Investors appear to be concerned about potential manufacturing issues at a contract manufacturing facility.

Keith

Key Points

  • European regulators are allowing a partners facility in Spain that manufactures Modernas COVID-19 vaccine to operate while an investigation into contamination issues moves forward.
  • Investors could be concerned about potential production delays if more problems are found.

What happened

Shares of Moderna (NASDAQ:MRNA) were sliding 3.8% lower as of 11:26 a.m. EDT on Friday. The decline came even with a positive development for the company. The European Union is allowing the production of Modernas COVID-19 vaccine to continue at a facility in Spain operated by the companys partner, Rovi. Contamination in some doses of the vaccine shipped to Japan was linked to a potential manufacturing issue at Rovis plant.

However, EU regulators continue to investigate the contamination issue. Investors may be afraid that more problems could be found that could disrupt the production of Modernas SpikeVax vaccine. 

Close-up

Image source: Getty Images.

So what

Any production delays could hurt Modernas vaccine sales. However, theres no reason to expect any manufacturing hold-ups at this point.

The contamination problems werent as bad as they could have been. Although Japan suspended the use of 1.63 million doses of Modernas COVID-19 vaccine, no safety issues have been reported so far. 

Probably the main challenge for Moderna is that the vaccine stock is priced for perfection. Any concerns can give investors a reason to sell, creating downward pressure on the share price.

Now what

The European Medicines Agency will likely be able to determine the root cause of the contamination issues relatively quickly. That could put the problem to rest for Moderna -- or create even more headaches for the company.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Moderna Inc. The Motley Fool has a disclosure policy.

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