Best Biotech Action: Moderna vs. BioNTech

At first glance, the companies may seem very similar. Not only did they develop the first two COVID vaccines authorized by the Food and Drug Administration, they used messenger RNA (mRNA). It is a set of genetic instructions that direct cells to make proteins that trigger an immune response training your body for all future encounters. The technology had never been approved for a vaccine in humans.

Still, dig a little deeper and Modern (NASDAQ: mRNA) and BioNTech (NASDAQ: BNTX) differ significantly. They started out differently, they are handled differently, and the path they take after COVID is divergent as well. So which one will make the best investment? A few clues offer a possible answer.

Image source: Getty Images.

1. Different companies from the beginning

Moderna went public in 2018 in what was then the largest biotech initial public offering (IPO) in history. He valued the company at $ 7.5 billion. To do so, she had to acquire the technology to deliver mRNA into cells via a license from a Canadian biotech. Despite a legal battle, the US Patent and Trademark Office upheld the intellectual property claim last year. Although Moderna claims its delivery technology has advanced far beyond what it has licensed, preclinical documentation submitted by the National Institutes of Health (NIH) and the company itself may contradict this claim. It seems to describe a mechanism directly covered by the license. The story could be a nasty surprise for shareholders in the future.

About a year later, BioNTech went public. Away from the hype surrounding Moderna, BioNTech sold fewer shares than expected, and at a lower price than it expected. At the time, the company was valued at $ 3.4 billion. While Moderna CEO Stéphane Bancel has been called brash, aggressive and ego-driven, BioNTech’s Uğur Şahin is described as holding meetings in jeans and wearing a bike helmet and backpack. Pfizer CEO Albert Bourla said of him, “He’s a scientist and a man of principle. I trust him 100 percent.” These are just opinions, but sometimes that’s all we have as individual investors.

2. What is priority is done

Even before the SARS-CoV-2 virus spread around the world, Moderna was focusing on vaccines. Bancel felt that one or two jabs for inoculation facilitated the administration of mRNA compared to treatment. This was a business decision intended to mitigate the risk of default. It’s the type of calculated decision you would expect from someone who went to Harvard Business School. This turned out to be the reason the company was able to deliver a vaccine candidate so quickly. He was working with the NIH on a drug to prevent another coronavirus – Middle East Respiratory Syndrome (MERS). This is just one of the viruses the company has been working on for years.

BioNTech was much more focused. Its mission was to individualize cancer medicine. His foray into the COVID-19 vaccine raffle was an opportunistic bet. On March 16, 2020, he announced that he would launch clinical trials on his vaccine candidate and the next day he introduced Pfizer as a partner. Aside from Comirnaty – the name of the vaccine the partners eventually developed – its only non-cancer program with real progress is another venture with Pfizer. This medicine is a flu shot. For most of their adult lives, ahin and his wife, the company’s chief medical officer, have been dedicated to research to help beat cancer.

3. Wall Street shows one more love

Despite the similarity in approach, Wall Street continues to rate Moderna at nearly twice BioNTech. Although the latter must share the revenue with Pfizer, this does not take into account the disparity in the sales multiple.

MRNA PS report data by YCharts

Whether it’s Moderna’s big ambitions, its relationship with the NIH, a big pipeline, or aggressive management, Wall Street clearly sees a difference.

Data sources: Moderna, BioNTech.

When Pfizer recently released its results, it raised its 2021 revenue forecast for Comirnaty from $ 26 billion to $ 33.5 billion. This should bode well for BioNTech shareholders when it releases its results in August. This matches some analysts’ projections for vaccine sales of $ 29 billion this year, nearly double what the company has committed to.

The tiebreaker

The two companies have done something really remarkable by launching a vaccine in one year. Everyone is an innovator. And Moderna and BioNTech are both in excellent financial shape to fund the rest of their mRNA drug pipeline.

Choosing between them is like ordering dessert – there really is no wrong selection. That said, the tiebreaker for me is the owner’s mindset. I would rather invest in the low-key focus of BioNTech and its leader rather than the more promotional leader of Moderna. BioNTech was founded by Ahin and his wife. And although he has seen his net worth soar astronomically over the past year, he has yet to sell a stock.

While Bancel might as well be a founder, he was hired shortly after the company was founded. He took advantage of the rise in stock prices in a way that a founder might not have. In a report last year, it was revealed that the CEO had sold shares outside of normal processes when the company reported positive news. It earned him at least $ 40 million. No wrongdoing was alleged. He has every right to sell stocks and diversify his net worth. This only emphasizes the difference between the two leaders. At one level, choosing between companies is answering the question “who do you trust with your money?” For me, the answer is simple.