Investors in COVID-19 vaccine companies who sent stocks soaring in the early months of the pandemic have lost confidence in the prospects of a clear winner. As the market awaits Phase II/Phase III trial data, analysts believe stocks could plunge in the coming weeks. 

The ups and downs of Moderna, one of the frontrunners in the vaccine race, included a peak of $95 in April followed by a correction of 25-35% over the past two months. The company’s share price closed at $69.47 on Friday. Shares of BioNTech, which is jointly developing a vaccine with Pfizer, saw a 6-month peak at $104 per share in the summer before losing 30-40% over the past two months. BioNTech closed at $66.69 on Friday. 

Shares may continue to slide for both companies as analysts caution that forecasts for revenue do not match current stock prices for BioNTech and Moderna. Early results indicate that more than one company will walk off with the profits in a highly competitive market.

“I do think that shares have run up quite a bit just around the hype and enthusiasm around the vaccines,” said Anna Baran, equity analyst for BioNTech at Morningstar. “We saw that from many of the players that either have a vaccine in development or a different kind of therapy in development.”

Baran said that the market may be assuming a larger market share for BioNTech or more longer-term profits than Morningstar’s modeling suggests. 

If BioNTech does emerge as an early approved vaccine manufacturer, profits are likely to be concentrated in the next few years. Baran said that the competitive advantage will be lost over time as other companies will likely manufacture a vaccine that is cheaper to make, easier to store and generally benefits from more scientific knowledge about the coronavirus. 

In a recent interview, FDA Head Stephen Hahn indicated that the agency could approve a COVID-19 vaccine ahead of Phase III results if benefits outweigh the risks. Companies can file ahead of results and be approved for an EUA for certain high-risk populations.

Moderna may be a frontrunner for early authorization based on new data showing strong results for elderly patients, a potential differentiator for the company. 

“Moderna reported new data in elderly patients showing strong neutralizing antibody titer data that was similar to younger patients which is a surprise positive and was not necessarily expected by the Street,” said Michael Yee, equity analyst at Jefferies, Inc. in a note. Yee puts the chances of the vaccine working for Moderna and BioNTech/Pfizer at about 65-70%. 

The new data pointed to a potential rally for the company, just ahead of the official Phase III results. But analyst at SVB Leerink Mani Faroohar downgraded the stock.

“Based on a capacity buildout equivalent to a Manhattan project for vaccines and clarity on competitive pressure in the SARS-CoV-2 vaccine market,” he wrote in a note. “We are downgrading [Moderna] to underperform.”

Moderna also came into recent scrutiny over the summer when company executives were found to have sold off roughly $90 million worth of stock, according to an investigation by NPR.

Individual investors are worried about the downward trend in the r/Investing channel on Reddit. 

“This is what I don’t understand, shouldn’t they be upward trending if they are about to develop a vaccine?” asked a user named manuelgcasas. But new investors in biotech and pharma are learning that the discovery of a new technology and the commercialization of that technology for long-term profits are not as closely tied in this race. 

Overall, the COVID-19 vaccine race has been so far positive for the biotechnology sector, as an American contract is guaranteed with scope for further global expansion, said Yee in a note in early August. The vaccine also serves to de-risk the mRNA technology that is being used and drive significant investment in research and development for the sector, he said. 

After a huge run, the SPDR S&P Biotech ETF (XBI) rallied +100% to an all-time high at $120 but has stayed there for the summer. Yee expects that future trading will stay within that range as the market awaits answers on the vaccine and the results of the November 3 election. And even if a big positive announcement is forthcoming on the vaccine, that may not translate to a rally in the sector. 

“We assume while it is positive that vaccines work, we do worry the broader equity market will benefit more,” he said in a note. “Biotech stocks could be a source of funds as investors will have even more confidence in the economy opening up.”