I really like Moderna (MRNA 0.86%). The company's COVID-19 vaccine has been instrumental in preventing infections, hospitalizations, and (most importantly) deaths. Its messenger RNA (mRNA) platform could be used to develop vaccines and therapies targeting a wide range of diseases. I'm not surprised that Moderna ranked No. 3 on the Axios-Harris annual survey of corporate reputations and was the top healthcare company on the list.

But it's possible to like a company, yet not be a fan of its stock. Moderna was a great stock to buy in 2020 and even earlier this year. However, the stock is now trading at a sky-high valuation.

I don't think Moderna's current market cap of $180 billion-plus is justified at this point. Here are two biotech stocks that are better buys right now than Moderna. 

Two scientists in a lab.

Image source: Getty Images.


Novavax (NVAX -3.50%) could soon be a direct competitor to Moderna. The company expects to file for Emergency Use Authorization (EUA) of its COVID-19 vaccine candidate NVX-CoV2373 in the U.K. within the next few weeks. Regulatory filings in Australia, New Zealand, and the European Union should follow shortly thereafter, and the company plans to submit for U.S. EUA in the fourth quarter of 2021.

I don't look for Novavax to achieve the same level of success with its COVID-19 vaccine as Moderna has because the company will be late to the party. It's most likely to rack up sales as a booster shot.

However, Novavax doesn't need to keep up with Moderna's sales to deliver more impressive stock gains. There are several reasons why Novavax stock will likely beat Moderna over the next year. 

Valuation is an important factor. Novavax's market cap is below $20 billion. That's roughly 3.5 times projected 2022 sales, which is much more attractive than Moderna's forward price-to-sales multiple of 9.8.

Novavax also has more near-term catalysts than Moderna does with multiple EUA filings. I think the company's chances of winning authorizations are quite good, based on the late-stage results for NVX-CoV2373.

Over the longer term, Novavax could have an advantage over all of its rivals. Its flu vaccine candidate NanoFlu just might be Novavax's ace in the hole. The company plans to develop a combination COVID-19/flu vaccine. If successful, this combo vaccine should put Novavax in a great position as the world transitions from a pandemic to an endemic COVID-19 market.

Vertex Pharmaceuticals

You might be a little surprised that I picked Vertex Pharmaceuticals (VRTX -1.05%) as another biotech stock that's a better buy than Moderna. After all, Vertex's share price has fallen around 20% year to date after setbacks for its alpha-1 antitrypsin deficiency (AATD) program. However, my take is that Vertex should be poised to take off.

I'm not alone in that view, by the way. Wall Street analysts think that Vertex stock could soar by 38% over the next 12 months, based on the consensus price target. Why such optimism? I can think of three reasons off the top of my head.

First, Vertex's cystic fibrosis (CF) franchise still has plenty of room to run. The company's four approved CF drugs currently treat around half of the 83,000 or so CF patients in the U.S., Canada, Europe, and Australia. And Vertex doesn't have any potential rivals beyond phase 2 testing.

Second, the big biotech could have some good news from its pipeline in the relatively near future. Vertex expects to report results later in 2021 from a phase 2 study evaluating VX-147 in treating a genetic kidney disorder called APOL1-mediated focal segmental glomerulosclerosis. It plans to announce phase 2 results for VX-548 in treating acute pain following bunionectomy surgery early next year. 

We only have to go just a little farther in the future before Vertex could have another non-CF drug on the market. The company and its partner, CRISPR Therapeutics, hope to submit for regulatory approval of CTX001 in treating rare blood diseases beta-thalassemia and sickle cell disease in less than 24 months.

Third, Vertex has a growing cash stockpile that it will likely put to use in bolstering its pipeline. The company has already made acquisitions over the last couple of years that could pay off handsomely. 

Moderna's COVID-19 vaccine sales could taper off after 2022 -- possibly by a lot. It has only one pipeline candidate that could win approval within the next few years. Vertex is arguably in a much stronger position, yet Moderna's market cap is nearly 3.8 times greater than Vertex's.

Again, I like Moderna. But I think Novavax and Vertex are hands-down better biotech stocks to buy right now.