Many drugmakers are rushing to develop potential therapies and vaccines for novel coronavirus disease COVID-19. But two of them have been in the spotlight in recent days. Moderna (NASDAQ:MRNA) announced positive interim data on Monday from an early-stage clinical study of its COVID-19 vaccine candidate. Last week, Sorrento Therapeutics (NASDAQ:SRNE) reported results from a preclinical study of an antibody that holds the potential to completely neutralize the novel coronavirus.

As you might expect, both Moderna and Sorrento have seen their stocks skyrocket. Moderna's shares have nearly quadrupled year to date, while shares of Sorrento have soared more than 70%. But which of these two coronavirus-focused biotech stocks is the better pick for investors now?

A red coronavirus model on top of a messy pile of $100 bills

Image source: Getty Images.

The case for Moderna

We obviously have to start any discussion about buying Moderna stock with the company's promising COVID-19 vaccine, mRNA-1273. Interim results from a phase 1 clinical study that's being led by the National Institute of Allergy and Infectious Diseases (NIAID) highlighted the potential for mRNA-1273 to produce antibodies that bind to the novel coronavirus and can neutralize it.

Moderna is conducting a phase 2 clinical trial of mRNA-1273 and is using the early data from the NIAID-led phase 1 study to tweak the design of its study. If all goes well, the biotech could advance its COVID-19 vaccine to a pivotal phase 3 study in July. 

Morgan Stanley analysts project that the total global COVID-19 vaccine market could be between $10 billion and $30 billion while the pandemic continues, and between $2 billion and $25 billion annually afterward. But with lots of other drugmakers also developing COVID-19 vaccine candidates, there's no way to know how much of this potential market Moderna might be able to capture if mRNA-1273 is successful. 

Still, there's an enormous opportunity for Moderna -- again, if its COVID-19 vaccine proves to be safe and effective in further clinical testing. The company also has other promising candidates. Its most advanced pipeline candidates are experimental cytomegalovirus (CMV) vaccine mRNA-1647, cancer vaccine mRNA-4157, and coronary artery disease therapy AZD8601. The latter two programs are being developed in partnership with Merck and AstraZeneca, respectively.

In addition, Moderna's pipeline is loaded with early-stage programs. These include experimental vaccines for avian (H7N9) flu, human metapneumovirus (hMPV) and parainfluenza type 3 (PIV3), respiratory syncytial virus (RSV), and Zika. 

Moderna shouldn't have to worry about having enough cash to fund its development programs. The company plans to raise $1.25 billion through a public stock offering. This secondary offering will dilute the biotech's shares, but only by around 5%.

The case for Sorrento Therapeutics

Sorrento jumped into the COVID-19 development arena on March 20, with the biotech announcing that it had produced a protein that it called STI-4398 that held the potential to prevent infection by the novel coronavirus. Over the next few days, Sorrento announced multiple partnerships and new COVID-19 programs.

However, Sorrento's biggest news came last week with its announcement of promising preclinical results for its STI-1499 antibody. After screening billions of antibodies, the biotech found that STI-1499 was the best of all at neutralizing the novel coronavirus. Sorrento stated that STI-1499 "completely neutralized the virus infectivity at a very low antibody dose." 

It's still really early. Sorrento will have to demonstrate that STI-1499 is both safe and effective in multiple phases of human clinical testing. There's also the real possibility that other drugmakers working to develop antibodies to treat COVID-19 will beat Sorrento to the punch. But if STI-1499 is successful either as a stand-alone therapy or part of a cocktail therapy, Sorrento would likely have a huge market opportunity.

Unlike Moderna, Sorrento already has an approved product on the market. It launched ZTlido in 2018 as a treatment for pain associated with shingles. ZTlido hasn't been a huge commercial hit so far, though; Sorrento made less than $22 million in net product sales last year.

The biotech's pipeline includes two experimental cancer drugs ready to move into phase 2 clinical testing plus several other early-stage programs targeting cancer and pain. Sorrent's Ark Animal Health subsidiary also is exploring the use of one of Sorrento's experimental drugs in treating pain associated with bone cancer and osteoarthritis in dogs.

Sorrento had cash and cash equivalents totaling $21.9 million as of March 31, 2020. With the company losing close to $70 million in its last quarter, it will need to raise more cash soon. The most likely avenue for raising this needed capital is through a secondary stock offering that would dilute the value of existing shares.

Better coronavirus stock

Moderna is much farther along in development with its COVID-19 vaccine candidate than Sorrento is with its experimental COVID-19 antibody. It's also set to have a stronger cash position than Sorrento thanks to its big secondary stock offering that's on the way. Based on these factors, I think Moderna is the better stock to buy right now given the environment surrounding the coronavirus.

Still, though, I think there's a legitimate question as to whether Moderna's prospects justify its valuation. Could the stock move a lot higher? Absolutely. But my view is that the uncertainties for Moderna make it too risky for most investors, including me.