Fears about the coronavirus outbreak that first hit China are increasing. There have been more than 20,000 confirmed cases of the virus and 425 deaths in just over one month.

But several drugmakers are racing to develop vaccines and antiviral drugs to fight the outbreak. Two companies at the forefront of these efforts are Johnson & Johnson (NYSE:JNJ) and Novavax (NASDAQ:NVAX). Which of these stocks is the better choice for investors?

Gloved hand holding a vial of blood with a label showing coronavirus and a check mark next to a positive sign

Image source: Getty Images.

The case for Johnson & Johnson

Johnson & Johnson announced on Jan. 29 that it's launching what the company calls "a multipronged response" to the threat presented by the 2019-nCoV coronavirus that's been making headlines. J&J's primary focus is to use its AdVac viral vector and PER.C6 cell line technology to develop a vaccine for 2019-nCoV.

This appears to be a smart step. Both AdVac and PER.C6 were used to create J&J's experimental Ebola vaccine. Even though the vaccine isn't approved yet, it's already being used in the Democratic Republic of the Congo and in Rwanda as part of those countries' campaigns to prevent the spread of Ebola. In addition, J&J used these two technologies to develop its experimental vaccines targeting HIV, respiratory syncytial virus (RSV), and Zika.

While J&J works as quickly as possible to develop a coronavirus vaccine, the company has donated bottles of its HIV drug darunavir/cobicistat, which is marketed under the brand name Prezcobix, to Chinese researchers investigating potential ways to treat the virus. Some anecdotal findings have suggested that HIV drugs could help patients with another coronavirus -- severe acute respiratory syndrome (SARS).

As a huge drugmaker, Johnson & Johnson also has a lot of drugs that are already on the market or in its pipeline, including quite a few antiviral drugs. The company plans to conduct research to see if previously tested drugs could potentially help patients fight the latest coronavirus strain.

Even if J&J's efforts are successful in addressing the coronavirus scare, though, sales of any one drug or vaccine would likely only amount to a drop in the bucket for the healthcare giant. But that underscores the appeal of buying J&J stock. The company offers a way to obtain diversification across the healthcare spectrum because of its multibillion-dollar business segments in consumer health, medical devices, and pharmaceuticals.

The case for Novavax

Novavax, on the other hand, would almost certainly see its shares skyrocket if it successfully develops a coronavirus vaccine. The biotech stock has already been one of the biggest winners among coronavirus-focused drugmakers, with its shares up over 60% year to date.

Developing vaccines is Novavax's specialty. The company's lead product is a nanoparticle-based vaccine for the flu. Novavax should report results from a late-stage study of this vaccine later in the first quarter of 2020. Its pipeline also includes three other experimental vaccines in clinical testing.

Novavax has already developed vaccines targeting other types of coronavirus -- SARS and Middle East respiratory syndrome. However, neither vaccine has won regulatory approval.

Gregory Glenn, Novavax's head of research and development, told Bloomberg that the company is "working very hard" on a coronavirus vaccine. However, he also acknowledged in another interview that it's not a quick process to develop a vaccine, win regulatory approval, and get to market.

Novavax has experienced some setbacks with its vaccine programs. The biotech's RSV vaccine ResVax failed in two different late-stage clinical studies. But past failures don't mean that future successes aren't possible. Novavax could emerge as a big winner with its experimental coronavirus vaccine or with its NanoFlu flu vaccine.

Better pick

If you're looking for the stock that would deliver the biggest returns if it's successful in developing a coronavirus vaccine or treatment, the answer is easy: Novavax. But that doesn't necessarily make Novavax the better pick over Johnson & Johnson. Why? There's no guarantee that Novavax will be successful with its coronavirus program.

For that matter, there's no guarantee that J&J will be successful with its coronavirus efforts, either. However, failure on this front simply won't matter that much to the investing case for J&J.

It's entirely possible that the current coronavirus worries will fade away, just as worries about the avian flu, Ebola, SARS, and other viruses aren't as great as they once were. Instead of buying a stock based only on the prospects for developing a coronavirus vaccine or therapy, the smarter approach is to buy a stock based on the prospects that it will deliver solid long-term gains.

Novavax might be able to generate tremendous gains in the future. However, the biotech's fortunes hinge largely on how NanoFlu performs in clinical testing. J&J's gains probably won't be jaw-dropping, but they should be more reliable. My view is that the stability and financial strength that J&J provides makes it the better choice for long-term investors.