As half of the duo behind one of the world's most widely used and effective COVID-19 vaccines, BioNTech (BNTX 0.04%) is well on its way to enduring stardom in the healthcare sector. Far from content to keep playing second fiddle to collaborator Pfizer (PFE 1.60%), the biotech looks to be on a path toward ever-greater independence.
But that path carries some risks. Though it'll be raking in its share of Comirnaty revenue for quite some time, -- including an estimated 13 billion euros to 17 billion euros this year -- BioNTech has yet to prove that it can develop and market a therapy or vaccine entirely on its own.
Let's make a few projections about where the business is going in the next three years so that investors can judge whether it might be a favorable investment, given that the market has already largely priced in its near-term COVID-19 vaccine income.
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Pipeline scaleup points to an even bigger future
Over the next three years, expect BioNTech to pour funds and energy into its development pipeline. Last year, the company expanded its research and development teams by more than 40%, paving the way for multiple pipeline projects to be advanced at the same time. If it continues at a similar pace over the next few years, such a large expansion of the R&D group might promote the maturation of the business into a bona fide pharmaceutical company.
Either way, scaling up will be essential if the company is going to maintain momentum with its five immuno-oncology programs, all of which are in phase 2 of clinical trials. Likewise, expect more immuno-oncology collaborations, more vaccines for infectious diseases to move from preclinical testing into early-stage trials, and more high-impact preclinical programs to start making waves.
Specifically, both its influenza vaccine project and its recently announced shingles vaccine collaboration with Pfizer could contribute significantly toward BioNTech's immunology portfolio.
Under the terms of the shingles collaboration, BioNTech will get an immediate infusion of $75 million in cash alongside an equity investment of $150 million, and it could receive up to $200 million in milestone payments thereafter. And, it'll get a hearty share of the profits from the vaccine's sales, assuming it's eventually approved by regulators. But, that might take more than three years to happen, so investors should mostly take heart in the fact that Pfizer is continuing to be a key partner in expanding BioNTech's development capabilities.
Don't be surprised by a few stumbles along the way
With so many new and maturing research programs moving forward at the same time, setbacks are inevitable. In all likelihood, in 2025, BioNTech stock will be riskier to hold than it is today, though the potential for massive gains still exists.
The first reason that it'll be a riskier stock is that sales of its coronavirus vaccine aren't guaranteed to persist, and certainly not at current levels. If the pandemic makes a more rapid exit than expected, the company will wind up with a lot less gas in the tank for investing in growth. There's also a rising risk that vaccines from competitors like Novavax and Moderna will sap some of Comirnaty's market share.
Still, pipeline risk is likely to be an equally large concern, especially for investors who are considering purchasing the stock today.
Particularly in BioNTech's oncology pipeline, there will soon be enough mid-stage clinical projects approaching critical readouts to make predicting the stock's price an exercise in futility. Though its roster of clinical programs will be significantly advanced in a few years' time, later-stage programs tend to have larger consequences for the prices of biotech stocks, as they're closer to potentially realizing revenue.
For the company's income to sustain it through the end of the decade, at least one of its oncology programs will need to succeed -- but the odds are slim that any of them will be commercialized in the next few years. And subpar clinical trial results could easily dent the stock price in the meantime. Alternatively, in three years, the company might be on the precipice of a massive bull run, assuming its therapies subsequently get approved.
To get a feeling for which of these outcomes is more likely to occur, keep an eye on how management communicates with the public about its oncology programs. There's no 100% reliable way to tell if a specific treatment candidate will succeed in advance of seeing the clinical trial results, but generally, executives in the biotech world prefer to provide sneak peeks and unscheduled interim data updates when there's something promising to report.
