This company was the first to market with a viable COVID-19 vaccine and has discovered that it is 100% effective for adolescents. Is now the time to invest?
BioNTech (NASDAQ: BNTX), a German biotechnology company, has joined the lucky group of companies that benefited from the pandemic as it was the first company to successfully develop the COVID-19 vaccine, BNT162b2, or Comirnaty. When Phase III trials confirmed an efficacy rate of 95%, the mRNA vaccine was quickly fast-tracked for emergency use. It partnered with Pfizer for distribution in all countries but China, where Fuson will do the honors. Recently, it was discovered in trials that the vaccine is 100% effective in preventing coronavirus infection in young people under 16 years of age, thereby securing more orders in the future. With its stock price up over 114% year-to-date (YTD), should you invest in BioNTech?
The bull case for BioNTech
This company was the first to develop a cure for our global suffering, the market for which includes every living person on the planet. With 300 million vaccine doses ordered by the U.S. and 600 million by the E.U., BioNTech is projecting 2.5 billion additional doses in 2021 and will likely meet those numbers as it is slightly more effective than competitor Moderna's and doesn't cause blood clots like Johnson & Johnson's inoculation. All this translates to a projected $19 billion in sales this year, of which BioNTech will split down the middle with Pfizer; that's not counting the younger age group, for which the company is awaiting approval.
Already the company easily beat projections of $274 million in revenue by posting $396 million for Q4 2020 (an 1,134% year-over-year increase), which is just the tip of the iceberg as vaccine distributions had only just begun. Additionally, BioNTech posted a net profit of $450 million compared to a net loss of $70 million the year prior and ended the fourth quarter with nearly $1.5 billion in cash. The real impact of vaccine sales will be seen in coming quarterly reports, beginning on May 10.
As much as the company will make from the vaccine, that market is sure to dry up eventually, even if it is discovered that further boosters are required. Not to worry, as BioNTech has other mRNA products in its pipeline, specifically for a variety of cancers. In fact, this year it will initiate three new phase II trials and six first-in-human phase I trials for their cancer medications. Moreover, the company acquired GMP certified manufacturing site last year from Novartis, which has an annual production capacity of 750 million doses, to meet high vaccine demands.
The bear case for BioNTech
As this is the first vaccine of its kind that was delivered at lightning speed, there are things we don't know about it, including potential long-term side effects. Additionally, previous attempts at mRNA vaccines were abandoned due to the severity of their side effects in test trials, although Comirnaty doesn't share a similar profile. In the case of Johnson & Johnson, even though the blood clot issue affects a very small number of people, administrations were suspended.
I had the Pfizer-BioNTech vaccine and I only experienced soreness at the injection site, but friends have reported 2-day long bouts with severe flu-like symptoms. What will happen when someone suffers a fatal reaction to an injection? Furthermore, although the company has many products in its pipeline, they're still far away from FDA approval, so BioNTech will have to soldier on with its vaccine revenue until then.
So, should I invest in BioNTech Stock?
Yes. This is a company that is on the bleeding edge of future cures and vaccines and will continue to be profitable. In addition to its purchase of the manufacturing site, BioNTech also acquired Neon Therapeutics recently to expand its U.S. presence and bolster its immunotherapy pipeline. As for Comirnaty, I feel any side effects will be minimal as over 1.3 billion doses have been administered already without any major issues.
Quickfire round:
1. Who founded BioNTech?
Husband and wife team Dr. Ugur Sahin (CEO) and Dr. Ozlem Tureci (Chief Medical Officer)
2. How much does the vaccine cost?
Although it's free for recipients, it costs the U.S. government $19.50 per dose and the E.U., EUR12 per dose. Israel is paying $23.50 per dose
3. How many vaccines are in BioNTech's pipeline?
20 for cancer, 1 for influenza, 1 for tuberculosis, 1 for HIV, and 3 for undisclosed targets.
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