Key Points
- Moderna may request an Emergency Use Authorization as early as this week.
- The FDA will meet with an advisory committee on Dec. 10 to discuss Pfizer’s authorization request.
- The Pfizer and Moderna vaccine candidates reported 95% efficacy and 94.5% efficacy, respectively.
Our experts issued a rare "Double Down" Buy alert on this one stock... Learn more.
Pfizer (PFE -3.52%) and Moderna (MRNA -2.52%) have emerged as leaders in the much-talked-about coronavirus vaccine race. Pfizer and its biotech partner, BioNTech (BNTX -1.55%), last week became the first to request Emergency Use Authorization (EUA) for their investigational vaccine. Moderna may make that same request as early as this week.
If you're interested in betting on the winner of the race and the future of this vaccine market, you may be looking at both of these players. Which makes the best buy right now? There are two main factors to consider: the companies themselves and your investment style.
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First to cross the finish line
If Pfizer's data satisfies the U.S. Food and Drug Administration (FDA), this big pharma player is likely to be the first to cross the vaccine race finish line. On Dec. 10, the FDA's Vaccines and Related Biological Products Advisory Committee will meet to discuss Pfizer's data and offer a recommendation. The FDA doesn't have to follow the committee's advice. But the agency does listen closely to the words of this panel of experts.
So, we know Pfizer leads from a timeline perspective. But Moderna may be only weeks -- or even days -- behind if the biotech applies for an EUA before the end of this month. Both companies can win this race, even if they don't cross the finish line at the same time. That means their stock prices will benefit from vaccine authorization and each company will carve out an early share of what's sure to be a massive market.
Possible authorizations or approvals in other countries will offer another boost to the vaccine developers' share prices. The European Medicines Agency has started rolling reviews of both companies' candidates. Some media reports say the U.K. might approve the Pfizer investigational vaccine this week.
Favorable efficacy and safety data
Since we're interested in long-term investment, it's important to look at which of these two players could take a larger share of the market down the road. From a quality perspective, Pfizer and Moderna are on par. Analyses so far show 95% efficacy for Pfizer's vaccine candidate and 94.5% efficacy for Moderna's. Safety data also have been favorable for both.
One particular feature may push a Moderna vaccine into the lead farther down the road, though. Moderna's investigational vaccine can be stored at standard refrigerator temperatures for as long as a month. Beyond that time, it must be stored in standard freezer temperatures. That means shipping and storing of the vaccine won't require special equipment.
Pfizer's vaccine candidate, however, requires the ultra-low temperature of negative 94 degrees Fahrenheit. That means standard refrigerators and freezers won't do. To address the problem, Pfizer has developed special shipping containers using dry ice. They can even be used as temporary storage for up to 15 days. Still, with shipping and transport more of a challenge, Pfizer may eventually lose market share to Moderna or other players.
Moderna or Pfizer?
Considering all of this, it seems Moderna might be the best coronavirus stock, right? Yes and no. This is where investment style comes in. If you're an aggressive investor with appetite for risk, go for Moderna. Clinical-stage biotech companies have been more sensitive to coronavirus news, so you'll find a more volatile share performance (positive or negative) with this pick. Moderna has climbed more than 400% this year, while Pfizer has slipped 1.8%.
Why is that so? Because these biotechs depend on a successful coronavirus program for near-term revenue; big pharma companies, with their vast array of products, don't.
If you're a cautious investor, Pfizer is the better buy. The company's product portfolio will assure revenue well into the future -- a potential coronavirus vaccine is just a bonus. Big pharma companies also offer the advantage of dividend payments. Pfizer recently declared its 328th consecutive quarterly dividend. The company's annual dividend stands at $1.52 per share, sporting a yield of 4.17%.
And finally, before you choose Moderna or Pfizer, it's important to keep in mind that just because companies are submitting data to the FDA doesn't mean risk has disappeared. Failure can happen at any stage of development. Once we've accepted that fact, we also can accept the following idea: With potential products so close to commercialization, now is the best moment yet to bet on coronavirus vaccine makers.
