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Forget Moderna! These 2 Stocks May be the Biggest Winners of the Vaccine Race

By Adria Cimino - Dec 10, 2020 at 6:25AM

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A biotech company and a big pharma player each offer something that sets them apart from rivals.

Since the beginning of the coronavirus vaccine race, we've been hearing a lot about Moderna ( MRNA 1.74% ). That's because back in March, the biotech company became the first to launch a vaccine candidate in human trials. Now, the company is awaiting the U.S. Food and Drug Administration's (FDA) decision on its request for Emergency Use Authorization (EUA). The FDA has set its meeting to discuss Moderna's data and EUA request for Dec. 17.

This speed to market, however, doesn't necessarily mean Moderna will be the winner of the race. Other companies may enter the market later -- but with a product that eventually may become more successful. Here are two companies that are in exactly that situation today.

A masked doctor draws up a dose of coronavirus vaccine.

Image source: Getty Images.

1. Novavax

Novavax ( NVAX -0.92% ) launched the first phase 3 trial of its investigational vaccine in the U.K. this September. It's also running a phase 2b trial in South Africa to gain further efficacy data across different populations. The biotech has completed enrollment in both studies. Novavax expects data from the two trials in the first quarter of 2021. Based on data from the U.K. trial, Novavax will submit regulatory requests in the U.K., the European Union, and other counties. An additional phase 3 study in the U.S. and Mexico, planned to start any day, will support a regulatory request in the U.S.

If all goes smoothly, it's possible Novavax could bring its investigational vaccine to market in the first half of the year. The global need for a coronavirus vaccine means the company might easily take a share of the market even if two or three other players are already on the field.

But where Novavax may truly stand out lies farther down the road. The company plans to explore a combined flu/COVID-19 vaccine. Novavax is the perfect company to do this. The biotech has developed NanoFlu, an investigational flu vaccine that met all primary endpoints in a pivotal trial this year. The next step is regulatory submission and approval. Novavax plans on studying the possible combination of NanoFlu with its investigational coronavirus vaccine.

The potential product would be for post-pandemic use. And that's fine. Considering the depth of the current health crisis, governments are sure to remain vigilant even once it's over. Demand for prevention will continue far into the future.

The advantages of a one-stop product are clear. For those getting vaccinated, it means fewer jabs. And from the provider angle, one product streamlines transport and storage -- and therefore lowers costs.

2. Johnson & Johnson

Johnson & Johnson ( JNJ 1.46% ) also has a coronavirus vaccine candidate in phase 3 trials. The company lost a few weeks of time this fall when the unexplained illness of a trial participant halted the study. After an investigation determined the event wasn't linked to the vaccine candidate, J&J resumed its trials.

In a statement to Stat News, J&J said it expects interim results from the phase 3 study in January and may request an EUA as soon as February. The company announced earlier this month that it had begun rolling submissions with the European Medicines Agency and Canada's regulatory body. Rolling submissions allow a company to submit results as they become available. That way, regulators can get a head start on evaluating data while the rest of the trial unfolds.

But timing won't be crucial for J&J. Why is a late entrance just fine for this company? Because J&J has something that none of the other phase 3 competitors have: a single-dose vaccine. J&J's earlier-stage trial evaluated one-dose and two-dose regimens. That study found the single dose evoked a strong immune response, prompting the company to select it for final testing.

A one-dose vaccine is a big advantage for everyone. For countries, it means more of their citizens can be vaccinated with a limited number of doses. For healthcare providers, storage is simpler and organizing vaccination of the masses is easier. And for patients, one shot is definitely preferable to two. So, even if J&J enters the market months after others, it probably won't have a problem gaining market share.

Will investors also win?

Risk is different for each company. Novavax, as a clinical-stage biotech, will depend on the vaccine for revenue. J&J, a big pharma with many commercialized products, won't.

As a result, J&J represents a lot less risk -- but it also represents less opportunity for a big share gain in a short period of time. J&J shares only rose about 2% this year. At the same time, Novavax climbed more than 3,000% on optimism about its vaccine program. However, J&J may provide steady long-term gains. It's advanced 48% over the past five years.

If Novavax and J&J both bring their investigational vaccines to market, they're likely to take a place among the top players -- and investors are almost sure to benefit from share gains. But if the vaccine programs fail, the experience will be much more painful for Novavax investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Novavax, Inc. Stock Quote
Novavax, Inc.
$160.48 (-0.92%) $-1.49
Johnson & Johnson Stock Quote
Johnson & Johnson
$159.38 (1.46%) $2.29
Moderna, Inc. Stock Quote
Moderna, Inc.
$306.72 (1.74%) $5.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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