Vaccine-focused biotech stocks have been amazing performers over the last couple of years -- particularly if you owned the right ones. Novavax (NVAX 2.95%) jumped from a micro-cap to a $12 billion valuation. And of course, mRNA vaccine specialists have been on fire. Moderna (MRNA 3.28%) is now worth $94 billion, and BioNTech (BNTX 0.55%) has grown to a $58 billion valuation. Even tiny Vir Biotechnology (VIR 0.37%) has crushed the market: It's up by 144% over the past two years.
Of course, it was COVID-19 that caused this segment of the healthcare sector to skyrocket. But there are a lot of other ugly diseases out there, and effective vaccines could knock some of them out, too. We asked three of our contributors which companies in this niche they're bullish on now: Their picks: Novavax, Moderna, and Vir Biotechnology.
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Flu vaccines could be a big moneymaker for this biotech
George Budwell (Novavax): Novavax's shares are up by a staggering 3,560% over the past two years. The stock's meteoric rise during this period wasn't without cause, however. Its protein-based COVID-19 vaccine candidate, NVX-CoV2373, is forecast to haul in somewhere between $3 billion and $8 billion in sales next year. Either end of that range would qualify as a strong revenue stream for a company with a $12.8 billion market cap at present.
With all the focus on NVX-CoV2373, though, some investors have seemingly forgotten about Novavax's recombinant quadrivalent seasonal influenza vaccine candidate, dubbed NanoFlu. That's unfortunate, because NanoFlu could prove to be a blockbuster in its own right, and it arguably has a better shot at delivering sustainable revenue growth than NVX-CoV2373 over the next five years.
Novavax wrapped up the final analysis for its seasonal flu vaccine's pivotal trial in September, and the study's results were subsequently published in The Lancet Infectious Diseases. The most important takeaway for investors is that NanoFlu did, in fact, achieve statistical significance on the trial's primary endpoints. Novavax also recently commenced an early-stage trial to evaluate the combination of NanoFlu and NVX-CoV2373. Top-line data from this trial ought to be available in the first half of 2022. An annual vaccine that provides protection against both seasonal flu and COVID-19 would likely appeal to millions of older adults. NanoFlu, in turn, has very real potential to be the company's next major growth driver.
Nearly three dozen reasons to pick Moderna
Patrick Bafuma (Moderna): Moderna has a widely used COVID-19 vaccine on the market, and $15 billion in cash and investments on the books as of Sept. 30. But the $94 billion market cap biotech is not resting on its laurels. With 34 candidates in its pipeline, it is pushing hard to be known for more than just its COVID-19 vaccine.
Furthest along in the development process is its cytomegalovirus (CMV) vaccine, which is currently in phase 3 studies. CMV is the leading infectious cause of birth defects in the U.S. Pregnant women who get infected with CMV can pass the virus on to their fetuses. Each year, about 25,000 babies in the U.S. are born infected with it, and about 20% of those have birth defects including learning disabilities, hearing loss, vision impairment, and decreased muscle strength and coordination. Thus far, there are no approved vaccines for CMV.
Slightly behind that in the R&D pipeline is a vaccine against RSV, another common contagious respiratory virus. It's currently in phase 2/3 trials for older adults, and could become another growth driver for the Massachusetts-based biotech. It is unclear if RSV boosters would be needed, but considering the two-dose series of GlaxoSmithKline's (GSK 1.60%) shingles vaccine Shingrix saw $2.4 billion in sales in 2019, this could be a major opportunity for Moderna.
The company has an annual influenza vaccine in phase 2/3 trials as well -- and the total addressable market for flu vaccines is anticipated to be almost $10 billion in 2030. This all feeds nicely into the organization's clear goal of bringing a pan-respiratory-virus annual vaccine to market.
And finally, the biotech has a 50-50 partnership with Merck to develop personalized oncology vaccines. After a sample of a patient's tumor is analyzed by the company, Moderna provides an injection of personalized mRNA that is intended to enhance the patient's immune system's ability to recognize and attack cancerous cells. This "personal cancer vaccine" is in phase 2 trials for head and neck squamous cell carcinoma as well as for melanoma. If it shows promise, the concept might be applicable to other cancers too. After helping curb one of the most fatal pandemics in the last century, it would be hard to imagine a better encore than revolutionizing cancer therapy.
"A world without infectious disease"
Taylor Carmichael (Vir Biotechnology): While the mRNA vaccine for COVID-19 that Pfizer (PFE 0.23%) brought to market in partnership with BioNTech made all the headlines, Glaxo decided to collaborate with a much smaller biotech: the $4 billion market cap Vir Biotechnology. George Scangos, formerly the CEO of Biogen (BIIB -0.48%) for many years, now heads up Vir. And the mission statement of that little vaccine specialist is pretty audacious: "a world without infectious disease."
Vir Biotechnology was founded many years ago. A company named Alnylam (ALNY 0.19%) had a pipeline bursting with RNAi therapies. While these drugs are also focused on RNA, instead of trying to create new messages (as the mRNA drugs from Moderna and BioNTech do), Alnylam's treatments seek to inhibit certain RNA molecules. Alnylam has been highly successful, but it wasn't actively pursuing vaccines with the technology. So a biotech start-up licensed the science, and Vir was born.
Since then, Vir has moved beyond its siRNA (small interfering RNA) roots: It has platforms in antibodies, T-cells, and innate immunity, too. All of the company's treatments are focused on helping people fight off infectious diseases.
Right now, Vir Biotechnology has three antibody therapies for COVID-19, including one that's already been authorized by the FDA. (Glaxo is handling the COVID-19 drug development). And Vir is actively pursuing vaccines for hepatitis B, the flu, and HIV. With almost $1 billion in cash on the books and very promising science underpinning its pipeline, Vir looks likely to be a winner over the next several years.
