A researcher works in the lab at the Moderna Inc. headquarters in Cambridge, Massachusetts, US, on Tuesday, March 26, 2024.
Adam Glanzman | Bloomberg | Getty Images
The Covid-19 pandemic turned Moderna and BioNTech into household names almost overnight. Now the two companies are on different paths.
Both Moderna and BioNTech helped pioneer mRNA, or messenger RNA, technology. Moderna staked its entire identity around mRNA, while BioNTech saw it as one piece of a broader portfolio focused on immunology and oncology. The pandemic gave both companies a chance to prove mRNA’s promise of using the body’s own immune system to protect against viruses or treat diseases.
Covid vaccines have generated roughly $45 billion in sales for each company, earning them each about $20 billion since their rollout in late 2020. But despite parallel booms after the pandemic, the vaccine makers have since taken their businesses in different directions — and Wall Street has noticed.
The two companies have spent their Covid vaccine windfall differently: Moderna doubled down on its mRNA pipeline, while BioNTech used the money to do deals and diversify, including into one of the hottest emerging areas of cancer drugs. Today, Moderna has about $8.4 billion in cash; the German-based BioNTech has €15.9 billion (or $18.2 billion).
The divergence of the two companies is even more stark in their stock performance. Over the past year, Moderna shares have slid about 72%; BioNTech shares have gained nearly 29%.
“Just their name was made based off the pandemic and the vaccines that they very quickly brought to people around the world to help get us through that period of time,” said Evercore ISI analyst Cory Kasimov. “But the approach they’re taking now and the outlook for these two companies is distinctly different at this point.”
Investors will get a fresh look at both companies’ performance as they post quarterly results in the coming days. Moderna is set to report Friday morning, followed by BioNTech on Monday morning.
Differing priorities
Moderna used its Covid cash to build out its mRNA portfolio, particularly vaccines. It invested in shots for flu, RSV and lesser-known viruses like cytomegalovirus and norovirus.
“From our perspective, the pandemic really showed that the science of what we’re doing worked, and the natural sort of response to that was to continue down that path and do more,” said Moderna President Stephen Hoge.
Funding such a large pipeline wasn’t cheap. The company has started slashing expenses as sales of its Covid vaccine slide and its RSV vaccine struggles to find a foothold. But the clock is running, said Leerink analyst Mani Foroohar.
“We’re moving into a time where being a vaccine company is going to be more expensive, tedious and onerous,” Foroohar said, citing changes at the Food and Drug Administration under the leadership of Health and Human Services Secretary Robert F. Kennedy Jr., who has expressed skepticism about vaccines.
Foroohar in 2022 pointed out what he saw as a Shakespearean tragic flaw in Moderna’s business model. That shortcoming, in his view, is that Moderna scaled its pipeline assuming mRNA technology would be the tool for all problems instead of a solution for some problems.
Hoge said Moderna’s “really good at making mRNA medicines” and decided to focus on doing that.
“The reality is that we think over the last 10 years, that focus has actually made us successful, and in the pandemic, it certainly had a big impact and obviously was something that sets us up for the more diverse pipeline we have right now,” Hoge said. “So we recognize that we may be going through some cycles, but we’re pretty confident in the long-term trajectory we’re on, and we’re looking forward over the years ahead to showing with all these additional medicines what we’re really capable of.”
An mRNA model is placed in front of the “Area 100 R&D” research laboratory for personalized mRNA-based cancer vaccines at a new facility of BioNTech in Mainz, Germany, on July 27, 2023.
Wolfgang Rattay | Reuters
Meanwhile, BioNTech decided to use the proceeds from its Covid vaccine to diversify. Out of the limelight as partner Pfizer took the lead on selling the companies‘ shot, BioNTech expanded into promising new cancer technologies.
Most importantly, it acquired a bispecific antibody targeting the proteins PD-L1 and VEG-F. That technology promises to build on – and possibly best – the success that Merck has found with Keytruda, a cancer drug with nearly $30 billion in sales last year alone.
That thesis still needs to be proven in large, global clinical trials, but BioNTech is already seeing that deal pay off. Bristol Myers Squibb in June announced it would pay up to $11 billion to partner with BioNTech to codevelop the experimental drug, which BioNTech acquired for a fraction of that. BioNTech in 2023 initially paid Biotheus $55 million up front to license the drug outside China before acquiring the company outright earlier this year for up to $1 billion.
“[BioNTech] found an asset, they developed it, and then they got a pharma partner, it’s like a dream,” said BMO analyst Evan David Seigerman. “So they’re really strategic in that, and I think they’re adding a lot of diversification, which makes the story a lot less risky if you’re just focused on mRNA, vaccines and Covid, and that’s super risky, in my view.”
At the same time, hopes are high that BioNTech’s bispecific antibody drug will work, meaning any disappointment ahead could hurt the stock. Investors are watching forthcoming Phase 3 trial results from Summit Therapeutics, which is testing a similar drug for lung cancer. Those data could help — or hurt — BioNTech’s stock while it awaits data from its own studies, which could take until 2028.
For Moderna, investors want to see if sales of its Covid and RSV vaccines can rebound. The company is also seeking FDA approval for an mRNA flu shot. But at this point, the most intense focus is on Moderna’s Phase 3 trial for a personalized cancer treatment for melanoma, said RBC Capital Markets analyst Luca Issi.
Moderna may be able to share the first interim data as soon as next year, Hoge said, though the company can’t promise an exact date since it’s an event-driven study. That means enough people in the trial need to relapse before Moderna can analyze whether its treatment kept cancer from returning longer. If the treatment succeeds, it could launch in 2027 or 2028, Hoge said.
That leaves Moderna largely dependent on its vaccines until then. An ongoing patent dispute over Moderna’s Covid-19 shot could also eat into the company’s cash, analysts say, adding they expect the legal proceedings to play out next year.
Time will tell whether the divergent strategies win over Wall Street long term.
