Moderna (MRNA -1.39%) and Novavax (NVAX) both delivered major returns for investors in the early days of the coronavirus vaccine race. Their shares soared 434% and 2,700%, respectively, in 2020. That's as investors bet on their ability to commercialize a coronavirus vaccine.
Moderna's vaccine entered the market in December of 2020. Novavax's vaccine began winning authorizations a year later -- but isn't yet approved in the United States. Still, both companies now are selling their vaccines and forecast billions of dollars in revenue this year. Yet, Moderna's and Novavax's shares are both suffering these days. They're down 46% and 62%, respectively, year to date. But catalysts may be on the horizon. Regulators are set to meet next month to make some important decisions that will impact both companies. Which stock is a better buy ahead of these meetings? Let's find out.
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Moderna dominates the market
Moderna already has proved it can dominate in the coronavirus vaccine market. The company generated billions of dollars in revenue and profit last year.
MRNA Net Income (Annual) data by YCharts
And the revenue picture looks even brighter this year. Moderna forecasts at least $21 billion, according to advance purchase agreements signed so far. The company now is studying a vaccine candidate that specifically targets the omicron variant as well as the original coronavirus. The U.S. Food and Drug Administration is meeting in late June to decide on whether an updated vaccine should be used for fall vaccination. If regulators say yes, Moderna expects to be ready with its candidate.
It's possible Moderna will continue bringing in a high level of revenue from its vaccine in the coming years. Experts expect the coronavirus to stick around. But it's too early to predict exactly what the revenue picture will look like. That's the one big uncertainty Moderna faces right now. At the same time, Moderna is moving closer to market with two potential blockbuster products. And they're not in the coronavirus program. I'm talking about vaccines to prevent two common viruses: respiratory syncytial virus and cytomegalovirus. Moderna's candidates are in phase 3 now.
Moderna also has an enormous amount of cash -- $19.3 billion. That ensures its ability to advance its own programs and buy assets to boost growth.
Novavax may gain market share
Novavax isn't likely to dominate the vaccine market in the near term. Moderna and Pfizer are well ahead when it comes to vaccinating populations worldwide. But Novavax still may carve out a decent share. The company forecasts vaccine revenue between $4 billion and $5 billion this year. That's a lot for a company's very first commercialized product.
Novavax also may have an edge when it comes to preventing coronavirus down the road. The biotech is working on a combined coronavirus/flu vaccine. So is Moderna. But Novavax is ahead when it comes to timeline and expertise. Novavax already brought a flu vaccine candidate -- NanoFlu -- successfully through clinical development prior to the pandemic. It's combining that candidate with its coronavirus vaccine. Moderna had to start from scratch on a flu vaccine. The company is working quickly and generating positive results. But Moderna's combined vaccine still is in preclinical development. Novavax's is in a phase 1/2 trial. An eventual product could be big because it covers two major viruses.
Today, Novavax is heading toward a possible catalyst: potential authorization of its current vaccine candidate in the U.S. An FDA advisory committee will discuss the subject on June 7. A decision could come almost immediately thereafter.
Moderna or Novavax?
First, it's important to note that coronavirus vaccine stocks aren't generating the same sort of returns we saw earlier in the pandemic. Investors no longer are piling into these shares after any bit of positive news. That doesn't mean we shouldn't buy these stocks though. What it does mean is we shouldn't expect quick, dramatic gains. Instead, a good vaccine stock will deliver steady gains over time.
Now let's consider Moderna and Novavax. I like both stocks, but here, I'm focusing on which one is a better buy right now. One big advantage of Moderna is the number of candidates in the pipeline -- and the fact that a few are even in late-stage development. Novavax's pipeline is much earlier stage -- with the exception of NanoFlu and the coronavirus program. That's why, in general, I have a slight preference for Moderna.
But, if I had to add just one of these players to my portfolio right now, I would choose Novavax. That's because this company is just getting started on its route as a commercial-stage vaccine company. News of increasing sales and new authorizations (including a potential nod from the U.S.) could offer the stock a boost -- and put it on the road to recovery.
