BioNTech has strategic partnerships with giants including Pfizer and Regeneron. Billions of cash on hand.
Investors who follow my coverage on Moderna (MRNA) and Novavax (NVAX) will know all too well how risky biotech investing is. After soaring in May and July, Covid-19 vaccine developers are stuck in a downtrend. The market is ignoring any positive clinical data reads in the fight against the coronavirus. Even pre-orders from countries around the world for vaccines failed to lift the sector.
While one last near-term bounce is possible, investors must turn to fundamentals instead to evaluate the upside potential in these biotechnology firms. BioNTech (BNTX), together with its development partner Pfizer (PFE), will likely bring a vaccine to market next.
How should investors expect BioNTech to trade in the next few weeks?
Investors should first recognize the downside ahead for the sector. The bearishness in Moderna stock is showing no signs of reversing:
Chart from Seeking Alpha
The green dots represent the ‘neutral’ rating assignment on the stock.
Below, BNTX stock peaked at above $100 only to keep falling:
Data by YCharts
Financially, Moderna and BioNTech have a similar profile. Both firms raised billions in cash, with the former selling stock. BioNTech has a better funding profile: it brought ~$1.1 billion in gross proceeds through non-dilutive upfront cash payments and equity and debt-financing commitments. The firm expanded its existing partnership with Pfizer to jointly develop its Covid-19 vaccine program. It established a new collaboration with Regeneron (REGN) in the field of oncology.
Note: Investors may recall REGN stock rated as a deep value play on Sep 17, 2019. Based on strong revenue growth from its atopic dermatitis drug, Regeneron has since returned over 100%:
Performance Data Courtesy of SA Premium
Incidentally, SA Premium assigned lower EPS revision and value scores on Regeneron stock since its run-up:
So, biotechnology investors may want to explore other opportunities which include BioNTech.
In its deal with Regeneron, each company will keep all rights to its product. For example, BioNTech may keep all rights to its BNT100 melanoma (oncology) FixVac product. As shown below, the firm has a multi-platform immune-oncology strategy:
Source: BioNTech Presentation (Slide 7)
BNTX investors are holding not only a potentially major player as a Covid-19 vaccine supplier but as an immunotherapy firm. Long-suffering Gilead Sciences (GILD) investors will recall that the firm bought Kite Pharma at an 82% premium in 2017. As BNTX develops its first CAR-T cell therapy with BNT211, a mega-cap firm may like its prospects in neoantigen T cell therapy.
Having many platforms allows the firm to explore opportunities with different combinations. For…
Read full article