Of the 52 vaccines being tested on humans in clinical trials, there are three primary types. Some use a dead or weakened virus to bring coronavirus genes into the cells and create an immune response. Others contain fragments or even whole proteins from the coronavirus, but no genetic material to invoke the immune system. Finally, genetic vaccines use genetic material to cause the body to create a protein from the virus, and then the immune system recognizes the virus and attacks it.
BioNTech (BNTX 0.58%) and partner Pfizer (PFE 0.55%) are creating a genetic vaccine candidate that just gave all of humanity a jolt of optimism with the announcement of interim results from its phase 3 clinical trial. But while the vaccine, called BNT162b2, would obviously be a huge driver of the company's revenue in the near term, there is more to BioNTech's long-term outlook than just this one drug. The company's successful development of messenger ribonucleic acid (mRNA) as a method of triggering the immune system could provide a platform for the treatment of many other diseases. Given the run up in the stock after the positive news, investors have to ask: Is BioNTech stock a buy?
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Company history and backers
BioNTech was founded in 2008 to take the idea of personalized medicine to the extreme. The company's basic idea is that every cancer patient's tumor is unique, and by analyzing the genetic signature of that tumor, scientists can create gene-based therapies designed to limit the spread or even destroy that specific instance of cancer.
It's not just fantasy. In 2017, all of the 13 patients injected with a genetically personalized treatment for their advanced-stage melanoma developed increased immunity against mutated pieces of their tumors. Essentially, they became immune to the spread of their own cancer. Additional vaccines against rabies and the flu both offered protection, but the benefits subsided after a year.
Other than COVID-19, the company's current targets include skin cancer, HIV, tuberculosis, the seasonal flu, and many undisclosed rare or infectious diseases. Outside of Pfizer, BioNTech has some impressive partnerships including Regeneron (REGN -0.84%), the Bill & Melinda Gates Foundation, the University of Pennsylvania, and Genentech.
Prior to developing its COVID-19 vaccine candidate, the company had no treatments in phase 3 trials. Management now has nine fully owned candidates, and five candidates it is developing with partners, beginning phase 1 trials either late this year or in the first half of 2021. To date, BioNTech's revenues have been the result of equity offerings, grants, and manufacturing contracts, not the sale of any approved drugs. It looks like that could be about to change.
Partnership and profit
BioNTech and Pfizer just gave investors an early peek at data from their phase 3 trials of their COVID-19 vaccine candidate. The candidate displayed 90% efficacy in participants who got two doses of the vaccine, three weeks apart. This far exceeded the high end of expectations. This summer, the National Institutes of Health (NIH) determined that in order to put an end to the pandemic, a vaccine needed an efficacy rate of at least 70%, or of at least 80% without any other measures (like mask-wearing and social distancing). Understandably, the market was excited by the 90% efficacy rate, as were governments that had entered deals with the partners to acquire doses upon regulatory approval.
In July, the U.S. government agreed to purchase as many as 600 million doses at a price of roughly $39 for both doses in the standard two-dose schedule. Although pricing could change once the immediate pandemic needs end, Pfizer did confirm that other developed countries will not get a lower price for the same volume than the U.S. government. Hoping to host the delayed 2020 Olympic games, Japan signed on for 120 million doses. The U.K. agreed to take 30 million doses over the next two years and not to be left out, the European Union signed a deal on Wednesday for 300 million doses.
And there will probably be more deals ahead. Company executives have indicated that people will continue to need vaccination both to maintain herd immunity and in case of mutations in the virus. For its part, BioNTech will also be profiting from the vaccine's market in Asia. In March, management signed an agreement with Fosun Pharma to distribute the vaccine in China. BioNTech received $135 million upfront and will share future profits in the country.
What happens now?
First, the companies need to complete two months of data collection after the second dose of the vaccine. Based on the current timeline, this means that they'll reach this milestone in the third week of November. After this, the partners are expected to file for an Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration (FDA). While the EUA will allow the vaccine to be distributed to those most in need, there are some unknowns. First, no one in the trial had a severe case of COVID-19. Because of this, it's not yet known how well the treatment prevents the most severe outcomes. It's also not known exactly how long the vaccine will protect against infection.
Yet another unknown is how the vaccine will be distributed. Because it is a gene-based product, it needs to be stored at remarkably low temperatures -- negative 94 degrees Fahrenheit. Pfizer and BioNTech will be working with the U.S. government to use dry ice for shipping vaccine vials in order to keeps temperatures low. The vaccine can remain in this deep freeze for up to six months, but once at a destination, the vaccine can only be kept between 36 and 46 degrees Fahrenheit for up to five days. The hurdle at destinations will be ensuring that patients who are most in need are able to get the vaccine in that five day window, as well as receive the follow-up dose exactly three weeks later.
At present, the companies are projected to produce 50 million doses by year end, and up to 1.3 billion by the end of 2021. The next year looks like an all-out effort to produce vaccine doses and get them out around the world. While the companies have expressed interest in Covax, the World Health Organization's (WHO) initiative to ensure underdeveloped countries have sufficient early access to a vaccine, they have yet to sign on. In fact, the companies haven't taken funding from anyone. While this approach first appeared risky, it left them unencumbered by politics and bureaucracy, and able to charge a fair market price for the product they worked hard to develop.
BioNTech has demonstrated the superiority of its science over the past few years. Now, with a partner in Pfizer and a global call to action, both companies appear poised to deliver the vaccine the whole world has been waiting for. With hundreds of millions of doses already pre-sold, a distribution agreement in China, and plans for more than a billion doses next year, BioNTech doesn't seem able to go anywhere but up.
