Novavax (NVAX 2.06%) and Vaxart (VXRT -10.29%) have practically become household names in 2020, largely thanks to their efforts to develop vaccines for COVID-19. Both of these companies have also performed exceptionally well on the stock market of late. Year to date, shares of Novavax are up by 4,210%, while Vaxart's stock is up by 2,660% over the same period.

It may not be too late to jump on the bandwagon, however. Considering the massive market opportunity that presents itself to these biotechs, their stocks could continue delivering market-beating returns. But if investors had to pick just one, which should they bet on today? Let's dig in a little deeper and decide which of these companies is more likely to outperform the other moving forward.

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Comparing their COVID-19 programs 

Novavax is developing a potential vaccine for COVID-19 called NVX-CoV2373. On Aug. 4, the company released data from phase 1 of its ongoing clinical trial for this candidate. According to the biotech, the potential vaccine produced neutralizing antibodies in all 131 healthy participants. Further, the candidate was "well-tolerated and had a reassuring safety profile."

Novavax had previously said that the phase 2 portion of this trial would investigate the safety, immunity, and disease reduction of NVX-CoV2373 in a broader age range of participants. The company plans on delivering as many as 100 million doses of the vaccine by the end of 2020, pending regulatory approval.

Vaxart specializes in orally administered vaccines, and the company's COVID-19 vaccine is of the same variety. The biotech's five initial candidates all generated immune responses in "all tested animal models after a single dose" in preclinical trials. Following these results, the company selected the most promising experimental vaccine of the group, and it plans on starting a phase 1 clinical trial as early as this summer.

Hand holding a chess piece and knocking out another chess piece.

Image source: Getty Images.

Other pipeline candidates 

Novavax's most promising pipeline candidate -- other than NVX-CoV2373 -- is NanoFlu, a flu vaccine candidate for adults 65 and older. The company reported positive results from a phase 3 clinical trial for NanoFlu back in March, and the company plans on submitting a Biologics License Application to the U.S. Food and Drug Administration (FDA) under the accelerated pathway for this candidate soon. Novavax claims that its flu vaccine could be more effective than the current market leader, and if approved, NanoFlu could go on to be a blockbuster product.

Vaxart's most advanced pipeline candidate is also a flu vaccine, but this product is only in a phase 2 clinical trial. However, the company's norovirus candidate, which is ready for phase 2 trials, could be promising. According to a recent study, expenses related to outbreaks of the norovirus in the U.S. amount to a median of $10.6 billion per year. The virus causes 19 million to 21 million annual U.S. cases of acute gastroenteritis, an infection characterized by vomiting and abdominal cramps. With that said, Vaxart's potential norovirus vaccine is nowhere close to hitting the market, and neither are any of the company's other candidates. 

Comparing their financials 

Neither of these companies has any products on the market at the moment, and neither generates much by way of revenue; this makes it difficult to compare their financial results. However, here are a few things to consider. First, both Novavax and Vaxart are taking part in Operation Warp Speed, an initiative begun by the U.S. government to accelerate the development of vaccines and treatments for COVID-19. Novavax received $1.6 billion in funding from the government as part of this endeavor.

Meanwhile, Vaxart is taking part in a nonhuman primate (NHP) challenge study as part of Operation Warp Speed. The study will test the efficacy of several experimental coronavirus vaccines, and depending on how it goes, this company could receive federal funding as well.

Both biotechs could also get additional capital from third parties, if recent history is any guide. For instance, Novavax has received funding of up to $388 million from the Coalition for Epidemic Preparedness Innovations (CEPI). Given the urgency of the coronavirus situation, neither company is likely to run out of capital anytime soon. 

Turning to their most recent earnings releases, Vaxart only had $29.9 million in cash and cash equivalents as of March 31, compared with Novavax's $244.7 million. However, Vaxart's operating expenses of about $4 billion during the first quarter were much lower than Novaxax's $26.3 million operating expenses during its first quarter. Vaxart's net loss of $1.3 million was also better than Novavax's $25.9 million net loss.

While funding may not be a big issue for these companies (at least for now), it is worth noting that with a market cap of $1.12 billion, Vaxart is more in line with what one would expect from a clinical-stage biotech company. Novavax's roughly $10 billion market cap is a bit harder to swallow for a clinical-stage biotech; in fact, it may be a warning sign for risk-averse investors.

What's the verdict?

Compared with Vaxart, Novavax is further along in the development of its potential COVID-19 vaccine, and the company also has another promising candidate in NanoFlu. Further, Novavax has received more in funding than Vaxart; for those reasons, I think Novavax will continue to outperform both the market and Vaxart moving forward, making it the better biotech stock to buy at the moment.