Moderna (MRNA 0.79%) has delivered impressive stock gains so far in 2021. However, BioNTech (BNTX 1.38%) is by far the bigger winner year to date, with its stock skyrocketing more than 330%.
Despite its stronger stock performance this year, BioNTech's market cap is only a little over half the size of Moderna's. Here are three reasons BioNTech isn't nearly as big as Moderna right now.
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1. Lower expected sales
It makes sense that a company with significantly lower revenue and earnings would have a lower market cap than a rival with stronger financial results. But BioNTech actually outperformed Moderna on both fronts in the companies' latest quarterly updates.
In the second quarter, BioNTech reported revenue of 5.3 billion euros (around $6.2 billion). The German biotech posted earnings of nearly 2.8 billion euros (close to $3.3 billion). By comparison, Moderna's Q2 revenue totaled $4.4 billion, and it generated earnings of $2.8 billion.
So why does BioNTech have a lower valuation than Moderna? One main reason is that the company projects lower sales for full-year 2021. BioNTech expects full-year sales of 15.9 billion euros (roughly $18.6 billion). Moderna looks for full-year revenue of $20 billion. BioNTech and Pfizer split the profits on the sales of their COVID-19 vaccine. Moderna, however, pockets all of the revenue from its vaccine.
Neither BioNTech nor Moderna has provided guidance for 2022 yet. However, Moderna revealed that it has already secured advanced purchase agreements totaling around $12 billion for next year with options worth another $8 billion.
2. Less advanced pipeline
The differences between BioNTech's and Moderna's financial results don't fully explain the discrepancy in the valuations of the two vaccine stocks. There's another factor likely at play, though.
Investors are always looking to the future. For biotechs like BioNTech and Moderna, that means their pipelines are important to their valuations. And investors probably are more excited about Moderna's pipeline.
BioNTech doesn't currently have any late-stage candidate other than its COVID-19 vaccine. Moderna plans to advance its mRNA-1647 cytomegalovirus (CMV) vaccine into late-stage testing this year. The company thinks the CMV vaccine could generate sales of between $2 billion and $5 billion if it goes on to win regulatory approvals.
Moderna also has a much larger cash stockpile to use in bolstering its pipeline than BioNTech does. As of June 30, 2021, Moderna's cash, cash equivalents, and investments totaled $12.2 billion. BioNTech's cash position stood at 914.1 million euros (nearly $1.1 billion) at the end of the second quarter.
3. Lower profile
There's another reason why BioNTech is so much smaller than Moderna that could be more important than you might think. BioNTech has a much lower public profile than Moderna does.
Part of the challenge for BioNTech on this front is that it's overshadowed (especially in the U.S.) by its big partner, Pfizer. Many people refer only to the Pfizer and Moderna vaccines, leaving BioNTech out altogether.
I wouldn't go as far as to call BioNTech the Rodney Dangerfield of biotech stocks. Unlike the late comedian, BioNTech does get respect from investors. Its sizzling stock performance this year proves the point. However, BioNTech hasn't received nearly as much hype as Moderna has.
Bigger isn't always better
For right or wrong, these three reasons go a long way toward explaining why BioNTech isn't nearly as big as Moderna. But bigger isn't always better.
There are major questions about how sustainable Moderna's sky-high market cap actually is. One prominent analyst predicts that the stock will plunge close to 70% because its present valuation isn't warranted.
Granted, quite a few Wall Street analysts think that BioNTech is overpriced at current levels, as well. However, there's an old saying: "The bigger they are, the harder they fall." BioNTech's smaller size in comparison to Moderna just might be an advantage in the not-too-distant future.
