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Could BioNTech Be a Millionaire-Maker Stock?

By Jason Hawthorne - Dec 15, 2020 at 6:25AM

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To reward shareholders, the company is employing a common technology strategy.

Some of the best inventions were just a combination of other great inventions. For instance, although they aren't as popular as they once were, modern fax machines simply combined the photocopier and the telephone. Putting two technologies together created an altogether new one, to solve a different problem.

BioNTech's ( BNTX 0.00% ) strategy for drug development resembles that approach. Despite its fame for developing a potential COVID-19 vaccine with Pfizer ( PFE 1.28% ), the company has many more drug candidates in the pipeline. With a novel approach and demonstrated success, could BioNTech be a millionaire-maker stock?

A man surrounded by money falling from above.

Image source: Getty Images.

A huge success

Obviously, discussion about BioNTech starts with its partnership with Pfizer to develop a coronavirus vaccine. The coronavirus vaccine the pair created -- BNT162b2 -- has exited clinical trials and is now being administered to people in the U.S., U.K., and Canada. In the U.S., all signals turned to "go" as the Food and Drug Administration granted emergency use authorization on Dec. 11. Frontline healthcare workers in several states recently became the first Americans to receive a dose outside of clinical trials.

Together, the companies stand to make a reported $13 billion in 2021 sales. Even after splitting those revenues 50-50, BioNTech's take will be almost two times its entire market capitalization when it went public a little more than a year ago in October 2019.

Over the next year or two, there is no question about what will drive the financial success of the company -- BNT162b2. However, to significantly outperform the market, the company's other programs will have to start showing similar success. Luckily for shareholders, management has formed partnerships with several different drug makers to do just that. 

The path of partnership

Something jumps out when reading BioNTech's investor presentations. The company has cultivated a broad array of partnerships to combine its messenger RNA technology with other approaches. By combining its expertise with other proven treatments, management hopes to increase the addressable market. At first glance, the strategy appears to be a hedge -- spreading their bets across multiple programs. Instead, I think BioNTech is getting a head start in how gene-based medicine will revolutionize drug development in the decades ahead. The collaborations are impressive.

BioNTech and Pfizer began their collaboration in 2018, signing an agreement to develop a mRNA-based flu vaccine. The company has also partnered with Regeneron ( REGN -0.94% ) on melanoma, the Bill & Melinda Gates Foundation on HIV and tuberculosis, Roche Holdings' ( RHHBY 0.78% ) Genentech on patient-specific genetic treatments, as well as others on rare diseases and novel approaches for using mRNA to better deliver drugs to their targets. Management has called the many partners and methods strategy a "technology agnostic approach" -- and I think it sets the company up to be the leader in mRNA treatment development.

What the future holds

With all of its partnerships, BioNTech now has 11 candidates in clinical trials -- the furthest along is its Phase 2 trial with Genentech -- and at least 11 more scheduled to be initiated in 2021. The results to date have been compelling. The company's mRNA has helped successfully fight skin cancer and amplified the immune system against other cancers.

Biotech companies are notoriously risky investments, but I think BioNTech has all the makings of a great long-term investment. Management's approach to take on multiple partners across multiple diseases is signaling the intent to be a technology partner, not a drug developer.

Similar to how Dolby licenses its audio technology to companies producing or exhibiting entertainment, I think BioNTech can be the provider of mRNA technology for companies fighting disease. Although the headlines for the next year are likely to revolve around the company's COVID-19 vaccine candidate, investors hoping this company is a millionaire maker should stay focused on progress against the long-term strategy. With a $28 billion market cap, current investors are paying for successful commercialization of other drugs in the company's pipeline or a perennial need for the COVID-19 vaccine. Neither is far-fetched, but shareholders should look out for developments that reduce the probability of either.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

BioNTech SE Stock Quote
BioNTech SE
$333.50 (0.00%) $0.01
Pfizer Inc. Stock Quote
Pfizer Inc.
$53.72 (1.28%) $0.68
Regeneron Pharmaceuticals, Inc. Stock Quote
Regeneron Pharmaceuticals, Inc.
$628.05 (-0.94%) $-5.95
Roche Holding AG Stock Quote
Roche Holding AG
$49.90 (0.78%) $0.39
Dolby Laboratories, Inc. Stock Quote
Dolby Laboratories, Inc.
$85.80 (0.41%) $0.35

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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