Half a dozen COVID-19 vaccine candidates are currently in clinical testing. Moderna (NASDAQ:MRNA) and Novavax (NASDAQ:NVAX) claim two of them.

Unsurprisingly, both biotech stocks have skyrocketed in recent months. Moderna has arguably attracted more attention. However, Novavax has been the bigger winner with its shares rising nearly five times more than Moderna's so far in 2020. Which of these coronavirus-focused stocks is the better pick going forward?

Gloved hands holding syringe and vaccine bottle

Image source: Getty Images.

The case for Moderna

There's a pretty good argument to be made that Moderna ranks as the leader in the race to develop a COVID-19 vaccine. It's already evaluating mRNA-1273 in a phase 2 clinical study and hopes to advance the vaccine into a pivotal late-stage in July.

The Trump administration selected five COVID-19 vaccine candidates for broad federal support and funding as part of its "Operation Warp Speed" initiative; Moderna's experimental vaccine was one of them. This federal funding will help the company produce up to 1 billion doses of mRNA-1273 annually beginning in 2021 if all goes well with clinical studies.

Moderna isn't just focused on its COVID-19 vaccine candidate, though. The biotech's pipeline includes a total of 23 messenger RNA (mRNA) programs with 13 in clinical testing. Cytomegalovirus (CMV) vaccine mRNA-1647 received the most interest prior to the COVID-19 pandemic. Moderna expects to report the first interim analysis from a phase 2 study of the experimental vaccine in the third quarter of 2020 and begin a phase 3 study next year.

The company also has two other partnered programs in phase 2 testing. Personalized cancer vaccine mRNA-4157 is being evaluated in combination with Merck's Keytruda for the adjuvant treatment of high-risk resected melanoma. AstraZeneca licensed the rights to AZD8601 from Moderna and is conducting a phase 2a study of the drug for treating ischemic heart disease in patients undergoing coronary artery bypass grafting (CABG) surgery.

Moderna is well-capitalized thanks to a secondary stock offering in May. The biotech raised gross proceeds of $1.34 billion to fund its development programs.

The case for Novavax

Novavax wasn't on the White House's list of COVID-19 vaccine candidates to support. However, exactly why remains a mystery. The biotech's COVID-19 vaccine NVX-CoV2373 is ahead of two rivals that were included.

NVX-CoV2373 should still be viewed as one of the lead candidates in the COVID-19 vaccine race. In May, Novavax received the biggest grant to date from the Coalition for Epidemic Preparedness Innovations (CEPI) to develop its COVID-19 vaccine. Earlier this month, the biotech won a key contract with the U.S. Department of Defense to supply NVX-CoV2373 to the military.

Believe it or not, Novavax has had an even bigger catalyst in 2020 than its promising COVID-19 vaccine program. In March, the company reported positive results from a phase 3 study of its nanoparticle-based flu vaccine NanoFlu. One analyst projects that NanoFlu could rake in peak annual sales of $1.7 billion if approved. 

Novavax also has another vaccine candidate in its pipeline that could be a winner down the road. Respiratory syncytial vaccine (RSV) ResVax flopped in a couple of late-stage clinical studies. However, Novavax thinks that it could still be successful and is exploring opportunities to partner with other drugmakers on the vaccine.

At the end of March, Novavax's cash stockpile stood at nearly $245 million, including cash, cash equivalents, marketable securities, and restricted cash. With the CEPI and Department of Defense deals in hand as well, the company should be in a good position to fund operations at least through 2021.

Better coronavirus stock

There's one important factor that I think makes a big difference in choosing between these two coronavirus-focused stocks: valuation. Moderna's market cap of nearly $23 billion is nearly nine times larger than Novavax's market cap of close to $2.6 billion.

This significantly lower valuation, combined with the promising prospects for NanoFlu, make Novavax the better stock to buy in my view. Keep in mind that Novavax still faces risks. It's possible that NanoFlu could fail to win regulatory approval. Novavax's COVID-19 vaccine candidate might stumble in clinical studies. But for aggressive investors, I think this biotech stock is an attractive pick.