UJ Alexander
BioNTech (NASDAQ:BNTX) was already starting to gain some recognition for its pioneering work in mRNA technology when it signed an agreement with Pfizer (PFE) to develop a mRNA-based vaccine to prevent the flu in 2018. However, few knew at the time that the relationship would pave the way for another collaboration that would go on to produce the highest-selling pharmaceutical product in a single year, with $36.8 billion in 2021 sales, the COVID-19 vaccine.
Pfizer describes how they collaborated with BioNTech to expand one of the world’s most effective COVID-19 vaccines in an engaging article it published titled “The Vaccine of a Lifetime: How Pfizer and BioNTech Developed and Manufactured a Record-Breaking COVID-19 Vaccine. “Time. ” The vaccine, known by its clinical name BNT162b2, became the first to obtain conditional approval, called Emergency Use Authorization (“EUA”), in the United States on December 11, 2020. It has also become the first COVID vaccine. -19 fully approved through the Food and Drug Administration (“FDA”) on August 23, 2021. Pfizer and BioNTech recalled this COMIRNATY vaccine after the FDA approved it for marketing.
Since BioNTech only generates profits from COMIRNATY, investors are worried about a drop in sales once the pandemic is over. Inventory has fallen since reaching its all-time high of 441. 35 on August 9, 2021, to the final value on December 21, 2023. $103. 57.
Data via YCharts
Some of the reasons the stock dropped might be because investors anticipated decreasing demand for the COVID-19 vaccine as emergency measures eventually wind down, competition increasing, and some people decide not to get booster shots. Moderna, Pfizer, and BioNTech have recently lowered COVID-19 sales forecasts as the government-backed market for COVID-19 vaccines shrunk. Increasingly, COVID-19 vaccine manufacturers will need to rely on the commercial market for sales as global organizations like COVAX, an international collaborative effort to provide access to COVID-19 vaccines, ceases operations at the end of 2023. The U.S. government ended emergency measures on May 11, 2023, and the World Health Organization and Europe are also planning for the post-pandemic period. It may take until 2025 for the market for the COVID-19 vaccine to reset to a commercially-driven market.
However, there are reasons why long-term investors buy those shares at existing prices. BioNTech has a promising pipeline of oncology and infectious disease targeted therapeutics in ongoing Phase 2 and 3 trials. These treatments have abundant prospects for diversification and long-term benefit growth. In addition, the company has a balance sheet that it can use to bring some of these drugs to market.
This article will talk about how COVID-19 is still generating benefits for the company, its portfolio of oncology treatments, its monetary situation, and why investors in competitive expansion deserve to add inventory to their portfolio. I rate the inventory as Purchased.
Despite some people’s belief that COVID-19 is not a risk because the World Health Organization (“WHO”) and the U. S. Department of Health and Human Services (CDC) have not been able to prevent COVID-19 from COVID-19. After the U. S. government declared the end of the public health emergency in May, COVID-19 has not gone away as expected. A risk to public health. Just a week ago, ABC News reported that COVID-19 hospitalizations had risen in the U. S. , with the highest rates among the oldest and youngest in the population. The variant dubbed JN. 1 is spreading around the world. Singapore, India, the United Kingdom and Germany are among the countries reporting an increase in cases. According to data presented through BioNTech in its Q3 2023 earnings call, hospitalizations will increase in the winter months and will continue to rise.
BioNTech
The WHO still recommends that as many people as possible get vaccinated against COVID-19, and BioNTech and its partner Pfizer remain at the forefront of creating vaccines designed to combat older variants. The pair were the first to market a vaccine targeting the variant called Kraken, the subvariant of Omicron XBB. 1. 5, which emerged in late 2022. The EMA (European Medicines Agency) granted the Omicron marketing in August 2023, temporarily followed in September by the US FDA, which granted it an EUA. for ages six months to 11 years in September 2023 and full approval for age 12 years. Regulators in the United Kingdom, Japan, Canada and South Korea temporarily followed suit with approvals. Management reported that it performed well in Europe and Japan, capturing significant market share.
The U. S. FDA has ruled that the U. S. Food and The U. S. Department of Health and the Center for Disease Control (“CDC”) are still discussing the need for an annual booster shot for COVID-19. However, that hasn’t stopped vaccine makers from hoping that an annual booster dose, such as the flu shot, will be key to protecting older people and young people from new variants.
BioNTech
BioNTech Chief Executive Officer (“CEO”), Ugur Sahin, said on BioNTech’s third-quarter 2023 earnings call, “Given our current understanding of the seasonality of COVID-19 and its burden on fitness systems during the fall and winter seasons, we anticipate the need for annual adaptations. “However, the final authority to make a decision on whether annual vaccinations are required rests with regulators around the world, and they would possibly disagree with testing done through vaccine manufacturers.
If regulators in primary markets like the United States or Europe eventually introduce annual vaccines, it could create a rich recurring earnings stream for BioNTech and identify a solid foundation. Its mRNA competitor, Moderna (mRNA), recently stated in a press release. where he glimpsed the evolution of the COVID-19 market:
The global influenza market volume is approximately 500 to 600 million doses per year, of which approximately 150 million doses are administered in the United States. Moderna estimates that the duration of the COVID-19 market in the U. S. will beThe U. S. vaccine in the fall of 2023 will likely increase from 50 million to 100 million doses, depending on vaccination rates. Over time, the Company anticipates that the COVID-19 market will approximate the influenza market in the U. S. Given the burden of the disease.
Source: Moderna
If Moderna is right, the duration of the annual COVID-19 market in which Pfizer-BioNTech will ultimately compete is expected to be around 150 million doses in the U. S. There are 500 to 600 million in the U. S. and 500 million worldwide, a market worth billions of dollars. in sales annually. BioNTech’s control has provided a baseline projection on the percentage of the U. S. market it expects to capture. Ryan Richardson, Chief Strategy Officer at BioNTech, said:
According to a recent national vaccination survey conducted in the United States through the CDC and released last month, more than 30% of adults reported having won or plan to get a vaccine adapted to the XBB. 1. 5 variant. This knowledge reflects the forward-looking baseline. Annual vaccination call.
Source: BioNTech Third Quarter 2023 Earnings Call.
Richardson refers to the following table when he made the above statement.
BioNTech’s Third Quarter 2023 Results Presentation
Since the U.S. adult population is 258.3 million as of the 2020 Census, 30% of that number is around 76 million. Using both companies’ estimations, the market for COVID-19 vaccines could settle in between 76 to 150 million doses. Kff.org stated in an article that Pfizer charges a commercial price of $115 for its COMIRNATY vaccine. Multiplying 76 and 150 million by $115 equals $8.76 to $17.25 billion. Morningstar estimates that Pfizer-BioNTech has a 55%-60% market share in the U.S. market. Assuming it can maintain that market share at the mid-point of 57.5% market share, the partnership could potentially split $5 billion to $9.9 billion in U.S. revenue annually once the COVID-19 market stabilizes. Of course, BioNTech only receives a 50% share of Pfizer’s gross profit as part of its agreement to share costs with Pfizer, so it can potentially receive between $2.5 to $5 billion in U.S. revenue every year. These estimates don’t include revenue from Europe and Japan.
However, take these estimates with a huge grain of salt, as many factors can throw these numbers off, especially competition. The COVID-19 vaccine market is quite competitive, and fresh players like Novavax (NVAX) have entered the market over the last several years, which could make it difficult for Pfizer-BioNTech to maintain market share.
In the near term, COVID-19 vaccine sales are expected to fall in 2024. After BioNTech reported its third-quarter 2023 results on Nov. 6, the watchdog forecast COMIRNATY’s full-year earnings would rise to around four billion euros (four billion dollars), up from five billion euros (five billion dollars). billion) forecast in March 2023. Wall Street estimates that the company will generate around 4. 75 billion euros (5. 2 billion dollars) in profits related to the COVID-19 vaccine in 2023. On December 13, Pfizer forecast that COMIRNATY and the COVID-19 drug Paxlovid will generate $8 billion in sales next year, compared with an estimated $12. 5 billion for those products in 2023. Moderna also predicted a slowdown in COVID-19 vaccine expansion in 2024, but expects its 19 franchise to expand again in 2025.
Finally, another valuable facet of its COVID-19 vaccine that is worth knowing about is that Pfizer-BioNTech has big plans to create mixed vaccines, expanding its main COVID-19 franchise to other markets such as the flu market. The association has already reported positive effects in a Phase 1/2 study on October 26, 2023 for a COVID-19 and influenza vaccine. The press release reads:
“We are encouraged by the initial effects of our Phase 1/2 study of our combination influenza and COVID-19 vaccine candidates. This vaccine has the potential to lessen the effect of two respiratory diseases with a single injection and can relieve patients. ‘immunization practices. providers, patients and health care systems around the world,” said Annaliesa Anderson, Ph. D. , FAAM, senior vice president and head of vaccine studies and progression at Pfizer. “mRNA-based vaccines have demonstrated their ability to induce physically powerful antibody and T-cell responses, and we look forward to beginning Phase 3 clinical progression. Today’s effects are a vital achievement in achieving our ambition to supply a broad portfolio of combined respiratory vaccines.
Source: Pfizer
BioNTech’s COVID-19 franchise can simply serve as a launch point for a broad portfolio of therapeutics.
The following chart shows how much COMIRNATY’s success helped it build a massive cash stockpile. BioNTech started 2023 with EUR13.9 billion ($15.22 billion) of cash and cash equivalents on its balance sheet and ended the third quarter of 2023 with EUR13.5 billion ($14.78 billion at current exchange rates). The number on the chart is slightly different because my exchange rate calculation may differ slightly from when YCharts calculated the exchange rate. It also has an additional EUR2.2 billion ($2.41 billion) in short-term investments.
Data via YCharts
The company’s Chief Financial Officer (“CFO”), Jens Holstein, said on the company’s third-quarter 2023 earnings call:
Our strong financial position is strategic advantage. These days where financial stability is key for companies in this industry, the cash surplus is a tremendous asset. Our cash position offers us opportunities to invest in capabilities and assets to build a highly innovative later stage R&D pipeline.
Source: BioNTech’s third quarter 2023 earnings call.
The chart below shows BioNTech’s loose change (“FCF”) over a consecutive 12-month period, from 2020 to the end of the third quarter of 2023. These figures would possibly slightly differently determine the exchange rates used. next issues of Macrotrfinishs.
Source: Macrotrends
The company has a strong financial foundation for the creation of a cutting-edge pharmaceutical platform. BioNTech has recently been developing treatments for various disease categories, focusing on cancer and infectious diseases such as HIV and tuberculosis. This article will talk about the oncology portfolio. . I’ll talk about the company’s fight against infectious diseases and potential new categories, such as cardiovascular disease, neurodegenerative diseases, and autoimmune diseases, in a lengthy article.
The company adopts a multifaceted cancer strategy. Although its mRNA platform gained attention outside the medical network due to its good luck with the COVID-19 vaccine, the company is already well established as an innovator in using mRNA to fight cancer. In addition, BioNTech is developing several other mRNA-free platforms to fight cancer, adding mobile and gene therapies, small molecules, and protein-based therapies. The following symbol shows your technique for cancer treatment.
BioNTech 2023 Innovation Day
When it comes to oncology, the company has already come far enough to start getting attention. BioNTech signed a memorandum with the United Kingdom in January 2023 to boost clinical trials of its personalized mRNA immunotherapies. The company aims to treat up to 10,000 patients with personalized cancer treatment by the end of 2030 through clinical trials or approved treatments.
The symbol below shows some treatments in its existing oncology pipeline, with BNT316 anti-CTLA-4 Ab and BNT323 HER2 ADC in Phase 3 and closer to commercialization.
BioNTech 2023 Innovation Day
In March 2023, BioNTech partnered with OncoC4, a clinical-stage biopharmaceutical company, to expand and commercialize BNT316/ONC-392 to tackle complex falsified tumors. In June 2023, the two corporations announced that they had begun treating their first patient in a phase 3 trial in non-small mobile lung cancer. This program had already earned a Fast Track designation from the U. S. FDA. It was approved in the U. S. in 2022, meaning it has already demonstrated early clinical evidence that the drug can produce a truly extensive improvement over existing therapies.
It partnered with DualityBio in April 2023 to scale up a cancer treatment. The first product of this collaboration to succeed in Phase 3 trials is BNT323 HER2 ADC, a treatment designed to fight complex endometrial or uterine cancer in no undeniable terms. The company got great news from the FDA on December 21, 2023, that BNT323 HER2 ADC received breakthrough treatment designation. An innovative cure designation accelerates progression and the FDA’s review procedure, a smart signal. BioNTech investors deserve to keep an eye on the progress of those two drugs, as they are the top ones with the highest probability of being the first to succeed at the finish line and go to market.
Another area for investors to watch is BioNTech’s progress in developing its two platforms, FixVax and iNest.
When BioNTech introduced a Phase 1 clinical trial in melanoma in 2012, using the precursor generation of what is now known as the FixVac platform, it would have arguably been one of the first corporations to offer an mRNA-based cancer therapy. FixVac, short for Fijo Vaccine, offers a commercially available vaccine designed to fight fake tumors, including melanoma, prostate cancer, HPV16, head and neck cancer, ovarian cancer, and non-small lung cancer. The merit of using FixVax for patients is that it costs less and is a faster remedy option than personalized vaccines. A more technical explanation of FixVac can be found on the company’s website. If you take a look at the table above, you’ll see that BNT116 is a FixVac vaccine. BioNTech has partnered with Regeneron (REGN) to expand BNT116 for non-small mobile lung cancer.
The Individualized Neoantigen-Specific Immunotherapy (iNeST) Platform is BioNTech’s progression effort for personalized mRNA cancer vaccines. The administration states on its website that “we have developed a first-of-its-kind on-demand production procedure for mRNA vaccines, designed to target mutations are expressed in the patient’s express cancer, called tumor neoantigens. “Nature. com defines neoantigens as “foreign proteins that are absent in tissues in general, but that can originate from tumors through mechanisms, such as genomic mutations, aberrant, post-translational transcriptomic variants. modifications (PTM) and viral ORF. ” The iNeST platform works best against man-made tumors, including melanoma and colorectal cancer.
BioNTech
BioNTech began collaborating with Genentech, a component of the Roche Group (OTCQX: RHHBY), in 2016 to expand iNeST. One of the cancer treatments that will emerge from the BioNTech-Genentech partnership is BNT122, which is in phase 2 trials for pancreatic duct resections. adenocarcinoma (PDAC) (a sham tumor that is removed by surgery). According to the company, the mortality rate from this type of cancer is disheartening, with a survival rate of only 8 to 10 percent within five years of surgery and chemotherapy. The component also has BNT122 in Phase 2 trials for surgically resected colorectal cancer, a Phase 2 validation study of BNT122 combined with pembrolizumab in the first-line treatment of complex melanoma, and a Phase 1a/b trial in locally complex cancer or metastatic tumors.
BioNTech has 20 oncology systems in 30 clinical trials as of November 2023 and plans to launch several oncology products in 2026.
The generation of cutting-edge medicines isn’t going anywhere without production skills. Pfizer has provided BioNTech with the scale to manufacture enough doses to meet global demand for COMIRNATY. However, in order for BioNTech to be able to expand its drugs independently, it wants to build its own business. own infrastructure. Its first step was to acquire a Novartis production facility in Marburg, Germany, in 2020. Since then, the company has created new factory capacity and now has an annual capacity of 1. 6 billion mRNA doses, one of the largest mRNA production facilities. in the world. . . CEO Sahin had this to say about Marburg in a press release in February 2023:
“Since we acquired our production facility in Marburg in the autumn of 2020, we have frequently invested in the plant to expand our functions and production functions. Plasmid production is an interesting and vital component of mRNA production that we hope to be able to cover in-house soon,” said Prof. Ugur Sahin, M. D. , CEO and co-founder of BioNTech. ” We plan to manufacture mRNA-based products for a wide diversity of clinical trial applicants at our Marburg site, while preparing production measures for the advertising production of personalized cancer treatments. “The new production facility includes two facilities covering clinical (“small-scale”) and advertising (“large-scale”) production of plasmid DNA. The clinical-scale plant has been operational since August 2022. At this facility, BioNTech recently manufactured plasmids for applicants for products on the company’s FixVac platform, such as BNT111.
Source: BioNTech
At Innovation Day 2023, a BioNTech representative said that its mRNA production platform allows the company to be a “manufacturer of digitized vaccines. “This article from Pfizer describes the digitized production of vaccines and how it so quickly accelerated the production of COMIRNATY.
BioNTech Innovation Day 2023
Finally, BioNTech wants to democratize mRNA generation through cellular mRNA production sets called BioNTainer. According to PressArray, the company shipped six BioNTainers to Rwanda in 2022. The press states:
BioNTech continues to expand and build its production facility in Kigali, Rwanda, following the inauguration in June 2022. The facility will space out the first BioNTainers and is expected to become a node in a decentralized, physically powerful definitive system. BioNTech also plans to send BioNTainers to Senegal and potentially South Africa in close coordination with each of the respective countries and the African Union. The vaccines that will be manufactured in this African network will be reserved for other people living in African Union member states, with the aim of supporting access. to new medications.
Source: BioNTech
The BioNTainers help avoid spending hundreds of millions of dollars and three to four years to build one massive facility. BioNTainers are the size of a standard container, allowing the company to set up the portable manufacturing unit wherever needed.
Although the company has worked on developing mRNA-based oncology products for over a decade, it has yet to receive approval from regulators for any of its therapies outside of COVID-19. Investing in BioNTech requires faith in management, and that the company has the tools to get multiple drugs approved in its pipeline.
BioNTech is also facing a very tough festival in building a portfolio of mRNA products from several companies, adding its COVID-19 partner Pfizer, which is building its own mRNA platform with products that can compete with BioNTech’s products. Lab festival at festival in court for intellectual asset rights. Moderna sued BioNTech in European and U. S. patent courts and sought damages. BioNTech recently won a European lawsuit against Moderna and won a lawsuit against CureVac (CVAC). Billions of dollars are in bet. So, expect lawsuits over mRNA patents to continue, which could muddy the waters. Investing in BioNTech means accepting the risks associated with a company whose project portfolio is still basically in the development phase.
The company has a price-to-earnings (P/E) ratio of 8.98 as of December 20, 2023. The average P/E ratio for the S&P 500 is 26.16, and the average P/E ratio for the biotechnology and pharmaceutical industry is 19.33. BioNTech looks woefully underpriced until you see that earnings-per-share (“EPS”) estimates are declining annually to 2025.
In Search of Alpha
Investing in BioNTech requires a long-term mindset, as an investor may not see the fruits of their investments for several years. Still, I believe the market undervalues the stock relative to the biotechnology and pharmaceutical industry, considering the company’s growth prospects look above average several years from now as it potentially starts getting therapies approved in its pipeline. I didn’t discuss its infectious diseases pipeline in this article, but I did discuss its oncology products. If everything goes well and it gets several of the products in its oncology pipeline approved in 2026, EPS growth should be solid in 2026, which is what the above EPS estimates on the image suggest, with 51.46% year-over-year growth. The stock deserves to trade at least in the range of a P/E of between 15 and 16, which translates to a stock price of between $173 and $184.
If you are an aggressive growth investor willing to speculate that the company has what it takes to get multiple therapies approved in its pipeline, buy a few shares as a stocking stuffer for your portfolio. I rate the stock a buy.
This article written by
Analyst Disclosure: I hold/hold an advantageous long position in MRNA stock, whether through stocks, securities, or other derivatives. I wrote this article myself and it expresses my own opinions. I don’t get any refunds for this (other than Looking for Alpha). I have no relationship with any company whose actions are discussed in this article.
Looking for Alpha Disclosure: The above functionality does not guarantee long-term results. No recommendation or recommendation is given as to whether an investment is suitable for a specific investor. The perspectives or reviews expressed above may not reflect those of Buscando Alfa as a whole. Seeking Alpha is not an inventory dealer, investment advisor, or authorized investment bank in the United States. Our analysts are third-party authors who collaborate with professional investors and individual investors who are licensed or qualified through any institute or regulatory body.