Shares of vaccine maker BioNTech (BNTX -3.50%) were surging today, up 6.9%. The German mRNA vaccine producer, which partners with Pfizer (PFE -0.31%) on the COVID-19 mRNA vaccine, was surging after some good news on trials for its new booster late last week. In addition, the Nasdaq Composite was up today, reversing some of the losses from late last week. Finally, news of more COVID breakouts in China probably helped sentiment for vaccine producers.
On Friday of last week, the European Committee on Medicinal Products gave a thumbs-up for the use of BioNTech/Pfizer's vaccine as a booster for COVID-19, even if the patient had taken other vaccines before. That bit of good news followed last Monday's news of positive phase 2/3 trials that tested the company's COVID booster for children between 5 and 11. Currently, it's only recommended that that age group receive the two-dose regimen, but Pfizer/BioNTech looks to apply for emergency use authorization for the booster as well.
Second, although China has thus far refused the mRNA vaccines made by Western drugmakers for their homegrown vaccines, those aren't looking as effective against omicron. Shanghai has already been under lockdown since March, and omicron appears to be spreading fast in Beijing as well. That has prompted concerns that the Chinese may lock down more cities.
While it's improbable that China would suddenly admit that it needs Western vaccines, therefore opening up its market to BioNTech's mRNA shot, the greater the problem becomes in China, the greater the chance it could happen.
Like the other mRNA vaccine stocks, BioNTech looks extremely cheap these days, as it trades at just four times this year's earnings estimates, and the company recently announced a $1.5 billion share repurchase program, good for about 4% of the company's market cap.
Still, earnings from COVID shots are predicted to fall in 2023, and it's unclear what other drugs might replace lost COVID vaccine sales in the future. BioNTech is still in phase 2 trials of its other drugs in development, which are geared toward treating influenza, shingles, tuberculosis, malaria, and various types of cancers. Being able to treat cancer with mRNA vaccines would be incredible, but investors should keep in mind these trials are still relatively early and have an uncertain payoff.
Therefore, while BioNTech may look like a value stock, it is still a speculative bet on mRNA technology. While mRNA has been a miracle for treating COVID, treating cancer is a much tougher nut to crack. Therefore, investors should do their own research and have a specific view on whether they believe mRNA may be successful at these other indications before investing.