Only two coronavirus vaccines have a realistic possibility of becoming available by the end of 2020. Moderna (MRNA -3.49%) makes one of the vaccine candidates in the running. Pfizer (PFE -3.25%), along with its partner BioNTech (BNTX -1.44%), lays claim to the other contender.
While Moderna and Pfizer share this one important thing in common, the two drugmakers are quite different in many respects. Which of these coronavirus-focused stocks is the better pick for investors over the long term? Here's how Moderna and Pfizer compare.
Image source: Getty Images.
The case for Moderna
Moderna's initial public offering (IPO) in December 2018 was the biggest ever for a biotech stock. Since then, the company's shares have skyrocketed close to 280%. Most of the gain has come this year after Moderna announced it was developing a coronavirus vaccine candidate.
That experimental vaccine, mRNA-1273, has moved quickly through clinical trials. Along the way, Moderna has racked up nearly $2.5 billion in funding from the U.S. government, including a deal to supply 100 million doses of its vaccine. The biotech has also secured a supply deal with Canada and is in discussions about an agreement with the European Commission.
These supply agreements are contingent upon mRNA-1273 proving to be safe and effective. We should know pretty soon if that's the case. Moderna has already begun rolling regulatory submissions for its coronavirus vaccine in Canada and received a green light to file for European approval. It could submit for U.S. Emergency Use Authorization (EUA) by late November.
Assuming all goes well, Moderna will have an instant blockbuster product on its hands. But the bigger story for the company relates to the rest of its pipeline. Moderna's experimental coronavirus vaccine is based on an approach where messenger RNA (mRNA) is engineered to create a specific protein that mirrors the spike protein on SARS-CoV-2, the virus that causes COVID-19. If this mRNA approach works for one disease, it will likely work for many others.
Moderna is banking on mRNA in a big way. The company is evaluating five other mRNA vaccine candidates in clinical testing. Its pipeline also includes seven mRNA programs targeting conditions such as cancer and coronary artery disease.
Investors, in turn, are banking on Moderna's success. The biotech's market cap currently stands at a little under $30 billion. If mRNA-1273 wins regulatory clearance, the stock could move much higher.
The case for Pfizer
Pfizer recognized the potential for mRNA vaccines in 2018 when it partnered with BioNTech to develop an mRNA flu vaccine. The big drugmaker expanded its relationship with the German biotech earlier this year to advance its coronavirus vaccine program.
That turned out to be a smart move for Pfizer. The two companies hope to file for EUA with the U.S. Food and Drug Administration for experimental coronavirus vaccine BNT162b2 by the third week of November. If the vaccine wins EUA, Pfizer and BioNTech stand to receive $1.95 billion from the U.S. government to supply 100 million doses. That deal could be expanded to include another 500 million doses. In addition, the companies have supply agreements in place with Canada, the European Union, and Japan.
Of course, Pfizer isn't dependent only on BNT162b2. The company markets a long list of products, featuring more than half a dozen on track for blockbuster sales this year. Its most significant growth drivers include blood thinner Eliquis, cancer drugs Ibrance and Xtandi, and rare disease drug Vyndaqel.
Pfizer also boasts one of the deepest pipelines in the biopharmaceutical industry. It has 90 clinical programs, with four of those awaiting regulatory approval and another 23 in late-stage testing. The big pharmaceutical company's most promising candidates include pain drug tanezumab and pneumococcal vaccine PF-06482077.
The planned merger of the Upjohn business, which is home to a basket of older drugs that have lost patent exclusivity, with Mylan should boost Pfizer's growth. While the deal will also reduce Pfizer's dividend a little, the company will still offer one of the more attractive dividends in the healthcare sector. Pfizer shareholders who retain their shares of Viatris, the newly formed entity resulting from the Upjohn-Mylan merger, will receive a combined dividend from Viatris and Pfizer that's roughly equivalent to Pfizer's current dividend.
Better coronavirus stock?
My view is that both Moderna and Pfizer are attractive stocks. However, they'll appeal to different kinds of investors.
Aggressive investors will likely prefer Moderna. The biotech's shares will almost certainly move a lot higher than Pfizer stock will if both companies win EUA for their respective coronavirus vaccines.
On the other hand, Pfizer's the better pick for more conservative investors. The big pharma stock is less risky than Moderna. It offers a solid dividend with decent, albeit not spectacular, growth prospects that should improve in the near future when the Upjohn-Mylan transaction closes.
