If there's one mistake that keeps coming back to haunt me, it's buying a stock after a fierce run-up. Once a business is known to be a success story, it's often quite difficult to finagle a profitable investment as companies can fall victim to the market's overly high expectations. And that's precisely the hesitation that some investors might have with BioNTech (BNTX 1.63%).
The German biotech is best-known for being Pfizer's partner in developing Comirnaty, one of the world's most widely distributed coronavirus vaccines. But now that the company is flush with resources and know-how from its pandemic work, a whole new chapter in its history is poised to open. Is it possible that people who buy the stock now for the first time will see gains that are anything like BioNTech's 860% growth in the past three years, or is it too late to hop on board?
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It'll be hard to one-up the success of Comirnaty
The biggest argument for why it might be too late to buy BioNTech stock is that it doesn't have any products on the market besides Comirnaty, and sales of the vaccine are unlikely to go significantly higher. Management's upper estimate for the treatment's revenue in 2021 was 17 billion euros ($18.7 billion), and it's hard to see how that could increase if global governments assume that the virus is in recession.
What's more, as the market has priced in the company's expected inflows from sales, there might not be much more room for the stock to grow without a major deviation from what's expected. There aren't any pipeline programs that are on the verge of being commercialized, which makes the prospect of getting any non-Comirnaty income all the less likely in the near term.
Lastly, there's the issue of falling investor interest in vaccine stocks. While BioNTech isn't purely a vaccine company, it's true that the sharp collapse of Moderna and Novavax shares this year is likely to deter some investors from making a purchase. All three stocks are down by roughly 46%.
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But that doesn't speak to the ability of those businesses to keep innovating, so it's important to remember that things could easily change.
Yet, a long and potentially profitable road lies ahead
In my view, it isn't too late to buy BioNTech stock whatsoever, and here's why.
Right now, it has 2.3 billion euros in cash, and only 286 million euros in debt. And its trailing 12-month operating expenses were 839.5 million euros. That means it has plenty of capital to invest in expanding and moving forward with the projects in its pipeline, thereby seeding future revenue opportunities. So even if vaccine revenue contracts, there's still plenty of gas in the tank.
Furthermore, BioNTech's roster of midstage clinical programs in oncology is nothing to sneeze at. It has five candidates in phase 2 trials, two of which are wholly-owned, and the rest of which will require profit-sharing with a collaborator if they end up getting approved.
Over the next few years, some of these programs will mature, and multiple product launches in a single year aren't out of the question. Succeeding with the commercialization of even one of these projects should juice the company's revenue and share price alike, so it's definitely a mistake to write off this potential.
Then there's the fact that rumors of the pandemic's end have little to do with the number of doses of coronavirus vaccine BioNTech plans to make. Whereas it shipped 2.6 billion doses in 2021, it plans to ship as many as 4 billion doses this year. In other words, income from Comirnaty could keep rising for a bit longer. And work on variant-specific vaccines could keep the product relevant beyond what people might expect.
Should you buy shares today?
If you're an investor who typically invests in biotech stocks and is comfortable with the risks that they entail, I'd say that buying BioNTech today isn't a terrible decision. In the long run, its research and development activity should pay off, and it's in no great hurry for its pipeline projects to bear fruit.
But considering the market's present general disfavor toward biotechs, and the vaccine-revenue headwinds that might occur if the pandemic recedes, investing in BioNTech today is even riskier than usual. That doesn't make it too late to buy the stock, assuming your time horizon for investment is five years out or more. But it does suggest that waiting a while might be favorable.
For more-conservative investors, it's probably best to accept that BioNTech isn't the right choice for the moment. It's not unthinkable that its shares will continue to fall as stocks from the biotech industry continue to languish for reasons beyond their control. Once the market's winds change, it should be ripe for a purchase.
