The biotechnology industry is scrambling to develop a vaccine that could effectively stamp out the COVID-19 pandemic. This makes for a confusing landscape for investors trying to pick the eventual winners. Out of more than 130 vaccine candidates currently under investigation, there could be multiple winners, or there could be none. A successful vaccine could result in billions of dollars in sales.
But one thing the pandemic has done is to focus widespread attention on a few companies pioneering new approaches to drugs that could not only address this current threat, but also many other scourges. While Moderna (MRNA +1.97%) has been in the public spotlight for its lead position in developing a vaccine for SARS-CoV-2, lesser-known German biotech BioNTech SE (BNTX +8.36%) also has a drug-development platform based on messenger RNA (mRNA). BioNTech has begun dosing subjects in clinical trials for a pandemic vaccine, and its stock may represent a better value.
The development of mRNA drugs opens up potentially limitless new therapies, although the technology is still in its early stages and hasn't yielded a single approved drug to date. Messenger RNA is essentially the software of life, carrying the instructions for protein construction from DNA in the nucleus of every cell to ribosomes, where proteins are made. Drugs made from RNA can be engineered to encode for specific proteins with therapeutic value, turning patients' own cells into drug factories to treat their own disease.
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BioNTech was founded to develop personalized drugs for cancer treatment, with its mRNA platform the cornerstone of that effort, though the company has other technologies at its fingertips. It's working on combination drugs that utilize mRNA, next-generation CAR-T therapies, monoclonal antibodies, and small-molecule immunomodulators.
Although cancer continues to be the company's central focus, the mRNA platform has so much promise that BioNTech expanded into infectious diseases; in 2018 it signed a deal with pharma powerhouse Pfizer (PFE +0.46%), for the rapid development of influenza vaccines that could respond to pandemic threats. When COVID-19 hit the scene this year, BioNTech CEO Ugur Sahin contacted Pfizer, and the companies agreed to an all-out effort to get a SARS-CoV-2 vaccine on the market.
Four COVID-19 vaccines
Here's how BioNTech's COVID-19 vaccine program, code-named "Project Lightspeed," differs from competing efforts: The company is actually testing four vaccine candidates in different arms of the same clinical studies. The four variants are all mRNA vaccines working on the same general principle: They cause a person's cells to produce SARS-CoV-2 antigens, proteins which don't cause illness but stimulate an immune response by the body against the virus. The variants are tweaks that stimulate the immune system in different ways, including one candidate that comes with a molecule that causes the mRNA to multiply within the cell, hopefully amplifying the effect.
BioNTech has designed phase 1/2 clinical trials to narrow down the study to the most promising of the four candidates, determine the optimum dose, and move smoothly from phase 1 through phase 3 if results are positive. The company is testing the vaccines in 200 subjects in Europe, the first of which were dosed on April 23. In the U.S., the company started dosing 360 volunteers in early May, but has designed the study to expand to 7600 subjects as it closes in on the formulation that works the best. The first clinical data is expected by the end of June or early July.
Meanwhile, Pfizer is ramping up manufacturing capacity "at risk," assuming the trials will succeed. BioNTech is also partnered with Fosun Pharma in China, which is funding development along with Pfizer.
Precision medicine
Winners in the vaccine race are hard to predict, but the investment thesis for BioNTech is mostly about its personalized cancer immunotherapies. Whereas mRNA technology forms the basis for much of the company's work in oncology, BioNTech employs what it calls a "technology agnostic" approach, intending to combine multiple technologies into an individualized attack on hard-to-treat cancers.
BioNTech has 10 clinical-stage product candidates for treating cancer in 11 trials. These are aimed at melanoma; cancers of the prostate, breast, ovaries, pancreas, and head and neck; and various solid tumors.
Five of the potential cancer vaccines in phase 1 trials use what the company calls its FixVac approach: combinations of multiple mRNA molecules that are designed to elicit an immune response in patients with specific cancer types. It also has two treatments in clinical trials that rely on mapping the genetic mutations in the tumors of each specific patient. BioNTech can create mRNA molecules for an immunological drug specific to a patient's unique cancer with a turnaround of six weeks. One of these personalized cancer vaccines, partnered with Roche Holding's Genentech unit and aimed at first-line treatment of melanoma, is BioNTech's most advanced candidate and is in phase 2 trials.
The company should supply a steady stream of news events this year, as it plans to initiate up to four phase 2 trials and expects to report data from five clinical studies of cancer drugs in 2020. It also hopes to start six new phase 1 trials in the next 18 months, including its CAR-T treatment and flu vaccine.
Forget coronavirus; look at BioNTech for the long term
BioNTech is in the running with its COVID-19 vaccine, despite being a bit overshadowed by Moderna and some of the other entrants. As a consequence, BioNTech's stock is cheaper; it rose 44% this year compared with over 200% for Moderna. And at $11 billion, it has only half of Moderna's market capitalization.
However, the real reason to own BioNTech stock is the long-term potential in its oncology pipeline and its drug-discovery capabilities. The company will need to raise additional capital in the next few months, so that could cause a dip in the stock price. But the stock is still a better value than other small biotech stocks in the COVID-19 spotlight, and it should produce good returns for investors willing to stick with it for the long term.
