Please ensure Javascript is enabled for purposes of website accessibility

Better Coronavirus Stock: BioNTech or GlaxoSmithKline?

By Zhiyuan Sun – Jul 31, 2020 at 6:55AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These two biotech giants are racing to find a cure for COVID-19. Which one is the better buy?

While coronavirus cases in other developed countries are flattening, the U.S. has not been so fortunate. As of July 24, the number of coronavirus cases in the U.S. has reached a new record, with more than 78,000 Americans infected. Meanwhile, approximately 1,485 Americans are dying each day of COVID-19.  

There is light at the end of the tunnel, however. Currently, two of the largest biotech companies in the world, BioNTech (BNTX 0.96%)and GlaxoSmithKline (GSK 0.24%), are part of the race for a COVID-19 cure. Let's take a look at which of the two companies is the better buy. 

Factory worker with hygienic mask stand with confident action with her co-worker in the background.

Image Source: Getty Images.

Here's the progress from BioNTech

Together with Pfizer (PFE -0.91%), BioNTech is developing an experimental RNA vaccine for COVID-19 called BNT162b1. In its phase 1 clinical trials, 24 out of 24 participants who received BNT162b1 developed antibodies that neutralize SARS-CoV-2. Also, 95% of patients who received the vaccine developed T-cell responses, meaning immune cells that potentially grant immunity to the deadly virus for several years. The vaccine was also well-tolerated, with no serious adverse events reported.

Currently, the vaccine is in phase 2/3 clinical trials. If it's successful, Pfizer and BioNTech would seek approval with the U.S. Food and Drug Administration (FDA) in October. But demand for its prototype has already gone wild. On July 22, the U.S. government secured 100 million doses of BioNTech's vaccine, with a potential total order of 500 million doses. At $19.50 per dose, that could translate to about $2 billion to $10 billion in revenue for the two companies over the next year. Investors' expectations for BioNTech have run high, with the stock returning 147% year-to-date. 

Vaccines aside, BioNTech also has a vibrant oncology portfolio, with 11 candidates in development across 12 clinical trials. The farthest of these is near phase 2 development. With 452 million euros in cash (and an additional 217 million euros in upcoming investments), compared with a net loss of $53.4 million euros in Q12020, I think investors are more likely than not to witness some top-line results before the company has to raise cash again.

Group of doctors talking about corona virus during conference.

Image Source: Getty Images.

Here's the progress from GlaxoSmithKline

Together with Sanofi (SNY 0.05%), GlaxoSmithKline is developing an adjuvant coronavirus vaccine. An adjuvant is a biological additive that can be combined with traditional vaccines to enhance the latter's ability to elicit antibody and T-cell response. In addition, the adjuvant can lower the amount of biological ingredients required by the vaccine, thereby reducing its manufacturing and distribution costs.

Currently, GlaxoSmithKline is capable of manufacturing up to 1 billion doses of its adjuvant by 2021, if the biologic passes clinical trials. It's currently in the phase 1 investigational phase, with data expected in the next few months.

Although the company's progress may not be as amazing as that of BioNTech, keep in mind that GlaxoSmithKline is a blue-chip biotech company. Even if its vaccine programs flunk, investors would still be buying an underlying business that is growing its revenue by 19% year-over-year as of Q22020. The company brought in $8.4 billion in revenue and $0.42 per share in earnings for investors during the quarter. One of the strongest performing segments was consumer healthcare, which grew by 25% compared with Q2 2019.

Which one is the better coronavirus stock?

Overall, I would argue BioNTech is hands-down the better coronavirus stock, as its experimental vaccine has already demonstrated preliminary efficacy and safety, is on track to be distributed by the end of the year if all goes well, and has the backing of orders from the U.S. and U.K governments.

While GlaxoSmithKline is a reputable biotech company with a promising candidate, investors should look for the fine print before choosing it as a hedge against the COVID-19 pandemic. Management has stated that it does not intend to profit from its adjuvant vaccine, noting that if the treatment is approved, the company will reinvest its vaccine revenue into pandemic preparedness. The announcement did not thrill investors, and GlaxoSmithKline's shares are down 14% year-to-date. I think BioNTech is the much better buy for biotech investors

Zhiyuan Sun has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GSK Stock Quote
GSK
GSK
$29.43 (0.24%) $0.07
BioNTech SE Stock Quote
BioNTech SE
BNTX
$134.88 (0.96%) $1.28
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$43.76 (-0.91%) $0.40
Sanofi Stock Quote
Sanofi
SNY
$38.02 (0.05%) $0.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.