Is Novavax A Better Investment Than Moderna?

by Trefis Team
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The U.S. government has awarded biotech company Novavax (NASDAQ: NVAX) $1.6 billion towards trials, commercialization, and manufacturing of its potential Covid-19 vaccine candidate NVX-CoV2373. [1] This marks the largest award yet under “Operation Warp Speed” a federal government program that intends to accelerate the development and deployment of vaccines and treatments for Covid-19. While Novavax was seen as an underdog in the race for a Covid-19 vaccine thus far, this vote of confidence from the U.S. government bodes well for the company. So how does Novavax compare with Moderna (NASDAQ: MRNA) – which is seen as a leader in the race for a Covid-19 vaccine?

Our dashboard Trefis Theme: Covid-19 Vaccine Portfolio details key financial, valuation, and returns metrics for key U.S. listed companies working on Covid-19 vaccines.

Vaccine Technology & Clinical Trials

Novavax’s candidate is based on adjuvanted recombinant nanoparticle vaccine technology, which is viewed as a relatively more proven method compared to messenger RNA (mRNA) based technology that Moderna’s candidate is based on. While both Novavax and Moderna have provided early results indicating that their vaccines have demonstrated effectiveness against the coronavirus based on pre-clinical data or interim phase 1 trials, Moderna is well ahead in the clinic trial timeline. Novavax expects results from its phase 1 clinical trials to be available this month, indicating that it would start midstage trials in August or September. Phase 3 studies are likely to commence this fall.  Moderna, on the other hand, is slated to begin its phase 3 studies this month, with trials projected to involve 30,000 participants.

Financial Position

While the U.S. Department of Health and Human Services awarded $486 million to Moderna in April to accelerate development of a vaccine, the sum is significantly below the current grant for Novavax. That said, Moderna isn’t exactly lacking resources, holding over $1.2 billion in cash and short-term investments as of March 2020. Overall, financial resources are unlikely to be a major constraint for either company. If they continue to press ahead, with positive results funding should continue to flow, if required.

Pipeline Beyond Covid-19 Vaccine

Novavax stock has soared over 20x year-to-date, while Moderna is up 3x driven largely by the Covid-19 vaccine efforts. Considering that both companies are clinical-stage biotechs, with no products available commercially yet, it puts investors at sizable risk should their respective vaccines fail. So what do their pipelines look like beyond Covid-19?

Moderna’s core developments as of March 2020 include eight vaccines (besides Covid-19) most of which were in phase 1 or pre-clinical stage and four therapeutics. One of the company’s most promising vaccines is for cytomegalovirus, currently in late phase 2 trials. Moderna indicated that this could have peak sales of between $2 billion to $5 billion, with a very high probability of launch. Novavax is focused on vaccines for infectious diseases and its flu vaccine –  NanoFlu – reported positive data from its phase 3 studies a few months ago and it appears quite likely that it could go on to gain regulatory approval. [2]

Did you know that larger pharma companies such as Johnson & Johnson and Pfizer are also developing Covid-19 vaccines?  They could also offer better downside protection compared to Moderna and Novavax. Should you pick Johnson & Johnson Or Pfizer For Better Returns?

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Notes:
  1. Novavax Announces $1.6 Billion Funding from Operation Warp Speed, Novavax , July 7, 2020 []
  2. Novavax’ NanoFlu Achieves All Primary Endpoints In Phase 3 Clinical Trial, Novavax , March 2020 []
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