Investing in clinical-stage biotech companies can lead to market-beating gains in the long run. And speaking of market-beating gains, Moderna (NASDAQ:MRNA) and Inovio Pharmaceuticals (NASDAQ:INO) are two biotechs that have been outperforming the market all year long.

Year to date, Inovio's shares are up by 606%, while Moderna's stock is up by 214%. Investors have rewarded these companies for their efforts to develop a vaccine for COVID-19. Is it too late to get in on these stocks? Not necessarily; if either does manage to launch a vaccine for the coronavirus on the market, its shares could climb significantly more. With that as an overview, which of these two companies (if any) should investors buy today? 

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Moderna's COVID-19 efforts

Moderna's pipeline boasts more than a dozen products, including potential vaccines against several forms of cancer and an investigational vaccine against the Zika virus. However, none of these products have entered late-stage testing yet, leaving Moderna's potential COVID-19 vaccine, mRNA-1273, as its most promising candidate. After a phase 1 clinical trial -- the interim data of which showed that mRNA-1273 "was generally safe and well-tolerated" -- Moderna started a phase 2 clinical trial in May. This study is testing mRNA-1273's safety, reactogenicity, and immunogenicity in a pool of 600 healthy participants.

Further, Moderna announced that it had finalized the protocol for a phase 3 study for mRNA-1273, and despite a delay, the company still expects this late-stage study to start this month. The study will enroll 30,000 participants in the U.S., and its primary endpoint will be "the prevention of symptomatic COVID-19 disease." With Moderna gearing up to start a pivotal phase 3 study for its vaccine, something few others have done, many regard the company as one of the leaders in this race

Inovio's COVID-19 efforts

Inovio recently released interim data from its phase 1 clinical trial for its potential COVID-19 vaccine, INO-4800. The data showed that this vaccine, too, was "generally safe and well-tolerated," with the most common adverse reaction being redness on the skin where it was administered. However, this adverse reaction was a grade 1 in severity, the lowest grade possible. Also, the company said that 34 of the 36 participants on which there was data demonstrated an immune response six weeks after receiving INO-4800.

Man facing two doors with question marks hovering above his head.

Image source: Getty Images.

However, Inovio did not share data on how many of the patients produced neutralizing antibodies or T-cell responses (T-cells are white blood cells that kill infected cells). The lack of crucial information in the company's phase 1 interim data did not please investors. Inovio still plans on starting a phase 2/3 clinical trial for INO-4800 this summer (pending regulatory approval).

Looking at the rest of Inovio's pipeline, only one of the company's candidates has entered a phase 3 study, namely VGX-3100, an investigational DNA medicine for cervical dysplasia (a precancerous condition). But VGX-3100 won't receive regulatory approval before next year (at best) -- if it does at all. This factor puts added pressure on Inovio's investigational COVID-19 vaccine to deliver. 

Looking at the numbers 

Both Moderna and Inovio have successfully attracted funding from third parties recently. For instance, back in March, Moderna landed a grant of up to $483 million from the Biomedical Advanced Research and Development Authority (BARDA) to speed up the development of mRNA-1273.

Meanwhile, in late June, Inovio signed a contract of $71 million with the U.S. Department of Defense to scale up the manufacturing of its Cellectra 3PSP Smart Device, which the company uses to administer INO-4800. Further, as both of these companies are part of Operation Warp Speed -- and given the urgency of the situation -- they likely won't run out of funding anytime soon.

Comparing Moderna's and Inovio's financial metrics is a difficult thing to do, however. Neither company has any products on the market, neither generates much revenue, and neither is profitable. Both are unattractively valued, too. Moderna's high 13.9 price-to-book (PB) ratio is better than Inovio's even higher 20; however, Moderna's market cap of $22.8 billion is steep for a company of its standing, while Inovio's $3.62 billion seems more reasonable.

Of course, one could argue that if either company goes on to launch its COVID-19 vaccine on the market, none of these numbers will matter. But Moderna and Inovio still have to get through several difficult and uncertain stages before they can hope to profit from their ongoing COVID-19 efforts. Given the uncertainty of the situation, investors should take these metrics into consideration.

Which is the better buy?

Between these two companies, I think Moderna is the better stock pick at the moment, and here's why: With better phase 1 clinical trial results for its investigational COVID-19 vaccine, an ongoing phase 2 study, and a pivotal trial that should start soon, Moderna is ahead of Inovio in the race to develop a vaccine for the coronavirus.

However, this situation could reverse quickly, and both companies could end up falling short in their COVID-19-related efforts. That's why I think Moderna and Inovio are high-risk, high reward plays, and I wouldn't recommend initiating a position in either biotech stock.