BioNTech (BNTX 1.08%) was founded by the German husband-and-wife team of Uğur Şahin and Özlem Türeci in 2008, to use messenger RNA (mRNA) treatments for individualized cancer immunotherapy. A funny thing happened on their road to cancer cures, though: Using that same mRNA technology, they helped develop the top-selling COVID-19 vaccine.
BioNTech, which went public with an initial public offering in 2019, collaborated with Pfizer (PFE 0.23%) on Comirnaty, their joint COVID-19 vaccine, which did a pharmaceutical-record $36.8 billion in sales in 2021. BioNTech's fortunes changed with the 19 billion euros (roughly $18.75 billion) in collaboration revenue it received from Pfizer last year. BioNTech's stock made some investors rich, going from $85 per share in January 2021 to a high of $357 in late November of that year.
Flash-forward nearly a year later, and the vaccine stock is trading at less than half those lofty highs (on Monday, it was around $135 a share), down roughly 48% so far this year. And its trailing 12-month price-to-earnings ratio is only around 3.1.
An exit ramp or on-ramp for investors?
The problem investors see is that collaboration revenue is already slumping as the COVID-19 pandemic ebbs.
In the second quarter, the company reported $3.4 billion in revenue, down 111% from the same period a year ago, and earnings per share of $6.87, down from $14.56 a year earlier.
That kind of decline explains why the vaccine stock is trading for such a low valuation. Sure, it will continue to rake in money from collaboration revenue from the COVID-19 booster vaccine it developed with Pfizer. It had already received emergency use authorization from the Food and Drug Administration (FDA) for its COVID-19 booster shot, which was shown to be effective in clinical trials, but its revenue is not going to replace last year's numbers.
The hard part to figure out is how much of that likely revenue decline has already been baked into the stock's price. One Financial Times report said that BioNTech and Moderna (MRNA 0.30%), which also specializes in mRNA therapies, could both expect to see revenue fall by as much as 33% the next two years, even with the costs of COVID-19 shots going up.
What's next for BioNTech
Let's start with the positives. BioNTech, as of the last quarter, had 9.3 billion euros in cash (roughly $9.2 billion). That will go a long way toward helping the company develop its promising pipeline, which has 20 ongoing clinical trials, including five therapies in phase 2 trials and one in a phase 3 trial.
The lone phase 3 trial is for BNT161, an influenza vaccine BioNTech is developing with Pfizer. According to the Centers for Disease Control (CDC), seasonal flu has been on the rise this month, particularly in Regions 4 (Southeast) and 6 (South Central). The CDC said it recommended a flu vaccine for everyone 6 and older.
BioNTech's founders made news on Oct. 16, when they told Laura Kuenssberg of the BBC that they expect to see a vaccine against cancer by 2030.
Their company already has several mRNA cancer vaccines in the works, they said, using the same mRNA technology used for its COVID-19 vaccine. Their approach would be to create harmless versions of the protein antigens that appear on the surface of tumor cells. The idea is that a vaccine with those proteins would prod the body's immune system into preparing against such an attack by actual cancer cells. It would be complicated because different types of cancers carry different antigens.
"Everything we have learned about the immune system and about what we achieve with a cancer vaccine shows, in principle, the clear activity -- we can induce those killer T-cells, we can direct them," Türeci said on the show.
The company's most promising cancer vaccine is BNT111, an intravenous therapy that encodes bits of four specific cancer antigens in the drug's RNA to fight skin cancer. The thought is that having four different antigens increases the odds of the body recognizing the intruder and creating a T-cell response that would be useful against actual melanoma.
The therapy is in a phase 2 trial to treat patients with stage 3 and stage 4 melanoma that's estimated to conclude in October of 2024.
The company also sees potential in BNT-211 to treat advanced solid tumors, and so far the therapy has shown a good safety profile in treating testicular and ovarian cancers.
Surviving in the meantime
It will likely take several years for any of the company's oncology vaccines to pay off; in the meantime, earnings will likely decline and the stock's price could continue to suffer.
However, at some point, the company should become a less risky long-term bet with plenty of upside. It has plenty of cash. And all it would take is for one or two of its oncology pipeline candidates to be approved for its valuation to pick up and shares to jump again.
