The coronavirus pandemic has plagued countries around the world since late 2019, with no end in sight. Biotech companies are now in a frantic race to develop a vaccine against SARS-CoV-2, the novel coronavirus that has contributed to the deaths of over 200,000 people in the U.S. alone. Globally reported cases stand at 30 million, with over 950,000 COVID-related deaths. Cases in the U.S. alone have reached 6.8 million, and with economies shut down and stay-at-home orders in place, the country has found itself in the worst economic downturn since the Great Depression.
Currently, at least 212 coronavirus vaccines are in development, with 33 in clinical testing. One of the companies involved, U.S.-based biotech Moderna (MRNA -1.22%) has grabbed a lot of invest attention this year. Moderna is one of five companies leading in the vaccine race. Its candidate, mRNA-1273, a messenger RNA vaccine, is in a phase 3 trial that began on July 27.
Moderna's stock enjoyed a boost from positive results out of the company's phase 1 study, which showed that the vaccine candidate was safe and successfully neutralized antibodies, meaning it could prevent future infection by the novel coronavirus. Moderna's phase 2 study is still under way to examine the vaccine further. But if you consider the business beyond its development of its coronavirus vaccine, Moderna may not be such a good investment.
U.K.-based AstraZeneca (AZN -0.29%) is another competitor in the vaccine-development race. Its candidate, AZD1222, is being developed in partnership with the University of Oxford, and is also in phase 3 testing.
Shares of Moderna are up a whopping 248% year to date, while AstraZeneca's stock has gained 10.2% so far this year, compared to a gain of 2.8% by the S&P 500. Let's dig deeper into the progress of each company's COVID-19 program and evaluate which stock is the safer bet for vaccine investors.
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Is Moderna a good overall investment?
Moderna has enjoyed big stock gains this year, thanks to the progress of its potential vaccine in clinical trials. Its phase 3 study is testing a dose of 100 micrograms of its vaccine candidate on 30,000 participants to determine whether the potential treatment can achieve its primary endpoint: the prevention of symptomatic COVID-19 disease.
While bumps are still possible in its late-stage trials, the company is scaling up with help from production partner Lonza Group to produce between 500 million and 1 billion doses a year, beginning in 2021. But don't get too excited; many things can go wrong in the vaccine development process. Investors were painfully reminded of this after the recent pause in the trial of AstraZeneca's vaccine candidate (more on that in a moment).
Indeed, even if we forget the vaccine-development race for a moment, there are reasons to worry about Moderna. For one, the company has no approved products in its portfolio. It has many products in its pipeline that are in phase 1 or 2 trials, or the preclinical testing stage. The company stated that as of Aug. 5, it had "23 mRNA development candidates in its portfolio with 13 in clinical studies." But outside of the COVID-19 vaccine program, which has been expedited, approval of vaccines usually takes years. It could be awhile before the company makes any profit.
AstraZeneca is a more stable company
AstraZeneca and the University of Oxford's vaccine candidate showed that all participants exhibited good immune response against SARS-CoV-2 in phase 1/2 trial results. Hopes are high for AstraZeneca's candidate, and it's favored by many observers. The is clear from the sheer amount of funding it's received from the U.S. and the European Union.
The company plans to supply more than 2 billion doses globally. Under the initiative known as Operation Warp Speed (OWS), the U.S. has paid $1.2 billion to AstraZeneca to bring its supply plan to fruition. (Moderna received $1.5 billion for 100 million doses of its potential vaccine under OWS.) AstraZeneca also has a deal with Catalent's cell and gene therapy division to produce its vaccine at Catalent's facilities in Italy, which could begin late in the third quarter of this year.
Image source: Getty Images.
Recently, AstraZeneca faced a roadblock in its trials. On Sept. 8, the company put its phase 3 trial on hold, because one participant in the study experienced severe neurological symptoms. In turn, its stock price took a hit, showing the risks inherent in a massive, quickly moving, coronavirus vaccine trial.
In a press release, AstraZeneca CEO Pascal Soriot assured worried investors and potential vaccine recipients that pausing the trial was the standard course of action to ensure its safety. "A vaccine that nobody wants to take is not very useful," Soriot said. Reuters reported on Sept. 14 that the trial had resumed in Brazil, and AstraZeneca announced a resumption in the U.K. after approval from the Medicines and Healthcare Products Regulatory Agency.
A trial of this size (at 50,000 participants) is likely to report an adverse reaction in at least one trial member. Investors now await further information from AstraZeneca.
In the meantime, no matter what happens with its vaccine candidate, AstraZeneca is a stable and profitable company -- which is why it isn't trying to make money from its vaccine. Its portfolio of existing drugs brought a 12% increase in total revenue in the first half of 2020 from the year prior to $12.6 billion. Its new medicines in particular added $2 billion to total revenue; oncology drugs made up 42% of that. Its three cancer drugs, Tagrisso, Imfinzi, and Lynparza, combined to add $3.7 billion in sales. Its respiratory and immunology drugs are also making a mark. Total sales for Symbicort, used for the treatment of asthma and chronic obstructive pulmonary disease, were $1.4 billion in the first half of 2020. The company also has 166 projects in an extensive pipeline.
Its solid portfolio of successful drugs makes AstraZeneca a reliable stock, even if its COVID-19 program fails to deliver.
This is the stronger coronavirus stock
Moderna's stock price could go sky-high if its vaccine is approved. But considering the pitfalls in vaccine development, the stock also involves a lot of risk. With no other approved products, Moderna could be a good choice for aggressive short-term investors who believe that from high risk, come high rewards.
But AstraZeneca is as close as we can get to a sure thing. This $142 billion company is not only profitable, but also has a strong lineup of oncological drugs. The cherry on top is that AstraZeneca offers a dividend that yields 2.5%, higher than the S&P 500's average dividend yield of 2%.
Even if AstraZeneca's vaccine candidate fails its trial, it won't dent the company's business. But if Moderna's vaccine candidate fails in its late-stage trials, or struggles with regulatory approvals, it could be the demise of the stock. Those risks make AstraZeneca the better coronavirus-related biotech stock to invest in today.
