Moderna (NASDAQ:MRNA) and Vaxart (NASDAQ:VXRT) are two of the many companies that are pursuing a COVID-19 vaccine. The stock market has already produced a lot of riches for biotech investors in this sector; Moderna's stock has almost quadrupled in six months, while the stock of tiny Vaxart has produced an amazing 2,985% return in that time. 

Can these two stocks continue to advance? Both companies will be giving data readouts in the second half of 2020. Positive data will no doubt cause stock prices to double, triple, or quadruple once again. But bad news could cause either stock to implode. Let's dig in and see what we might expect.

Arrow running up high over the number, 2020.

Image source: Getty Images.

Moderna is about to begin its phase 3 trial

On Monday, Moderna's stock ran up 14% after an analyst for Jefferies, Michael Yee, wrote that the company's COVID-19 vaccine might produce annual sales of $5 billion if the company's drug is approved by the FDA. Yee's estimate assumed a price point of $50 for Moderna's vaccine, and he penciled in a possible 100 million doses to be sold in 2021. Let's test his assumptions.

On its website, the Centers for Disease Control and Prevention (CDC) lists the prices that it currently pays for multiple vaccines, as well as private sector prices. For adults, the prices range from $16 for a tetanus shot all the way to $140 for an HPV vaccine. (The price tag for vaccines in the private sector is about twice what the CDC pays.) Yee's estimate of a $50 price tag for a COVID-19 vaccine falls within that range.

What might be off is the analyst's estimate of the market demand. Several vaccine-makers, including Moderna, are preparing to manufacture up to a billion doses of coronavirus vaccine in 2021. In my mind, that number is a more realistic estimate of the market opportunity in front of us. After all, COVID-19 is not a normal illness. It's not normal for a disease to hamper the world economy. And it's highly unusual for the federal government to donate billions of dollars to biotech companies to speed up vaccine development and make sure there is adequate supply. 

Yee's estimate of 100 million doses sold is actually quite conservative. With Moderna planning to produce up to a billion doses of its vaccine next year, it's possible that Yee's demand forecast is off by a factor of 10. Assuming his price point of $50 is right, it might actually be a $50 billion market opportunity for Moderna in 2021. 

Right now, of course, this is pure speculation. Moderna's vaccine has not been approved yet, and it might never be. And so far, anyway, investors have been kept in the dark about how well the vaccine is succeeding in its clinical trials. While Moderna's vaccine candidate is set to begin phase 3 testing by the end of July, the company has been very secretive about its data so far. And news that the company is trying to get the FDA to lower the threshold for efficacy is worrisome, to put it mildly.

Since Moderna has no approved drugs -- and its COVID-19 vaccine is the furthest along in development -- much of the company's future is riding on this play. If it works, Moderna's science is validated, and the company's pipeline is far more valuable than it is today. If, however, the company's COVID-19 vaccine fails its review, the stock drop will be precipitous. We'll know more by the end of the year.

This dark horse might emerge as a big winner 

Vaxart is way behind Moderna and other Operation Warp Speed drugmakers like AstraZeneca (NYSE:AZN) and Pfizer (NYSE:PFE). These larger competitors are set to begin phase 3 trials in July. And they have the money to produce and distribute large amounts of a vaccine around the world.

Vaxart has none of that -- yet. Back in April, the company announced that its COVID-19 vaccine had been successful in animal models. Last month the micro-cap was elevated to the big time when the government's Operation Warp Speed (OWS) program selected its vaccine candidate for a confirmation animal study. This news was really big because, like many tiny biotechs, Vaxart is starved for cash. While the company has raised another $90 million just this week, that's still not enough to pay for an expensive phase 3 trial involving thousands of people. But now that OWS is involved, money is no longer an issue. If Vaxart's science is validated in the government's confirmation study, more funding will follow.

Of course, in terms of speed, Vaxart is lagging most of its competitors. The tiny biotech has almost no chance of being first to market. And yet that might not matter. Indeed, its vaccine candidate might prove to be the most valuable of all. That's because Vaxart's COVID-19 vaccine is not a shot, but a pill. 

Vaxart's entire vaccine platform is based on oral medication. Back in 2018, its tablet influenza vaccine defeated FluZone, the vaccine from market leader Sanofi (NASDAQ:SNY), in a phase 2 head-to-head study. Vaxart's oral flu vaccine reduced infection rates by 47 percent, compared with 43 percent from FluZone.

Like Moderna, Vaxart has signed agreements to produce a billion doses of its vaccine next year. And an oral medication -- if it works -- will give the company a logistical advantage in terms of ease of use. Vaxart's drug candidate is the only oral vaccine being evaluated by OWS.

The market opportunity for both companies is vast. Even though both companies have had tremendous gains in the first half of the year, the stocks might soar even higher over the next several months.