Messenger RNA-based vaccines promise great things for the future of medicine. The technology enables rapid decreases in the time needed to develop a drug – and is both cheaper and simpler to manufacture than more traditional options.
In the Western world, the first two companies to win approval for their mRNA-derived COVID-19 vaccines were Germany’s BioNTech SE (in collaboration with Pfizer) and United States’ Moderna, Inc.
Both firms have seen a continued run up in their share prices since the beginning of the outbreak of the coronavirus in February 2020. But will this growth persist, and which company offers the most upside for a potential investor?
Moderna (MRNA) was the first all-American company to receive US emergency-use authorization for its vaccine, just one week later than the US and Europe-based BioNTech. This gave the business a valued accolade in having the first-mover advantage over its domestic rivals.
Indeed, that advantage has only grown in the interim, since the much-publicized setbacks suffered by the likes of Johnson & Johnson (JNJ) and AstraZeneca (AZN) over the possibly of blood clots having damaged their respective positions in the market.
The company now has two COVID vaccines in play at the moment: the first is its well-known mRNA-1273 variety – the one already being administered to patients – and its second, mRNA-1283, which has only just entered phase I clinical trials.
This second vaccine has the potential to be a major catalyst for Moderna as competition between other vaccine producers hots up. Moderna has indicated that this new vaccine, if viable, will be a candidate for use as a booster shot for those already vaccinated, as well as a first dose for those who haven’t.
As it is still not clear whether any coronavirus vaccine delivers lifelong immunity, the possibly that Moderna could have a ready-made booster vaccine to be used an indefinite number of times on every patient, seropositive or seronegative, would be a huge revenue generator.
Furthermore, simply having an expanded portfolio of COVID vaccines on offer would also help the company corner more of the market, and demonstrates its expertise in the space vis-à-vis other pharmaceutical enterprises.
What is a cause for concern, however, is a stretched valuation. It’s quite possible price has got ahead of valuation at this point in time.
Moderna Market Cap & Financials
On the financial front, Moderna currently sports a relatively high market capitalization of $87 billion. Investors will worry at the moment whether this is justifiable; Moderna failed to give revenue projections in its Q4 2020 briefing – and even more alarming, it failed to do so again in its latest Q1 earnings report. Not disclosing this kind of information can often leave investors wary.
One point of optimism for shareholders, however, is the difference in the firm’s trailing twelve month and forward Price/Sales multiple. Its TTM was a well-inflated 22.87 (compared to a sector average of 4.09), whereas its forward ratio was a more pleasing 4.72 – which is even better when the projected industry multiple is expected to be 7.89.
It seems from this that the market reckons Moderna will outperform the wider Health Care sector over the coming year.
Indeed, Moderna’s revenues are already bearing this out. Its income grew nearly 24,000% year-on-year in Q1 2021 – from $8 million to $1.9 billion – and one can only assume that if its Price/Sales metrics improve as forecast, Moderna should make a decent profit off of these revenues sometime soon.
BioNTech (BNTX) wasn’t just the first company in the world to get its COVID-19 vaccine approved by regulators – it was also deemed to have created the safest and most effective drug on the market too.
The company’s share price has reflected this superiority as well. BioNTech’s stock has grown over 390% the last year alone, and its sales figures are surging. Its vaccine, BNT162b2, has already delivered a total of 450 million shots, and the firm has penciled-in agreements to provide more than a further 1.8 billion throughout 2021.
BioNTech is also enjoying the beginnings of what appears to be an emerging business and technological moat around its product i.e. its effectiveness against new strains of COVID-19 that are popping up all over the globe.
It remains to be seen how this will pan out, but it is still a major tailwind for BioNTech: vaccine-procuring authorities will, in the short-term at least, favor purchasing a vaccine that will protect more of their population for longer, saving money on costly additional vaccines as future COVID variants arise throughout the world.
BioNTech’s sales are growing at a rapid rate – and so too are its revenues and profits. Like Moderna, BioNTech saw 4-figure revenue increases in Q1 2021, with the German company gaining over 7000% in sales – from €27.7 million in 2020, to €2.05 billion a year later. Its earnings per share jumped from a loss of 0.24 euros in March 2020, to a diluted profit of 4.39 euros this time round.
It will also please investors to know that BioNTech has a richly diversified portfolio of products in its pipeline too. It specializes in treating cancer diseases with a range of therapeutic modalities, including next generation CAR-T cell therapies and immunomodulation factors such as ribocytokines and TLR-7 agonists.
It expects to be updating on four of its products during the remainder of 2021.
Moderna Stock Vs BioNTech: Summary
Neither Moderna nor BioNTech are dividend-generating companies, therefore any benefit to the investor will come through price rises in their respective stock valuations.
Given that Moderna missed on revenue expectations in the last quarter – and coupled with its reticence on providing guidance for the future – investors should be cautious about its near-term direction.
Conversely, BioNTech has converted itself into a profitable company, beating expectations across the board, and with what are on absolute terms lower total revenues.
BioNTech seem the most likely to continue growing at its current enviable rate, and should look more attractive to investors on this basis. Moderna is still a quality mRNA play, but is probably a riskier bet at the current time.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.