Shares of BioNTech (BNTX - Get Rating) are down 15% today following the stock’s recent run ahead of its U.S. vaccine rollout. On Friday, the U.S. Food and Drug Administration (FDA) authorized the emergency use of BNT162b2, the mRNA vaccine candidate developed by Pfizer Inc. (PFE) and BNTX. Since November 17, the day before BNTX and PFE announced that their new vaccine was 90% effective, the stock was up 49% through last Thursday. It was only a matter of time until investors took profits off the table.
BNTX is a Germany-based biotechnology company that focuses on developing cancer therapeutics and vaccines for infectious diseases, including COVID-19. Its oncology pipeline contains several classes of drugs, including mRNA-based drugs, neoantigens, cytokines, and antibodies, among others. But messenger RNA (mRNA) is what everybody is excited about right now.
mRNA has been researched for decades with the goal of loading properties into mRNA so it can be built into a patient’s DNA. That helps patients fight diseases using their own defenses, which have been modified by the new mRNA. In other words, the mRNA turns on our immune systems to start fighting a virus before we get it and then recognizes that virus when we’re exposed to it. That is the basis of the technology behind both the PFE and BNTX vaccine and the Moderna (MRNA) vaccine. BNTX’s COVID vaccine is the first mRNA vaccine ever approved.
The Thesis to Buy
Last Tuesday, Margaret Keenan in the UK was the very first person in the world to receive the COVID-19 vaccine outside of a trial. Today, shipments of the vaccine are arriving in Canada, and the U.S. While initial supplies will be limited, PFE projects it will deliver 25 million doses to the U.S. this year and up to 1.3 billion total doses by the end of 2021.
The vaccine has been a game-changer for BNTX. Prior to the pandemic, the company was focused on therapies for cancer and mRNA vaccine development. It has formed a number of relationships with different biopharma companies, but its partnership with PFE really put it on the map. The success of its COVID vaccine is a transformative moment in the healthcare industry and should lead to more therapies in addition to COVID-19.
For instance, BNTX is also partnering with PFE on a vaccine for the flu. In previous years, the flu vaccine was only 40% to 60% effective. By using messenger RNA technology, there is a strong possibility that a new vaccine could be much more effective, making BNTX and PFE leaders in the $4.45 billion flu vaccine market.
BNTX is also working with several companies on cancer treatments, including Genmab (GMAB), Regeneron (REGN), Roche Holdings, and Sanofi (SNY). If any of these cancer treatments are proven successful with mRNA technology, BNTX could be on the precipice of billions in revenue.
The Numbers
The company announced its latest financial results last month. Revenue came in at $67.5 million, which was well ahead of estimates and up 78.2% year over year. Sales are expected to grow a whopping 1230.3% next year due to the vaccine. As of the end of the quarter, the company had $1.2 billion in cash and only $207 million in long-term debt. BNTX also has a very healthy current ratio of 4.1.
While it is not currently profitable, it could soon be after next year. The stock is up 219 YTD and considered overvalued with a Price to Sales ratio of 153.94, but I think its valuation is justified. The COVID vaccine could be just the tip of the iceberg as its mRNA technology could lead to discoveries in multiple types of cancers and other ailments.
The stock is rated a “Strong Buy” in our POWR Ratings system. It holds a grade of “A” for Trade Grade, Buy & Hold Grade, and Peer Grade and a “B” for Industry Rank. It is also the #3 ranked stock in the Biotech industry. Overall, I believe BNTX is a “Buy” based on its strong balance sheet and potential for sky-high revenue growth.
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BNTX shares were trading at $108.27 per share on Monday afternoon, down $19.03 (-14.95%). Year-to-date, BNTX has gained 219.57%, versus a 14.92% rise in the benchmark S&P 500 index during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More...
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