In a CNBC interview last month, billionaire philanthropist Bill Gates readily identified the company that he views as the leader in the race to develop a coronavirus vaccine: Pfizer (NYSE:PFE).
Pfizer could very well be the first U.S. drugmaker to seek emergency use authorization from the Food and Drug Administration for a COVID-19 vaccine. However, the big pharma company wouldn't be in this strong position without its partner, BioNTech (NASDAQ:BNTX).
BioNTech originally developed BNT162b2, with Pfizer teaming up with the German biotech on the promising vaccine program in March 2020. There's no contest between the stock performances of the two partners so far this year. BioNTech's shares have skyrocketed close to 150%, while Pfizer stock is down year to date. Is BioNTech a better coronavirus stock to buy now than its big partner?
A study in contrasts
BioNTech and Pfizer differ on pretty much every key attribute investors typically evaluate. The most glaring discrepancy is the size gap between the two companies. BioNTech's market cap of $20 billion is only one-tenth of Pfizer's.
Last year, Pfizer generated revenue totaling nearly $51.8 billion. BioNTech's revenue was under $130 million and consisted mostly of collaborations and license agreements with major partners. BioNTech remains unprofitable. Pfizer, on the other hand, delivered earnings of more than $16 billion in 2019.
Pfizer's current product lineup includes close to 40 major drugs on the market, at least nine of which are on track to be blockbusters this year. BioNTech doesn't have any approved products yet.
The two companies' pipelines are mismatched as well. BioNTech's pipeline includes a dozen clinical-stage programs. The only late-stage candidate is experimental coronavirus vaccine BNT162b2. Pfizer has 90 clinical-stage programs in its pipeline. Four currently await regulatory approval, with another 23 in late-stage testing.
A pretty good argument for BioNTech
BioNTech is unquestionably at a disadvantage compared to Pfizer in many ways, but there's at least one pretty good argument for buying the German biotech stock: Its growth prospects could be much greater than Pfizer's.
Let's assume for a second that BNT162b2 sails through late-stage clinical testing and is marketed globally. Based only on their current supply agreements, Pfizer and BioNTech stand to make billions of dollars from the coronavirus vaccine. BioNTech is also eligible to receive milestone payments of up to $563 million. This influx of cash will impact BioNTech more than it will Pfizer.
If BNT162b2 is successful, it could also bode well for the rest of BioNTech's messenger RNA (mRNA) pipeline candidates. There aren't any mRNA vaccines or therapies on the market so far. BioNTech's coronavirus vaccine could boost investors' confidence in the safety and efficacy of the mRNA approach.
Investors could be especially excited about BNT122, BioNTech's lead candidate outside of BNT162b2. BioNTech and Roche subsidiary Genentech are currently evaluating BNT122 in combination with Merck's Keytruda in a phase 2 study as a first-line treatment for melanoma.
Straddling the fence
Is BioNTech a better pick than Pfizer? Sorry to straddle the fence, but I think the answer depends on your investing style.
Aggressive growth investors will probably prefer BioNTech over Pfizer. Although Pfizer's growth will almost certainly pick up after its planned merger of Upjohn with Mylan, it won't be nearly as much as BioNTech's growth could be if BNT162b2 goes on to win regulatory approvals.
However, BioNTech is also a lot riskier than Pfizer is. More conservative investors would be better going with the big pharma stock. It offers decent growth prospects (or at least will once the Upjohn-Mylan deal closes), along with an attractive dividend. Pfizer is likely to remain a leader in the biopharmaceutical industry for a long time to come.