There are now 23 coronavirus vaccine candidates in clinical testing, according to the World Health Organization. Four of them use an approach that involves engineering messenger RNA (mRNA) sequences, which in turn direct ribosomes in human cells to produce a protein identical to one found on the surface of SARS-CoV-2 -- in other words, an antigen to the virus that causes COVID-19.
BioNTech (BNTX -2.91%) and Moderna (MRNA -5.06%) developed two of those four mRNA COVID-19 vaccine candidates. So far, Moderna's efforts have received a lot more attention than BioNTech's program has. But which of these coronavirus-focused stocks is the better pick for investors now?
The case for BioNTech
Probably the most important reason why investors might prefer BioNTech over Moderna is the difference between their respective valuations. Moderna's market cap is currently around 50% higher than BioNTech's. That should give BioNTech more room to run if its COVID-19 vaccine candidate is successful.
Another reason why BioNTech could deserve investors' attention is that its chances of success are arguably better than Moderna's. BioNTech actually has four experimental COVID-19 vaccine candidates in clinical testing versus one candidate for Moderna. Two of its candidates -- BNT162b1 and BNT162b2 -- recently won Fast Track designations from the Food and Drug Administration based on the strength of preliminary results from a phase 1/2 clinical trial, which showed high levels of neutralizing antibodies in patients who had received BNT162b1.
BioNTech also enjoys an advantage due to its partnership with Pfizer (PFE -1.40%), which the companies initiated in March. Pfizer brings financial resources and a global distribution chain to the table that should help BioNTech both during the development of its coronavirus vaccine candidates and (assuming they meet the mark in clinical testing) eventual commercialization.
But investors shouldn't overlook the rest of BioNTech's pipeline. Its lead candidate, BNT122, is currently in phase 2 testing in partnership with Roche as a first-line treatment for melanoma. BioNTech also has 10 other programs in early-stage trials.
The case for Moderna
Why buy Moderna instead of BioNTech? Some investors might like that it's further ahead in the vaccine testing process. The company expects to begin a phase 3 study of its COVID-19 vaccine candidate, mRNA-1273, later this month -- a few weeks later than it originally planned. BioNTech, meanwhile, hopes to start a phase 2b/3 study of BNT162 perhaps as soon as the end of July.
Some might also anticipate that the safety profile for Moderna's candidate could be better than those of BioNTech's candidates. There's no way yet to know how the two biotechs' COVID-19 vaccine candidates will stack up against each other. However, Moderna is moving forward into late-stage testing with a 100-microgram dose, while BioNTech's 100-microgram dose produced adverse effects -- usually injection site pain -- more often than lower doses in phase 1/2 test subjects.
There's also a flip side to BioNTech's partnership with Pfizer that could work to Moderna shareholders' advantage. The financial details of the collaboration between BioNTech and Pfizer haven't been made public. You can bet, though, that Moderna would pocket a much greater share of the profits from sales of its COVID-19 vaccine if approved than BioNTech would.
Finally, Moderna's pipeline is arguably stronger overall -- it has three programs in phase 2 testing (excluding mRNA-1273) compared to BioNTech, which has just one. Two of those programs were promising enough to attract interest from big drugmakers AstraZeneca and Merck.
In addition, Moderna has 11 mRNA programs in early-stage testing. That's one more than BioNTech has (not counting its COVID-19 vaccine candidates).
The better coronavirus vaccine investment now is...
At this point, the pros and cons of these two stocks make the arguments for investing in either of them roughly equal, in my view. Further clinical trial results could well swing the pendulum toward one. But, for now, I think both BioNTech and Moderna have the potential to be even bigger winners than they've already been.
Keep in mind, though, that there's still a possibility that both of these stocks could be big losers in the coming months. There's ample reason to be cautiously optimistic about the prospects for their COVID-19 vaccine candidates. However, risk levels for both biotech stocks will remain high at the very least until phase 3 trial results are available.