Better buy: Moderna vs. BioNTech
Some investors like to take a “basket” approach to investing in an emerging technology. Spreading their dollars over a few companies ensures that their returns are tied to the overall technology trend, rather than just one company or management team. Other investors, eager to maximize returns (and willing to take more risk), will dig deeper to try and pick a winner in the industry.
For those looking to choose between actions in coronavirus vaccine manufacturers, two companies that take advantage of emerging genetic medicine technology present a profit opportunity. The benefit isn’t just in the coronavirus vaccine, it’s also in what it means for treating illnesses in the future. Both Moderna (NASDAQ: mRNA) and BioNTech SE (NASDAQ: BNTX) use messenger ribonucleic acid (mRNA or messenger RNA) – genetic instructions that tell cells to make proteins that fight, or even prevent, disease – to create a vaccine against the novel coronavirus, and investors looking to choose between they should focus on a few differentiating factors.
After yesterday’s news demonstrating the effectiveness of the Pfizer / BioNTech vaccine candidate, investors may think the battle here is over. However, the news, while exciting, is only the first step on the road to vaccine approval, distribution and benefit.
The history of BioNTech
BioNTech was founded in 2008 with the idea that each person’s cancer is unique and that messenger RNA could be used to design individualized treatments. This idea was validated in 2017, when all 13 people treated with a drug genetically adapted to each person’s skin cancer saw a significant reduction in the risk of the cancer spreading.
The process involves computer modeling in which scientists compare the patient’s DNA with a healthy blood sample. By identifying mutant proteins associated with cancer, they can target them with a cancer-specific solution in that patient’s body. The company currently has 12 products enrolled in 13 clinical trials with respected partners such as Regeneron, Sanofi and Pfizer (NYSE: PFE) – the latter, as you may have heard, for a COVID-19 vaccine. This vaccine candidate is the only trial where management expects results in 2020 beyond phase 3, and preliminary data yesterday showed the candidate was 90% effective in preventing COVID -19 among trial participants.
Moderna was the largest privately held biotechnology company in the world before it went public. The company has been extremely secretive in the past – not releasing experimental data, refusing to share the diseases it targets, and even forcing some job applicants to sign non-disclosure agreements.
The CEO of the company, Stéphane Bancel, did not apologize, admitting that the culture is intense. Since taking over as CEO in 2011, Bancel has gained a reputation for being more inclined to promote the company on Wall Street than to the scientific community. Despite Moderna’s pipeline of 21 drug programs targeting multiple viruses and cancers, the company’s COVID-19 vaccine will be its only drug with the results of a Phase 3 trial this year.
What everyone is talking about
For its COVID-19 vaccine, BioNTech chose to partner with Pfizer based on Pfizer’s experience in vaccine research, regulatory submissions, and manufacturing and distribution capabilities. The companies registered 30,000 participants at 120 global sites, including 39 US states. The trial is focused on adults between the ages of 18 and 85, and the two companies have received funding and orders for as many as 900 million doses combined from the German government, the European Union and the United States government, for start at the end of 2020. For production, the companies have two sites in Germany, a partnership with the Chinese company Fosun Pharma and three sites that Pfizer is in the process of activating in the United States
The companies believe they can deliver 100 million doses by the end of this year and 1.3 billion by the end of 2021. In an unusual move, the CEO of Pfizer wrote an open letter in July outlining the obstacles to the filing for an Emergency Use Authorization (EUA) and promising to do so quickly if companies achieve positive results by the end of November. With the announcement of exceptionally positive data, the company is on track to file an application with the EUA by the third week of this month. Ultimately, the partnerships, manufacturing, and timelines lead us to believe that once approved, BioNTech’s vaccine doses will quickly follow.
Like BioNTech, Moderna has chosen to partner with a more established pharmaceutical company. Moderna partner Lonza Group is helping to establish manufacturing capacity in the United States and Switzerland. With nearly $ 1 billion from the National Institutes of Health, Moderna was able to develop its vaccine candidate in just 63 days, becoming the first to conduct trials of a COVID-19 vaccine in humans in mid-March . Its vaccine entered phase 3 at the end of July and has 30,000 registered participants, with a preliminary analysis expected at the end of the month.
After these results, the company could file an EUA application next month, making the drug available to the general public in the spring. Management has signed agreements with the United States for 100 million doses ($ 1.5 billion), with Canada for 20 million doses, with Japan for 50 million and with Qatar for an undisclosed amount.
All of this promises to be good news for the company, but questions still arise around The flow of sales of shares from Moderna executives as stocks hit record highs this summer. And now that Pfizer and BioNTech have taken the initiative to distribute a highly effective vaccine around the world, the pressure is on for Moderna to be up close.
How to choose
Both companies posed a risk to investors with this previously unproven approach, but messenger RNA has long had the potential to transform medicine by providing more powerful treatments that are easier to manufacture if successful. Based on recent news, it looks like BioNTech and Pfizer have moved from the lab to the real world thanks to the effectiveness of their vaccine candidate. The test now will be the distribution.
In addition to each company’s pipeline, investors should consider what the vaccine might mean financially for immediate sales and future funding. Now that BioNTech has created a proven mRNA-based vaccine within a year of discovering a new virus, the conclusion is clear: Funding, not science, was the barrier limiting treatment development. to mRNA before 2020. its broader collaboration with Pfizer – and due to ongoing questions regarding sales of shares by Moderna executives – the choice between these two cutting edge actions is clear to me. I will be taking BioNTech stock on Moderna for what is likely to happen in 2020 and beyond.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.