in early November. These data will help specify the actual risk of the variant going forward. We expect volatility in related company stocks to continue until then.

Although Moderna’s CEO sounds concerned about the potential risks related to the Omicron-variant, Pfizer (PFE - Free Report) and its COVID-19 vaccine partner, BioNTech (BNTX - Free Report) remain confident with its COVID-19 vaccine and expect three doses of it to be enough to provide protection against the new variant, per the aforementioned Financial Times article. The U.S. President also shares similar views that the existing vaccine will continue to provide protection against severe COVID-19 infections.

Meanwhile, other than Moderna J&J (JNJ - Free Report) has announced plans to develop their respective Omicron-specific booster candidates. Pfizer and BioNTech are also reportedly planning to develop an Omicron-specific booster candidate, if required.

Pfizer and BioNTech believe that theywill be able to deliver an Omicron-specific booster within the next 100 days. Earlier this week, J&J announced that it is testing the effectiveness of its single-dose COVID-19 vaccine against the variant. J&J is also pursuing a new vaccine against Omicron, which will be pushed to clinical development, rapidly, if needed.

Zacks Rank

Moderna currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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