Covid vaccine sales are expected to remain substantial for both companies this year and account for virtually all their revenue.
Courtesy Moderna
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Companies with a lot of cash offer a great security blanket for investors—and Covid vaccine makers
BioNTech
and
Moderna
are two of the most cash-rich large companies in the world relative to their size.
You wouldn’t know it by looking at their stocks. Although both rallied this past week on reports of higher U.S. Covid cases, Moderna stock (ticker: MRNA), at about $103, is down 43% this year, making it one of the worst performers in the
S&P 500
index. BioNTech (BNTX), at about $111, is down 26%. Both have fallen from favor as investors ratchet down expectations of global Covid vaccine administration this year and in the future. The issues include vaccine fatigue, diminished fears of contracting the virus, and a perception of limited benefits of Covid boosters for the already vaccinated.
That’s a shortsighted view. Moderna and Germany-based BioNTech are being given little credit for their big cash positions, still-durable Covid franchises—BioNTech and its partner
Pfizer
(PFE) have the leading Covid vaccine in sales, with Moderna at No. 2—and promising and well-funded drug pipelines. Their stocks look appealing at now-depressed prices.
“The market views them as one-trick ponies and that the ponies are getting tired,” says Michael Pye, an investment analyst at Baillie Gifford, the largest Moderna investor and one of the top BioNTech holders. “What the market is missing here are huge cash piles and genuine R&D platforms and pipelines.”
The case for both stocks starts with their cash hoards. Moderna has $14.6 billion of cash and equivalents on its balance sheet, or about 35% of its market capitalization of $40 billion. BioNTech is even more flush, with nearly $20 billion of cash and investments, or almost 75% of its market value of $27 billion. Neither has any long-term debt.
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The companies aren’t the cash cows they were in 2021 and 2022, when each earned a total of about $20 billion. But BioNTech remains profitable and is expected to net about $5 a share this year and $3 a share in 2024. Moderna has moved into the red and is expected to lose $4 a share this year and $5 a share in 2024, due in part to a sharp rise in research-and-development costs, which should total $4.5 billion this year, up from $2 billion in 2021.
Covid vaccine sales are expected to remain substantial for both companies this year and account for virtually all of their revenue. Moderna projects $6 billion to $8 billion in Covid sales, and BioNTech nearly $5.5 billion. That’s even after Moderna cut its expectations for U.S. Covid vaccinations to 50 million to 100 million this year, though some analysts are skeptical that even 50 million will be administered. The companies will probably make more from the vaccines as the drugs move to the U.S. commercial market, where they’ll cost about $100 a jab, versus the $20 the U.S. government had paid.
| Company / Ticker | Recent Price |
YTD Change |
2023E EPS |
2024E EPS |
2023 P/E Ratio |
2024E P/E Ratio |
Market Value (bil) |
Cash, Invest- ments (bil) |
|---|---|---|---|---|---|---|---|---|
| BioNTech / BNTX | $110.77 | -26.2 | $5.62 | $3.19 | 19.7 | 34.7 | $26.6 | $19.6 |
| Moderna / MRNA | 103.19 | -42.6 | -3.92 | -5.11 | N/M | N/M | 339.3 | 14.6 |
E=estimate; NM=not meaningful
Sources: Bloomberg; FactSet; company reports
Moderna said this past week that its updated Covid vaccine for the fall vaccination season showed a “robust immune response” against the virus. The Covid vaccine market is moving to annual boosters administered in the fall.
One risk with cash-rich drug companies is that they could blow their money on expensive acquisitions with uncertain payoffs. Neither company says it wants to do a major deal. Instead, Moderna is developing a host of vaccines and treatments based on the messenger RNA technology that underpins its Covid vaccine. These include vaccines for respiratory syncytial virus, flu, combinations of a Covid and flu vaccine, and a cancer treatment that is being tested in clinical trials with
Merck
’s
(MRK) blockbuster drug Keytruda, which harnesses the body’s immune system to fight the disease.
BioNTech’s founders, Ugur Sahin, the CEO, and his wife, Ozlem Tureci, the chief medical officer, are cancer experts and have researched the disease for decades. That is a focus of BioNTech, which is developing treatments for lung and other cancers as well as infectious diseases.
“BioNTech probably is the best-funded biotech on the planet,” says Simon Baker, a Redburn analyst. ‘The company has some interesting cancer treatments coming down the track, and it’s doing a good job of advancing the pipeline.” He upgraded the stock to Buy from Neutral earlier this year and has a fair value of $170 per share.
BioNTech is the safer play due to its higher cash balance and continued profitability. Moderna might be the more interesting one. While the company is burning cash now, it has a larger and more advanced drug pipeline, with six treatments now in Phase 3 trials—the final stage of testing before potential approval by the Food and Drug Administration. Another catalyst could be an activist investor that would push for more restrained spending, something BioNTech, which is scaling back its R&D spending by 15%, to $2.3 billion this year, has already done.
Moderna could even be a takeout play. It has no dominant shareholder, although it does have a strong-willed CEO in Stéphane Bancel, who was an early believer in mRNA technology when skeptics were plentiful. Its market value of $40 billion is digestible.
Covid plays understandably excite investors less now, but the virus may continue to plague the world for a long time. Moderna and BioNTech offer cheap plays on that prospect and some underappreciated drug pipelines, with the security of a lot of cash.
Write to Andrew Bary at andrew.bary@barrons.com
