Moderna vs Pfizer shares: Which is the better investment?
Both companies are leading the race for the COVID-19 vaccine, but there are some big differences in how the drugs can be safely delivered.
- Pfizer-BioNTech and Moderna are the only two manufacturers to have received a regulatory nod for a COVID-19 vaccine.
- Both companies have tied up supply agreements for hundreds of millions of doses with major countries.
- COVID-19 vaccine sales are expected to generate revenue close to US$40 billion in 2021.
- Pfizer shares are nearly flat year-to-date, but Moderna shares have surged seven-fold so far in 2020.
A year ago, Moderna Inc. was a relatively unknown biotech company based in Cambridge, Massachusetts. Last week, it became just the second manufacturer in the world to get the regulatory green light from the US Food and Drug Administration for a COVID-19 vaccine.
Moderna’s shares have surged seven-fold this year to US$140.23 as it races – along with Pfizer and BioNTech’s rival candidate – to deliver the vaccine that will help end a pandemic which has already killed 1.65 million people worldwide.
With just two vaccine manufacturers currently sitting atop a potential market of billions of doses, which of them seems like the better bet for investors?
Here is a side-by-side look at how the two major COVID-19 vaccine manufacturers stack up against one other and also a comparison of some their key financials.
Both vaccines are administered in two doses and have similar rates of effectiveness. Pfizer’s vaccine is 95% effective after the second dose; Moderna’s was effective for 94% of the trial volunteers. Moderna’s doses need to be administered 28 days apart, while Pfizer’s second dose can be administered after 21 days. Both are based on the messenger RNA (mRNA) technology that hasn't previously been used in commercial drugs.
The Pfizer vaccine has to be stored at temperatures below -70 degrees Fahrenheit, which calls for specialised ultra-cold freezers. It must also be diluted with sodium chloride before being administered. The Moderna vaccine can be stored at temperatures of between -13 to -5 degrees Fahrenheit, allowing the use of standard refrigerators. It also does not need to be diluted before administration.
Moderna’s vaccine will be more expensive than its rival, costing between US$25 and US$37 a dose, depending on the size of the supply order. By comparison, Pfizer’s vaccine will cost about US$19 per dose.
US drugmaker Pfizer and its German partner BioNTech were the COVID-19 vaccine trailblazers, becoming the first in the world to release full late-stage trial data on 18 November. Britain was the first to approve the shot for emergency use on 3 December, followed by Canada and the US. Several other countries including Saudi Arabia and Mexico have also approved it, while the European Medicines Agency (EMA) and India are reviewing it.
Moderna came a close second in several countries after it released a full data analysis for a late-stage trial on 30 November. Canada is weighing approval now and the EMA will do so on 6 January.
Moderna will produce 20 million doses of its vaccine by the end of the year and expects to manufacture between 500 million to 1 billion doses next year, in collaboration with Switzerland-based Lonza. It already has an order book for 200 million doses from the US and also has supply agreements with Canada, Japan, the UK, Israel, Qatar and Switzerland for a total of about 800 million.
Pfizer and BioNTech intend to manufacture up to 50 million doses this year, and as much as 1.3 billion doses in 2021. Pfizer has a 100 million dose order from the US, and also has supply deals with the UK, the European Union, Japan and Canada, totalling upwards of 1 billion doses.
Analysts expect a majority of the 7 billion-plus global population will only be vaccinated by 2023. That means there would be no dearth of demand for at least the next two years, promising huge cashflows to the two companies leading the pack of vaccine makers.
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Demand for a COVID-19 vaccine is not likely to be an issue, with the number of doses sold purely a function of how much a company can produce. Analysts expect Pfizer and Moderna to sell between 750 million to 1 billion doses each in 2021 until there are other successful vaccine candidates. That would translate to revenues of close to US$20 billion for each group, which would be split with their partner companies.
For perspective, Pfizer reported a full-year revenue of US$51.7 billion in 2019, while Moderna, a relative minnow, had total sales of just US$60 million that year.
Pfizer reported a profit of US$16.7 billion in 2019, but is unlikely to see a major bump from the COVID-19 vaccine sales because of its cheaper price and the sharing of profits with BioNTech, its collaboration partner which originally developed the vaccine. Pfizer has also lifted dividend payments consistently, with shareholders getting US$1.45 per share in 2019.
By comparison, Moderna reported a loss of US$514 million in 2019 and has not paid any dividends so far. While some analysts estimate an operating margin of 20% on its COVID-19 vaccine, this would be limited by the fact that it accepted US government funding towards its development.
- Financial strength
Given its relatively small size compared to multinational drugmakers, Moderna stands to garner significant financial benefits from the COVID-19 vaccine. The success of the messenger RNA-based vaccine also bodes well for the rest of the company’s pipeline of 21 vaccines and therapies for rare diseases, which are all based on the same technology.
Pfizer’s recent spinoff of several of its brands into the NYSE-listed Viatris will net the company around US$12 billion, giving it the cashflow to invest in the next set of blockbuster drugs, even without gains from the COVID-19 vaccine.
- Share performance
Pfizer shares have been quite volatile this year, with gains in July and November tempered by declines in June. The stock is up just 1.5% so far in 2020 and currently hovers around the US$37 level. The stock has an earnings per share (EPS) of US$2.84 a share with a forward price to earnings ratio of 12.4 times.
Moderna shares are up more than 600%, after more than doubling in November. The stock started the year at nearly US$20 and currently trades at US$140. Analysts estimate an EPS of US$1.66, with a forward price to earnings of 10.6 times.
How to buy shares in vaccine stocks
Most listed companies working on COVID-19 treatments are from countries outside of Australia. To buy shares in a global company you'll need to open an account with a share trading platform that gives you access to global stock markets.
One point to remember is that while some stock exchanges, such as those in China, Russia or India, can be hard to access from Australia, many companies dual-list in the United States. This means that you can buy many of these stocks using a share trading app with US market access, such as eToro.
Moderna, Pfizer and BioNTech are all listed on US stock exchanges, which means you can buy stocks in them using a US share trading app such as eToro.
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Buy shares with eToro
Note: Photography by Marco Verch