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Some investors like to take a “basket” approach to investing in emerging technology. Spreading their dollars across a few companies ensures that their returns are tied to the overall technology trend, rather than a business or management team. Other investors, eager to maximize returns (and willing to take more risks), will dig deeper to try and pick a winner in the industry.
For those wishing to choose between stocks in coronavirus vaccine manufacturers, two companies that are leveraging an emerging gene-based medicine technology present a profit opportunity. The advantage is not only in the coronavirus vaccine, but also in what it means for the treatment of diseases in the future. Both Modern (NASDAQ: MRNA) is BioNTech SE (NASDAQ: BNTX) are using 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 for the novel coronavirus, and investors looking to choose between they should focus on a few differentiating factors.
After yesterday’s news demonstrating the efficacy of Pfizer / BioNTech vaccine candidate, investors may think the battle is over here. However, the news, while exciting, is only the first step towards approval, distribution and profits for a vaccine.
Image source: Getty Images.
The history of BioNTech
BioNTech was founded in 2008 with the idea that each person’s cancer is unique and that messenger RNA could provide the ability to design personalized treatments. This idea was validated in 2017, when all 13 people treated with a genetically matched skin cancer drug from each person 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 cancer-associated mutant proteins, they can target them with a cancer-specific solution in that patient’s body. The company has 12 products currently 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 study where management expects results in 2020 beyond phase 3, and preliminary data yesterday showed the candidate was 90% effective in preventing COVID-19 among study participants.
The history of Moderna
Moderna was the largest privately held biotechnology company in the world before it went public. The company has been extremely confidential in the past, not publishing experimental data, refusing to share the diseases it was targeting, and even forcing some candidates to sign nondisclosure agreements.
The company’s CEO, Stephane Bancel, did not apologize, admitting that the culture is intense. Since taking over as CEO in 2011, Bancel has developed a reputation for being more inclined to promote the company on Wall Street than the scientific community. Despite Moderna’s pipeline of 21 drug programs targeting many viruses and different types of cancer, the company’s COVID-19 vaccine will be its only drug with results from a Phase 3 study this year.
What they all talk about
For its COVID-19 vaccine, BioNTech chose to partner with Pfizer thanks to Pfizer’s experience in vaccine research, regulatory requests, and manufacturing and distribution capabilities. The companies enrolled 30,000 attendees across 120 global sites, including 39 US states. The trial focuses on adults between the ages of 18 and 85, and the two companies have received funding and orders for as many as 900 million combined doses from the German government, the European Union and the US government, to begin the end of 2020. For manufacturing, the companies have two sites in Germany, a partnership with the Chinese company Fosun Pharma and three sites that Pfizer is activating in the United States
The companies believe they can supply 100 million doses by the end of this year and 1.3 billion by the end of 2021. In an unusual move, Pfizer’s CEO wrote an open letter in July outlining obstacles to the presentation of an Emergency Use Authorization (EUA) and promising to do so quickly if companies do well at the end of November. With exceptionally positive data being announced, the company is on track to apply for the EUA in the third week of this month. Ultimately, partnerships, manufacturing, and timelines instill confidence that once approved, BioNTech’s vaccine doses will follow quickly.
Like BioNTech, Moderna has chosen to collaborate with a more established company in the pharmaceutical sector. Moderna’s partner Lonza Group is helping to build manufacturing capacity in the United States and Switzerland. Benefiting 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 in late July and has 30,000 enrolled participants, with a preliminary analysis scheduled for later this month.
Following these findings, the company may file an EUA application next month, making the drug available to the wider public in the spring. The management has signed deals 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.
This all sounds like good news for the company, but doubts nonetheless arose about the wave of sales of shares of Moderna executives when shares hit a high this summer. And now that Pfizer and BioNTech are at the forefront of getting a highly effective vaccine distributed around the world, the pressure on Moderna is very 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 potent treatments that are easier to produce if successful. Given the recent news, it appears that BioNTech and Pfizer have made the leap from the lab to the real world with the effectiveness of their vaccine candidate. The test will now be distribution.
In addition to each company’s pipeline, investors need to consider what the vaccine could financially mean for both immediate sales and future funding. Now that BioNTech has created a proven mRNA-based vaccine within a year of the discovery of a new virus, the conclusion is clear: funding, not science, was the barrier that limited the development of mRNA treatments before 2020. Thanks to BioNTech’s early success using mRNA and its broader partnership with Pfizer – and given the continuing questions about stock sales from Moderna executives – the decision between these two cutting edge stocks is clear to me. I will be taking BioNTech stock on Moderna for what is likely to come in 2020 and beyond.
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