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Here's Why BioNTech Jumped Today

By Maxx Chatsko – Jun 29, 2020 at 1:06PM

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The German biopharma announced a $250 million private investment.

What happened

Shares of BioNTech (BNTX 2.08%) rose as much as 14.9% today after the company announced a private placement of approximately $250 million. Temasek, Singapore's state investor, agreed to purchase $139 million in common stock and $112 million in convertible debt. 

BioNTech is working on a coronavirus vaccine based on its mRNA technology platform. Pfizer (PFE 0.59%) has thrown its capital, reputation, and institutional knowledge behind the effort and the development-stage biopharma, which has catapulted the German company into the global spotlight. 

As of 12:37 p.m. EDT, the pharma stock had settled to a 8.3% gain.

An arrow bouncing up shelves on a wall.

Image source: Getty Images.

So what

BioNTech has leveraged its visibility as one of the most closely watched coronavirus vaccine developers to greatly expand its financial flexibility. The German biopharma ended March with $495 million in cash and expecting another $236 million in equity investments and nondilutive upfront payments due from partners Pfizer and Fosun Pharma in the second quarter of 2020, and it had over $100 million in debt financing extended by the European Investment Bank in June.

The business will surely need hundreds of millions of dollars to expedite clinical trials for its coronavirus vaccine candidates, scale manufacturing, and plan large-scale distribution of its vaccine product -- assuming that product proves to be safe and effective, of course.

It's not too surprising Temasek came knocking. The group has steadily increased investments in living technologies in the last decade, including companies in biopharma, industrial biotech, and agricultural biotech.

Now what

BioNTech is well funded and has a solid development strategy in place to test multiple vaccine candidates. The world will need multiple successful coronavirus vaccines to beat the pandemic, so investors shouldn't be too concerned about the company being the first to report successful results. What matters most is delivering a safe and effective vaccine. 

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

BioNTech SE Stock Quote
BioNTech SE
BNTX
$130.30 (2.08%) $2.65
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$44.09 (0.59%) $0.26

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