If you only looked at the performance of stocks, you might conclude that Inovio Pharmaceuticals (NASDAQ: INO) is a better stock of coronavirus than Modern (NASDAQ: MRNA). While Moderna’s share price has more than tripled so far in 2020, Inovio’s shares have soared more than 700%.
But the performance of stocks for the year to date is not the best way to choose between two stocks. It can be argued that Moderna is actually the best selection of these two coronavirus-focused biotech stocks. Here are three reasons why, plus one reason that Moderna is less attractive than Inovio.
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1. The Moderna COVID-19 vaccine is ahead
The most obvious reason that Moderna beats Inovio is that his vaccine candidate COVID-19 is ahead of Inovio’s candidate. Moderna mRNA-1273 is currently in a phase 2 clinical trial. Biotechnology expects to begin a pivotal phase 3 study in July. Inovio reported positive interim phase 1 data for INO-4800 on June 30, and hopes to start a phase 2/3 study this summer.
Granted, an initial advantage in clinical trials does not necessarily mean that mRNA-1273 is ultimately safer and more effective than INO-4800. However, if Moderna’s advanced-stage study goes well, its leadership in clinical progress could translate into greater commercial success.
Importantly, health officials recognize Moderna as a leader in the race to develop a COVID-19 vaccine in a meaningful way: The Trump administration selected only a handful of experimental COVID-19 vaccines to receive federal funding. Moderna’s vaccine was on the list, while Inovio’s was not. And recently, the chief scientist of the World Health Organization, Soumya Swaminathan, pointed to two leaders in the development of the COVID-19 vaccine. Again, Moderna was one of her choices, and Inovio was not.
2. Moderna’s cash reserve is much higher
Neither Moderna nor Inovio are close to making a profit. This means that both biotechnologies are burning cash. But Moderna has much more to burn than Inovio.
As of March 31, Moderna’s cash reserve was $ 1.7 billion, including cash, cash equivalents and investments. The company also has up to $ 700 million in possible grants and awards. Last month, Moderna further increased its cash position, raising around $ 1.34 billion in gross revenue from a share offering.
Inovio’s cash, cash equivalents, and short-term investments totaled $ 270 million as of March 31. Since then, the company has sold shares to raise net income of about $ 122 million.
Funding for clinical trials requires a lot of money. Launching a new product will require a lot of money. Inovio is more likely than Moderna to need to make another share offering to raise cash, so Inovio is also more likely to dilute the value of its existing shares before Moderna.
3. Moderna’s trajectory is not so questionable
Inovio’s pipeline might look more impressive than Moderna’s. Both biotechnologies have 15 candidates in clinical trials. However, Inovio has a late-stage candidate (VGX-3100), while Moderna has none. Nine of Inovio’s programs are in phase 2, compared to just three for Moderna.
However, it is important to note that Inovio was founded in 1983 and it has no products on the market yet. They are 37 years old and have no clinical success that finally mattered.
How about Modern? It was founded relatively recently in 2010. The company’s messenger RNA technology excited investors so much that Moderna’s initial public offering in 2018 was the largest biotech IPO in history.
The bottom line is that Moderna’s record is simply not as questionable as Inovio’s. In a decade, Moderna has built a pipeline with as many clinical programs as Inovio in nearly four decades.
Inovio’s great advantage
But there is a great advantage that Inovio has over Moderna: valuation. Even after its huge profit in 2020, Inovio’s market cap is only around $ 4.4 billion. That’s less than a fifth the size of Moderna’s market capitalization of around $ 24 billion.
Any of these biotech stocks would skyrocket if your COVID-19 vaccine were successful. But with its smaller market capitalization, Inovio would surely have more room to run than Moderna.
