Moderna (MRNA +1.88%) soared to fame in the early days of the pandemic thanks to its coronavirus vaccine. The stock price followed -- ending 2020 with a 434% gain. Since then, though, interest in vaccine stocks has waned. And Moderna shares have suffered.
At the same time, fellow biotech company Axsome Therapeutics (AXSM +0.23%) is getting its moment in the spotlight. Axsome shares have defied the bear market so far. That's as the company launches its very first products.
Regardless of recent stock performance, both companies offer solid future prospects. Now the question is: Which of these dynamic biotech players makes the better buy today?
The case for Moderna
Moderna shares have dropped 50% so far this year. Sure, Moderna is generating billions of dollars from its coronavirus vaccine now. But investors worry about sales of vaccines or boosters in a post-pandemic world.
These concerns may be overblown. Moderna recently said the U.S. vaccine market could be worth as much as $13 billion once the pandemic shifts to an endemic situation. International markets could add to that. These numbers don't point to vaccine sales higher than the estimate of $21 billion for this year. But they still leave Moderna with a blockbuster product -- and plenty of cash to fund the pipeline.
Speaking of its pipeline, Moderna has two phase 3 programs that could result in commercial launches in the coming two to three years: vaccine candidates for influenza and for respiratory syncytial virus (RSV). Both of these represent billion-dollar opportunities for Moderna.
NASDAQ: MRNA
Key Data Points
Now let's look at Moderna's valuation. The stock is trading for less than 5 times forward earnings estimates. That's compared to more than 12 late last year.
Of course, we could say that earnings growth might taper off in a post-pandemic world. But I don't think a phase of slower growth will last too long. Potential launches of flu and RSV vaccines could offer powerful new growth drivers. That's why Moderna looks cheap at today's level.
The case for Axsome
Axsome is just getting started when it comes to growth. It's not yet bringing in billions of dollars like Moderna. But it may get there. The company recently won regulatory approval for Auvelity, a treatment for major depressive disorder that may bring in $1.3 billion in sales by 2029, according to GlobalData.
The antidepressant market is crowded. But Auvelity's quick action -- it improves symptoms in just one week -- could help it rise above its rivals. Most antidepressants take weeks to work.
Axsome started selling its first drug in May: Sunosi, a sleep disorders treatment it bought from Jazz Pharmaceuticals. And the company plans to resubmit an approval request to regulators for its migraine candidate in the third quarter of next year. The U.S. Food and Drug Administration initially rejected the candidate, but Axsome has addressed all of the concerns.
So, if all goes well, we're looking at three commercialized drugs within the next couple of years. And more could follow shortly afterward. That's because Axsome's four other pipeline programs are in either phase 2 or phase 3 trials.
NASDAQ: AXSM
Key Data Points
And the company recently started recording product sales. It reported six weeks of Sunosi sales in the most recent quarter -- totaling $8.8 million.
So far this year, Axsome shares have climbed 28%, gaining most of that amount over the past few months. But considering the potential number of product approvals in the coming years, there's still room for share-price growth.
Moderna or Axsome?
Both companies offer promising outlooks. They're set to generate revenue from not just one but several products in the years to come. They also both have later-stage candidates in their pipelines. This is positive, because it indicates some of those potential products may not be too far off.
But if I had to choose just one of these stocks right now, I'd go for Moderna. The company has 46 programs in development, $18 billion in cash (thanks to vaccine sales) to support those programs, and a current product that should continue to be a blockbuster well into the future. Moderna, due to declines this year, also could offer more rebound potential -- even if that rebound doesn't happen overnight.
All of this means that today, Moderna wins this better-buy contest.
