Moderna makes commercial case for COVID-19 vaccine amid price pressure

The pandemic has given Moderna the chance to validate its mRNA technology and turbocharge its evolution into a commercial-stage company. However, as a clinical-phase biotech in a field largely made up of far larger, well-established, commercial-stage rivals, Moderna is facing novel challenges as it seeks to realize the opportunity.

COVID-19 vaccine developers including AstraZeneca and Johnson & Johnson have vowed to sell their products at cost during the pandemic, leading them to price their prospects as low as a few dollars a dose. Moderna, in contrast, has been clear that it will not sell its vaccine at cost.

The different pricing policies mean Moderna will likely need to persuade vaccine buyers to pay more to source its product, at least until the pandemic is over.

In early, small volume deals, Moderna has charged $32 to $37 a dose. J&J and Pfizer have disclosed deals worth around $10 and $20 a dose, respectively, although the agreements likely covered bigger volumes of vaccines than the Moderna contracts. Moderna expects to charge less in larger deals.

The deals agreed by companies such as J&J and Pfizer led an analyst to ask Moderna CEO Stéphane Bancel whether it will be hard for his company to charge a materially higher price. Bancel sees scope for Moderna to leverage its data to land deals despite being undercut by other companies.

“I think data is an important one, because I do not think all products are equal​,” said Bancel. “Public payers in some countries might be willing or not to pay for different efficacy. The private market might have a very-different inclination​.”

Moderna has already managed to land some deals, albeit on a smaller scale than those secured by some other vaccine developers. As of the end of July, Moderna had received around $400 million in cash customer deposits covering supplies of its COVID-19 vaccine, mRNA-1273.

With Moderna planning to scale up to make 500 million doses a year, and aspiring to hit a 1 billion run rate, there is scope for the mRNA specialist to make considerably more from the vaccine. At $32 a dose, Moderna’s manufacturing base case would generate annual mRNA-1273 sales of $16 billion.

Further down the line, Moderna may be freed from the price pressure it currently faces. AstraZeneca is supplying its vaccine at cost during the pandemic. If the SARS-CoV-2 coronavirus becomes endemic and necessitates an ongoing program of repeat vaccinations to ensure herd immunity, there may be continued demand for mRNA-1273 in a more normal pricing environment.

Bancel said he will “look to price in line with other innovative commercial vaccines​” if mRNA-1273 is used when the coronavirus is endemic. Two doses of Shingrix, the GlaxoSmithKline shingles vaccine that won approval in the US in 2017, costs around $280.

Moderna is already making the case that mRNA-1273 is worth a similar amount, notably by sharing a Quadrant Health Economics analysis that assigned a value of $300 a course to a COVID-19 vaccine. In high-risk adults at time of increased viral transmission, the analysis valued a course at $725.