As 2020 draws to a close, all eyes are peeled on Pfizer (PFE 0.52%) and Moderna (MRNA 0.46%). The two companies have been working throughout the year to create vaccines against the novel coronavirus that has taken nearly 1.6 million lives globally.
On Dec. 11, Pfizer received an Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration (FDA). Pfizer's coronavirus candidate, BNT162b2, is based on messenger RNA (mRNA) technology and was developed with its German biotech partner BioNTech (BNTX 1.48%). The candidate displayed 95% efficacy in the still-ongoing phase 3 trial.
Meanwhile, Moderna's mRNA vaccine candidate, mRNA-1273, reported an efficacy rate of 94.1%. Moderna received a EUA on Dec. 18, just one day after the agency's advisory committee unanimously recommended authorizing the vaccine.
Both companies receiving final regulatory approval will aid the global battle against COVID-19. However, how good will their success be for their stocks, which are in close competition with one other?
Pfizer is a first mover in coronavirus vaccines, but has more to offer
After receiving its EUA from the FDA, Pfizer immediately began distributing doses of its vaccine candidate in the U.S. Over 550,000 Americans were vaccinated in the first full week of distribution. More good news came from across the pond this week, when the European Medical Agency and the European Commission authorized the shot within hours of one another.
Pfizer has a deal with the U.S. Government to supply 100 million doses of the vaccine for $1.95 billion -- with an option to provide another 500 million doses. The company also has deals with other countries. Globally, Pfizer and BioNTech aim to manufacture and supply 50 million doses in 2020, and up to 1.3 billion doses by the end of 2021.
Whether or not Pfizer's coronavirus vaccine succeeds, it wouldn't dent the company's business. It's already a secure pharmaceutical company, with strong revenue from its core businesses of various approved drugs with growing sales. Its popular drugs driving revenue growth include breast cancer drug Ibrance, arthritis treatment Xeljanz, and Eliquis, which treats blood clots and helps prevent strokes. For the full year 2019, Pfizer's total revenue came in at $51.8 billion.
As CNN reported, according to estimates by Morgan Stanley, Pfizer could bring in $19 billion in revenue in 2021 from its coronavirus vaccine. This is in addition to the estimated $975 million just from 2020, as Pfizer plans to supply 500 million doses by end of the year. However, Pfizer will have to split the COVID-19 vaccine revenue 50-50 with BioNTech.
Moderna is a growth stock -- what else does it have in the works?
Receiving a EUA for its coronavirus vaccine is certainly good news for Moderna, since its future largely relies on this vaccine's (and its technology's) success. Its phase 3 trial known as the COVE study is still ongoing, collecting evidence to support a full FDA approval. Moderna has promised to supply 20 million doses for the U.S. before 2020 ends, and could manufacture 500 million to 1 billion doses globally in 2021.
Like Pfizer, government orders for mRNA-1273 are already sky-high. On Dec. 11, the U.S. government exercised its option for 200 million more doses. It still has the option to purchase an additional 300 million, if needed. On Nov. 25, Moderna announced that the European Commission also had the option to receive between an additional 80 million and 160 million doses of mRNA-1273.
On Nov. 29, Moderna noted an amendment in its deal with the U.K. government to supply an additional 2 million doses, making the total 7 million doses of mRNA-1273. Like Pfizer, Moderna also has supply deals with other countries.
There's a lot riding on these deals. That's because, unlike Pfizer, Moderna has no approved vaccine in its portfolio yet. Moderna plans to charge around $25 to $37 per dose in its two-dose schedule, while Pfizer plans to charge $19.50 a dose. If Moderna manages to sell 500 million doses in 2021 (that's the lower end of its projections), it could generate at least $12.5 billion in revenue from mRNA-1273.
The revenue from its COVID-19 vaccine over the next three years could build a stable cash reserve for the company, boosting research and development for other products in its pipeline. Moderna currently has 21 clinical candidates under development. Its clinical trials of vaccines for cytomegalovirus, the Zika virus, and various types of cancer have drawn attention from investors. But if its coronavirus vaccine proves ineffective, shows any severe side effects, or fails to receive full approval, its stock could come crashing down.
The mRNA technology that it was used to create mRNA-1273 is also the basis of many of Moderna's other potential treatments currently in development. Pfizer and BioNTech's mRNA-based COVID-19 vaccine candidate, BNT162b2, uses the same technology. As both the Pfizer-BioNTech and Moderna vaccines make their way through the market, they could invite a lot of attention to and trust in Moderna's drug development approach with mRNA.
It doesn't end there
To determine the success of the candidate vaccines, they need to be tested globally; that's where logistics comes into the picture. In terms of distribution, Moderna has the upper hand, as its vaccine candidate, mRNA-1273, can be stored at normal refrigeration temperatures for a month. Pfizer's candidate needs to be kept at minus 94 degrees Fahrenheit to remain stable for longer than five days. To leap over that temperature hurdle, both companies have designed temperature-controlled shippers. These containers will maintain temperature for 10 days unopened, allowing greater ease of global transportation.
A new danger looming over potential vaccines is the discovery of a more infectious strain of SARS-CoV-2 in the U.K. According to Reuters, scientists believe this new variant is 40% to 70% more transmissible; how effective the Pfizer-BioNTech, Moderna, or any other COVID-19 vaccine will be against it is yet to be determined. Coronavirus investors need to keep a close eye on new strains and mutations, which could make current vaccines less effective, or even ineffective.
Keeping in mind the pros and cons of these coronavirus biotech stocks, Moderna emerges as a good choice for aggressive investors who still want to fill their pockets with some short-term gains. Moderna's stock has surged 542% so far this year, while Pfizer's stock is up 0.9%. The S&P 500 has gained 16% over the same period.
But looking at the broader picture, Pfizer -- with its sustainable diversified business and growth strategies -- looks like a still-lucrative yet less risky investment opportunity for the longer term.