A year ago, a handful of vaccine stocks emerged from relative obscurity as the deadly Covid-19 pandemic claimed the first of what would become millions of lives. Two of those stocks, Moderna (MRNA) and BioNTech (BNTX), became household names. And both Moderna stock and BioNTech stock are making huge waves on Wall Street.
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Now the two words on the minds of many observers of the vaccine stocks are, “What’s next?”
Both Moderna and BioNTech were firmly rooted under 35 per share in late 2019. The vaccine stocks’ revenue was negligible and tied to collaboration deals. They both were plagued by years of losses. Even their messenger RNA, or mRNA, technology was largely theoretical and hadn’t been tested broadly in people.
Today, Moderna and BioNTech both have commercial products. Vaccine stock analysts expect sales to grow in at least the quadruple-digit range in the near term as countries race to vaccinate a world weary of death counts, business shutdowns and restricted activities. For the first time, both companies are expected to net some profits.
Among the army of Covid-19 vaccine developers around the globe, these companies — along with Novavax (NVAX), which still awaits approval of its vaccine — stand out among U.S.-traded stocks for the impact on their business.
Moderna and BioNTech are studying uses of their messenger RNA technology in fighting an array of infectious diseases and cancers, says Michael Breen, director of infectious disease and ophthalmology for research firm GlobalData. Meanwhile, the future of Novavax hinges on a different technology waiting in the wings.
“Maybe mRNA won’t be a silver bullet for all of those (uses),” Breen said in an interview. “But there’s a chance it will be a silver bullet for some of them.”
Moderna Stock, BioNTech Stock See Massive Acceleration
BioNTech stock and Moderna stock aren’t the only Covid-19 vaccine companies highlighted in 2020 headlines. But they’re the only two — so far — to completely turn around their fortunes due to the pandemic.
Moderna stock ended 2019 at 19.52. Since then, shares have rocketed 438.8%, as of the close March 9. And that’s after a deep pullback in Moderna stock since it hit a high point at 189.26 on Feb. 8. Shares closed at 130.87 on March 9.
Meanwhile, as of March 9, BioNTech stock has soared 188.2% from its 2019 close. It touched a peak at 131 in December and closed at 96.48 on March 9. In 2019, the vaccine stock was new to the public markets, having launched its initial public offering that October. The rise in BioNTech stock includes a dip from its peak in December to a low point at 80.55 later that month as shares of the Pfizer (PFE) partner form a cup-with-handle base, according to MarketSmith.com.
This year, Moderna stock analysts polled by FactSet expect the company to pull in $16.4 billion in sales. That’s a massive increase from $60 million in 2019 and $803 million in 2020.
BioNTech stock analysts see the drugmaker generating $8.18 billion in 2020 sales, a far cry from expectations for $470 million in 2020.
But you can’t note massive gains in vaccine stocks without mentioning Novavax. The company isn’t a messenger RNA expert. And, unlike Moderna stock and BioNTech stock, it didn’t go public in the last few years. But the pandemic could change the future of Novavax stock, just the same.
Vaccine Stocks: Another One To Know
Novavax has a long history of clinical frustrations. But the biotech company’s still-to-be-authorized vaccine offers protection right up there with BioNTech’s and Moderna’s drugs. In late-stage testing, it was 95.6% effective against the original strain of the virus that causes Covid, vs. 95% and 94.1%, respectively, for the rival vaccines.
Novavax isn’t a messenger RNA company. Messenger RNA is the body’s mechanism for creating proteins. Vaccines from BioNTech and Moderna hijack this process to prompt an immune response. The Novavax vaccine, on the other hand, uses insect cells to deliver a virus-like particle to the body, stoking an immune response. Vaccines using virus-like particles have been approved for a myriad of conditions, according to the National Library of Medicine.
Last month, Novavax began seeking approval for its coronavirus vaccine in multiple countries, including the U.S. The company is submitting a rolling review, meaning it will add data over time as it completes Phase 3 testing in the U.S. and U.K. Novavax says the two-shot regimen is stable at standard refrigeration temperatures.
“Novavax has a big chance of success,” said Brad Loncar, chief executive of Loncar Investments. “It might prove to be the best platform. Novavax will — just because of the timing — make a lot of noise, especially outside the U.S. where there are still billions of people who need to get vaccinated.”
Loncar’s firm provides the index for two exchange traded funds focused on biotech stocks.
Huge Jump In Novavax Stock
Since early 2020, Novavax stock has shown the biggest increase among the Covid vaccine stocks. From its 2019 close, it has risen 1,595.6% as of the March 9 close.
In 2021, Novavax stock analysts expect the firm to bring in $4.53 billion in revenue, catapulting 844%. The company also is expected to become hugely profitable after years of losses.
GlobalData’s Breen notes the company doesn’t have a commercial product yet. Novavax stock ended 2019 below 4 per share. It hit a high point close to 332 per share in February. That’s better than an 80-fold increase in a little more than a year for Novavax stock.
“What other industry could that happen in?” he said. “And they still haven’t launched their vaccine.”
To keep the good times rolling, all three vaccine stocks will have to prove their continued worth.
New Applications For Vaccine Stocks
Just don’t expect the same speed of development, experts caution. Facing a pandemic, the Food and Drug Administration allowed speedier testing of vaccines and treatments. Further, the Covid vaccines aren’t actually approved. Instead, they’re authorized for emergency use. Eventually, these companies will have to ask for approval based on longer-term clinical data.
“This is a very unique situation,” Chardan Capital Markets senior analyst Keay Nakae told Investor’s Business Daily.
“Both companies (Moderna and Novavax) are bringing in a lot of cash in a short time frame. Once we’re sort of past this pandemic, then we’ll see what happens for these companies.”
None of the companies returned requests for comment from IBD. But they have been fairly bullish on calls with investors.
Companies Are Bullish
During the annual J.P. Morgan Health Care Conference in January, BioNTech Chief Executive Ugur Sahin said he sees a high likelihood that Covid-19 will become endemic. If that happens, you’ll need to get a new Covid vaccine at regular intervals. Like the flu, it could be every year.
Then, there’s the concern that new mutations will undo current vaccines. Moderna is already testing a vaccine specific to a mutation identified in South Africa. That mutation appears to evade vaccines to some extent. BioNTech and Pfizer are testing a third dose of their original vaccine in the hopes it can take on the South Africa variant. There’s also some concern vaccine-induced immunity will wane over time.
Novavax and Johnson & Johnson (JNJ) tested their coronavirus vaccines during a time when the new mutations — known as variants — were arising. Novavax says its vaccine is 60% protective against the South Africa strain. The J&J vaccine, which the FDA authorized for use on Feb. 27, was 57% effective.
Meanwhile, vaccine stock AstraZeneca (AZN) has been under pressure since its drug appears to offer minimal protection against the same strain. The vaccine is authorized in a raft of countries including the U.K., Europe and Canada, but not the U.S. Last month, the World Health Organization also authorized the drug for emergency use.
Profound Acceleration In Vaccine Companies’ Operations
Before the pandemic, Moderna had tested nine messenger RNA-based vaccines in humans. But the company’s most advanced product was only in midstage testing.
It planned to begin final-phase studies for its cytomegalovirus, or CMV, vaccine this year. CMV is present in most humans and can manifest in fever, sore throat, fatigue and swollen glands. But most people’s immune systems keep CMV symptoms at bay.
Moderna Chief Executive Stephane Bancel estimates the pandemic accelerated his company’s financial operations by five years. Now, Moderna has enough funding to advance 20 programs across five therapeutic areas, he said on the company’s fourth-quarter earnings conference call.
“We had negative cash flows from operations every quarter,” he said. “And we anticipated needing multiple capital raises over at least five years until CMV would produce sufficient revenue for Moderna to break even in terms of cash flows and become a self-sustaining company.”
Now, the company is fully commercial with subsidiaries in eight countries.
“While most people in the world think of Moderna as a Covid-19 vaccine company, this is just the first product that we are launching,” Bancel said. “We have a platform, and our molecule mRNA is an information molecule. This is just the beginning.”
Vaccine Stocks Continue Work On Other Products
Moderna stock and BioNTech stock are 10-year stories from a vaccine shares perspective, Loncar says.
“That’s the way you need to think about it,” he said. “What are they going to accomplish over the next decade?”
Moderna is planning to soon start its Phase 3 test in cytomegalovirus, Bancel said. The company sees a peak of $2 billion to $5 billion in revenue for the product. It’s also targeting another nine infectious diseases with messenger RNA vaccines, including respiratory syncytial virus, HIV, Zika and Nipah.
Zika outbreaks have occurred in the Caribbean, Africa, Asia and the Pacific. Mosquitoes transmit the virus, which brings fever and other symptoms. The Nipah virus has a range of symptoms, from respiratory infection to fatal brain swelling, and has broken out several times in Asia.
Moderna also is working on cancer vaccines with Merck (MRK). These vaccines don’t prevent an illness. Rather, they provoke the immune system into mounting an attack.
BioNTech also has a deep pipeline steeped in cancer vaccines. It partners with names like Roche‘s (RHHBY) Genentech, Sanofi (SNY) and Genmab (GMAB).
Novavax is testing vaccines for respiratory syncytial virus and Ebola. Its earlier-stage efforts are in MERS and SARS. Both illnesses are caused by coronaviruses.
Influenza also looks to be a big opportunity for all three vaccine stocks. Moderna is working on a vaccine against the H7N9 strain. BioNTech is working with Pfizer on a flu shot. Novavax plans to test a flu shot for people age 65 and up, as well as a combo vaccine for flu and respiratory syncytial virus.
It Won’t Be An Easy Task
So while 2021 remains very much a Covid story — including chapters focused on variants — the future shines for infectious disease vaccines, Loncar says.
“If they can do that with Covid, it’s not unrealistic to believe that it could work for a lot of other infectious disease uses as well,” he said.
Vaccine development in 2020 was unprecedented, Loncar notes.
For that reason, you might get the impression investing in vaccine stocks is easy and predictable. But the messenger RNA platform still must prove it works in other areas. Further, Novavax still has yet to gain authorization for and to launch a commercial product. Don’t expect the same swift development in the immediate future, Loncar cautions.
“As awesome as (messenger RNA has) been against Covid, it still faces an uphill battle against a lot of things, especially outside of infectious diseases,” he said. “It’s important for people to know cancer and Covid are two totally different things. There’s a chance it may work in both, but there’s a chance it might not.”
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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