If you bought in $ 10,000 BioNTech (NASDAQ: BNTX) as of the October 2019 IPO, your investment would be worth well over $ 68,820 on December 16. There is one main reason for the spectacular run-up. BioNTech and its development partner, Pfizer (NYSE: PFE), successfully developed a coronavirus vaccine (BNT162b2) and received emergency use clearance from the US Food and Drug Administration on Friday, December 11.
This is the first-ever coronavirus vaccine in the US to have both late-stage efficacy data and to enter the public sphere through regulatory approval. At the moment, many investors are looking at Pfizer’s share for its consistent earnings, solid profit margins, dividend payout and long-standing status as a giant in the pharmaceutical industry. However, I think BioNTech would be better suited to growth investors looking for bigger profits. Here are two reasons why.
1. Huge Income Potential
Pfizer and BioNTech have a 50-50 partnership, in which the gross profit and expenses of the commercialization of BNT162b2 will be split equally between the two. The benefits of this arrangement will be much more apparent in BioNTech’s case than Pfizer’s as its market cap is $ 30 billion, compared to the pharmaceutical giant’s $ 228 billion. The two companies currently have more than 670 million orders of their vaccine from 13 countries and the EU and active options to deliver an additional 500 million doses.
Based on a price tag of $ 19.50 per dose, this would mean that BioNTech would have up to $ 6.5 billion in future revenue in the bag (after an even split).
In addition, the countries that have already ordered vaccines could exercise their options to purchase hundreds of millions of additional doses. Next year, Pfizer and BioNTech expect to scale their production capacity to 1.3 billion doses. Assuming they can successfully sell that many of them, it would mean that BioNTech’s stock is currently trading for only 2.4 times future sales.
Tens of billions of sales isn’t that much for Pfizer, but it’s big news for a company like BioNTech that has never launched a product.
2. A pipeline with a lot of mRNA
The success of its messenger RNA (mRNA) vaccine could serve as a proof of concept for BioNTech’s other research programs. For example, the company collaborates with Sanofi (NASDAQ: SNY) and Regeneron Pharmaceuticals (NASDAQ: REGN) to promote an mRNA intratumor therapy (BNT131) and an mRNA melanoma vaccine (BNT111), respectively. Both candidates showed therapeutic signals with favorable safety profiles at early stages.
In total, BioNTech has 11 products in its oncology pipeline going through 12 clinical trials. The vast majority of them will enter Phase 1 testing in 2021.
Even if only one of those candidates passes, it would be a huge boost for BioNTech’s stock. As of now, major biotech companies are buying out smaller companies with new FDA-approved cancer treatments for between $ 5 billion and $ 21 billion. Keep in mind that the valuation is usually for companies that have only one approved cancer drug in the pipeline.
I think BioNTech has one of the best benefits of all coronavirus vaccines for all the reasons above. It is certainly not too late to buy stock for investors with a “buy high and sell higher” mindset.