Moderna Or BioNTech: Better Stock To Play The mRNA Revolution?
Messenger RNA or mRNA technology has come of age, with the first two Covid-19 vaccines (Moderna and BioNTech/Pfizer) approved by Western regulators being based on the technology. The technology promises big benefits for drug development, considering the relatively quick development times (the Covid shots were apparently designed in a matter of a few days) with manufacturing also being simpler and more cost-efficient. Boston-based Moderna and Germany’s BioNTech – the two companies behind the first Western Covid shots – are the most prominent names in the mRNA space. Let’s take a closer look at the two company’s Covid vaccines, their financials, future drug pipelines, and relative valuations to find out which of the two stocks could be the better bet for investors.
See our analysis on Moderna Vs. BioNTech: Which MRNA Stock Should You Pick? for more details on how the financial and valuation metrics for the two companies compare.
Both Moderna and BioNTech and its partner Pfizer commenced deliveries of their Covid-19 vaccines last month and it’s safe to assume that the shots will be the biggest driver of their Revenues over the next two years. While both vaccines have proven to be over 90% effective and will require two doses per person, Moderna’s shot is easier to distribute and doesn’t need to be stored at super-cold temperatures, unlike the BioNTech vaccine. BioNTech and Pfizer are targeting production of over 1.3 billion doses in 2021, compared to Moderna which has guided between 600 million to 1 billion doses for the year. However, Moderna is likely to post higher revenues and profits from its vaccine, considering that its shot is more expensive (as much as $37 per dose, versus $19.50 per dose for BioNTech/Pfizer) and also because BioNTech will likely split the revenue with partner Pfizer.
Financials & Relative Valuations
The Covid-19 vaccine will be the first commercial product for both companies, with 2021 being the first full year of sales. The consensus estimates BioNTech’s 2021 Revenue at about $7 billion, while Moderna’s Revenue is estimated to come in at $8.5 billion. Working back from consensus EPS figures, Net Margins for both companies for this year are estimated to stand in the 50% range (although this appears high, in our view). Coming to valuations, BioNTech trades at 3x projected 2021 Revenue while Moderna trades at about 5x 2021 Revenue. Relative to projected earnings, Moderna trades at about 10x 2021 EPS, while BioNTech trades at about 5.5x. While this appears very reasonable for high growth companies, the bump from the Covid-19 vaccine will be temporary with sales moderating post-2022. Investors will need to look at Moderna and BioNTech pipelines more closely to value them for the long-term.
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BioNTech’s research pipeline is largely focused on cancer drugs (around 21 of its 27 candidates), while Moderna’s is more diverse, focusing on infectious diseases, vaccines, rare diseases, and cancer. The most advanced candidates for Moderna include an experimental vaccine for cytomegalovirus that is expected to begin phase 3 trials in 2021 and a personalized cancer vaccine mRNA-4157, to be given in combination with Merck’s MRK Keytruda, which is currently in phase 2 of the clinical timeline.  BioNTech has one drug in the phase 2 stage – BNT122 that is targeted at treating metastatic melanoma. The company’s other drugs are in the pre-clinical or phase 1 stage. 
Although there are many moving parts relating to research pipelines, and it’s difficult to say which company’s pipeline could eventually be more valuable, BioNTech’s lower valuation multiple and its oncology-focused pipeline (cancer drugs are usually very lucrative) could give it more upside potential compared to Moderna. That said, there are risks, considering that the BioNTech pipeline is more concentrated and it’s still too early to tell just how effective mRNA technology is outside of infectious diseases such as Covid-19.
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