As a profitable and rapidly growing biotech with a world-renowned vaccine approved for sale, BioNTech (BNTX +0.00%) has left its shareholders sitting pretty. Over the past 12 months, the company -- based in Mainz, Germany -- achieved a return of around 41.4%, crushing the market's 14.6% result.
More outperformance might well be in the cards for the stock, and there's a lot more to this company than its coronavirus vaccine. Its future success as an investment isn't as linked to the continuation of the pandemic as some might expect.
Let's examine three things that smart investors are likely to understand about this stock.
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1. Comirnaty will need to keep evolving
BioNTech's only product on the market is its Comirnaty coronavirus vaccine, which it developed jointly with the help of Pfizer -- and it has understandably been a blockbuster. In its third-quarter earnings report, the company estimated that it made 17 billion euros ($19.2 billion) from sales of the jab in 2021, assuming that it sold 2.5 billion doses. For reference, it brought in just 482 million euros in 2020, so the past year has yielded a bumper crop to say the least. Investors will need to check out the next earnings report on March 30 to see if revenue came in as predicted.
Either way, management expects that the coronavirus will continue to be a difficult public health problem that its vaccines will be instrumental in mitigating. Therefore, it'll be necessary to keep adapting Comirnaty to the emerging viral variants so that it remains effective. So on Jan. 25, Pfizer and BioNTech launched their clinical trial to test an omicron-specific shot.
Wise investors recognize that innovation isn't easy, though. If things move more slowly than planned, it's entirely possible that the omicron variant will be history before the new version of the vaccine is ready for prime time. The risk of being too late won't necessarily be any lower if the company tries to rapidly develop an updated candidate in response to a future variant either.
2. The company is looking beyond vaccines
Smart investors know that unlike competitors such as Novavax, BioNTech has ambitions to be more than a vaccine maker. Aside from Comirnaty, its pipeline has only one other clinical-stage infectious disease program, its phase 1 influenza vaccine being developed with the help of Pfizer. In comparison, it has 16 clinical-stage oncology programs, five of which are in phase 2 clinical trials.
In particular, its mRNA-based therapies for advanced melanoma and head and neck cancer might be on the cusp of commercialization or even on the market by 2025. Those two programs are wholly owned, which means that their success would be even bigger for shareholders. And the company also has a melanoma program and a supplementary therapy for colorectal cancer in development with privately-held Genentech.
BioNTech isn't just an mRNA company, either. Though mRNA-based medicines account for all of its late-stage projects, it does have a handful of ongoing clinical investigations with its cell and antibody therapies in development. In other words, BioNTech isn't trying to become specialized in just one technology. Overall, that might make it more resilient to any obstacles for the technology that arise over time.
3. It doesn't need Pfizer's help anymore
While BioNTech had never brought a medicine to the market before its coronavirus vaccine collaboration with Pfizer, it now has the organizational infrastructure and technical know-how to develop therapies without the pharma giant's help. That doesn't mean it'll eschew teaming up with Pfizer in the future, but it does mean that smart investors are updating their mental models of what the business is capable of doing on its own.
In a nutshell, expect this company to start cranking out new drugs using more and more of its newly formidable internal resources. In 2020, it spent 647 million euros on research and development whereas in the past 12 months it spent 937 million euros.
Further growth of this spending is all but guaranteed as over the next three years several of BioNTech's wholly owned clinical programs in oncology are likely to advance into the final stages of development. And with trailing free cash flow of 1.2 billion euros, there's nothing to stop it from firing on all cylinders.
