To The Moon

What happened

Shares of several COVID-19 vaccine makers are plunging this week.BioNTech(NASDAQ:BNTX)stock is taking the worst drubbing, down 19.7% as of the market close on Thursday.Moderna's(NASDAQ:MRNA)shares were sinking 17.2%.Novavax(NASDAQ:NVAX) and Ocugen(NASDAQ:OCGN)stocks were falling 18.5% and 16.2%, respectively. All of these declines are based on data fromS&P Global Market Intelligence.

There are multiple factors behind the sharp sell-off of these vaccine stocks. Perhaps most importantly, investors appear to be looking beyond the current surge in COVID-19 cases to a future where the demand for vaccines could be lower. The World Health Organization's (WHO) chief scientist also stated publicly on Tuesday that there's no evidence that booster doses are needed for healthy children and adolescents.

IMAGE SOURCE: GETTY IMAGES.

BioNTech's shares are down the most because of new results announced this week from a clinical study conducted in Israel. This study found that a fourth booster dose of Comirnaty, the COVID-19 vaccine developed by BioNTech and its partner,Pfizer(NYSE:PFE), isn't effective at preventing infections by the coronavirus omicron variant.

This news also appeared to negatively affect Moderna. Like the Pfizer-BioNTech vaccine, Moderna's COVID-19 vaccine Spikevax uses messenger RNA (mRNA) technology. Investors seem to be concerned that a fourth booster dose of Spikevax won't be effective at preventing infection by omicron either.

So what

The prospects of reduced demand for COVID-19 vaccines is something that should be concerning to investors. This scenario would mean lower revenue for BioNTech and Moderna, which already have COVID-19 vaccines on the market in the U.S. and across the world.

It could also translate to a tough climb ahead for Novavax and Ocugen. Novavax's COVID-19 vaccine has recently won authorizations or approvals in several countries, although not in the U.S. yet. Ocugen owns the rights to market Covaxin in the U.S. and Canada but hasn't secured authorizations in either country.

However, it's too early to know if vaccine demand will actually decline significantly. The World Health Organization (WHO) warned this week that new coronavirus variants are likely to emerge after the current omicron wave wanes. The organization's COVID-19 technical lead, Maria Van Kerkhove, stated, "We're hearing a lot of people suggest that omicron is the last variant, that it's over after this. And that is not the case because this virus is circulating at a very intense level around the world."

As for the WHO's take that boosters for healthy children and adolescents aren't necessary, it remains to be seen if countries will go along. The U.S. government continues to encourage adolescents ages 12 and up to receive a third booster dose of the Pfizer-BioNTech vaccine.

But what about the new data from Israel about a fourth dose of Comirnaty? This probably isn't as worrisome as it might seem at first glance. Pfizer and BioNTech expect to have their omicron-specific vaccine ready by March. Moderna is developing a version of its vaccine that targets the omicron variant as well.

Now what

The most important thing, by far, for investors to watch now is what happens next with the COVID-19 pandemic. The spread of new coronavirus variants could completely change the market dynamics for these companies.

Despite its dismal stock performance, Novavax has actually enjoyed some good news recently. The company won approvals for its COVID-19 vaccine in France and in Australia over the last several days. Novavax expects to soon complete its filing for Emergency Use Authorization (EUA) in the U.S.

Ocugen has already submitted for U.S. EUA of Covaxin in children. However, the company still awaits the lifting of a clinical hold placed by the U.S. Food and Drug Administration on a planned late-stage clinical study of the vaccine.