One of the most compelling stories of scientific advancement coming out of the pandemic has been BioNTech (BNTX 0.55%). The German biopharmaceutical company created the first vaccine using messenger RNA (mRNA) to receive authorization. With its partner Pfizer, it has delivered hundreds of millions of doses and inked agreements to supply billions more. That's been great for shareholders.
Looking forward, investors are baking in the windfall and already asking what comes next. Unlike many biotechs, the company is now in a strong enough financial position to pursue several potential breakthrough therapies, making it more likely that one of them will be successful. It also makes BioNTech a rapidly growing biotech that gets less risky with each new drug program it pursues.
Image source: Getty Images.
How we got here
Unlike today's hot IPOs (initial public offerings), BioNTech limped onto the public markets in October 2019. It sold fewer shares than planned, at a lower price than expected. The stock even dropped 9% after its first week of trading. Sentiment changed fast, and a partnership with Pfizer would deliver Comirnaty -- their joint coronavirus vaccine -- about a year later. That success, and a steady flow of deals for the first-of-its-kind vaccine, has propelled BioNTech's stock upward 1,270% since it debuted.
| Month | Total Doses | Region |
|---|---|---|
| July 2020 | 750 million | United Kingdom, United States, Japan |
| Aug. 2020 | 15 million | Canada, Hong Kong |
| Nov. 2020 | 200 million | European Union |
| Dec. 2020 | 300 million | United States, European Union, China |
| Jan. 2021 | 40 million | COVAX (COVID-19 Vaccines Global Access) |
| Feb. 2021 | 500 million | United States, European Union |
| April 2021 | 100 million | European Union |
| May 2021 | 60 million | Turkey |
Data source: BioNTech.
Through the end of March 2021, the company had delivered more than 450 million doses in 91 countries. That produced 2.05 billion euros in revenue for 2020, 344% more than in 2019. By the end of March, receivables -- what is owed to the company by customers -- were up more than 14 times compared to the end of 2020, to 2.4 billion euros.
Those deals should give investors more confidence in BioNTech's prospects. The company bolstered that feeling when it announced agreements with both Israel and Canada for doses in 2022 and beyond. This validated the idea that the COVID-19 vaccine will provide a financial bridge to the company's next act.
What comes next
First, BioNTech needs to manufacture and deliver all of the doses it has promised. To do this, it's made a few moves beyond its partnership with Pfizer. It purchased a manufacturing site in Germany from Novartis last year, and began shipping doses from that facility in mid-April. Management also recently announced a regional headquarters along with automated production in Singapore. It now believes it will have the manufacturing capacity for 3 billion doses this year, and even more in 2022.
Beyond that, BioNTech has a pipeline of more than 20 drug candidates; it believes several could launch within the next five years. The farthest along is its individualized neoantigen-specific immunotherapy (iNeST), in partnership with Genentech. The treatment combines genomic sequencing and advanced understanding of cancer immunology to design a patient-specific therapy to attack an individual's tumor mutations. The treatment is in phase 2 trials for melanoma, and BioNTech and Genentech plan to dose patients with colorectal cancer starting in the second half of 2021.
Melanoma also represents BioNTech's most advanced fully owned (without partners) property. Its intravenous vaccine for melanoma, BNT111, uses its FixVac technology, and is anticipated to begin phase 2 trials soon. FixVac is an off-the-shelf mRNA treatment, targeting a fixed combination of antigens. For instance, the antigens encoded in BNT111 are present in about 95% of all melanoma patients. Beyond melanoma, BioNTech plans to provide updates on four trials involving solid tumors this year.
In addition to its off-the-shelf and personalized cancer vaccines, other drug candidates employ mRNA to enhance the immune system by targeting cancer-specific proteins, amplifying the treatment, or reducing off-target effects. The company even has vaccines targeting influenza and tuberculosis. The variety of approaches gives BioNTech more shots on goal to score another blockbuster therapy.
Are we there yet?
BioNTech has a huge success on its hands that is generating a ton of cash. That cash is funding the development of nearly two dozen drugs applying the company's mRNA technology in various ways. During the company's first-quarter earnings call, management pointed to more than 1.2 billion euros in investments it plans to make in 2021. Now that the science is proven, it's trying to bring revolutionary treatments to the market as soon as possible.
The gains in the stock over the past year likely already reflect the financial impact of Comirnaty. The long-term returns of BioNTech will be determined by how successful those investments are. That's a familiar position for almost every drug developer. However, BioNTech's ability to spread its bets across different disease targets and methods dramatically reduces the risk.
While most biotechs are understood to be a bit of a gamble on a binary outcome, BioNTech represents one of the most diversified ways to bet on genetic medicine over the next few years. For investors who believe in gene-based medicine but are nervous about the all-or-nothing clinical studies often associated with smaller drug developers, that diversification makes it a great candidate for their portfolios.
