What Is The Fair Value Of BioNTech Stock?

German-based biotechnology company BioNTech SE (NASDAQ:BNTX) roared to great heights with its COVID-19 vaccine. As demand for these vaccines ebbed, the company had to explore other growth avenues and has its sights squarely set on the oncology space.

It hasn’t abandoned the development of mRNA vaccines by any stretch though and has variations lines up that are designed to boost the top line.

The company’s vaccine pipeline is encouraging as it aims to develop breakthrough technologies in the fields of cancer and infectious diseases.

It is also advancing cell therapy and protein-based therapeutic candidates, which show promise with more than 25 product candidates at different phases of clinical trials.

Apart from the cancer-focused research, the company is also researching treatments for HIV, tuberculosis, malaria, hepatitis B, and influenza. Beyond Covid-19, BioNTech is pioneering other vaccine innovations too but what does it all boil down to for shareholders?

Although BioNTech stock has been struggling to keep pace with the broader market, it has the hallmarks of being a long-term winner.

The year-to-date decline of 18.1% suggests it might already be trading at a discount, but wary investors need to pay attention of the premium forward price-to-sales ratio of 6.99x, which is notably higher than the industry median.

With pros and cons to evaluate, what does the future hold for BioNTech?

How Was BioNTech’s Covid-19 Journey?

The leader of the mRNA technology became an investors’ favorite in the initial years of the pandemic after the company, along with its COVID-19 vaccine partner Pfizer, received the necessary approvals, scaled up distribution, signed new agreements, and reported strong financials.

Net margins improved substantially and BioNTech share price exploded, which surprised many because before Covid-19, the company was little-known, and had a primary focus on cancer treatments.

Following the entry into the race to develop a vaccine for COVID-19, the company realized that the path to develop a vaccine and scale it globally would require a better-capitalized partner. It turned to Pfizer as a co-pilot for the important take-off.

Pfizer has been working with BioNTech since 2018 to develop an mRNA-based flu vaccine. The companies succeeded with COMIRNATY® (the Pfizer-BioNTech vaccine), becoming the first to gain full FDA approval on August 23, 2021. The vaccine has been available in the U.S. under Emergency Use Authorization (EUA) since December 11, 2020.

The commercialization of the COVID-19 vaccine was the turning point for BioNTech. Prior to this, the company had not sold or marketed any products in its pipeline.

Today, the majority of revenues rely on the COVID-19 vaccine, but with slower demand for the vaccine as the virus became endemic and a growing vaccinated population, the company experienced weakness in its top line.

For the year ended December 31, 2023, total revenues came in €3.82 billion ($4.07 billion), compared to €17.31 billion ($18.42 billion) in the year-ago period. However, its COVID-19 vaccine share in the U.S. remained steady. The company expects to return to revenue growth in 2025.

Will BioNTech Cancer Treatments Drive Growth?

For the company to remain relevant in the long run, product offerings beyond the Covid segment are crucial. The company is laser-focused on gaining approvals for more breakthrough products and securing commercialization permits to offset the slowdown in the Covid business. It is also focusing on strengthening its oncology capabilities.

It has collaborated with Biotheus, DualityBio, Medilink, and OncoC4 to complement the clinical oncology pipeline with innovation and immuno-modulatory programs.

BioNTech expects to have ten or more potentially registered oncology trials running by the end of 2024. As of the last fiscal year, the company’s pipeline consisted of over 20 programs in oncology and 7 programs in infectious diseases. These potential candidates were being evaluated in over 40 clinical trials, including eight Phase 2 and two Phase 3 clinical trials in oncology.

The company seems on track to continue building its pipeline and achieve its planned first oncology launch in 2026. Moreover, it has an ambitious target to have ten indication approvals by 2030.

Most recently, the company released the three-year follow-up data of an investigator-initiated Phase 1 trial of the individualized mRNA cancer vaccine candidate autogene cevumeran. BioNTech is developing this vaccine jointly with Genentech Inc.

The trial results were positive as they showed the persistence of immune response and delayed tumor recurrence in some patients with resected pancreatic cancer.

Oncology is a fast growing market with enormous spending by biotechnology firms to develop potential treatments for various types of cancer, which is a leading cause of death worldwide.

BioNTech only needs a few successful trial candidates to prove efficacy and substantially boost its product diversification. Moreover, commercialization will provide it with the necessary support to propel revenues to levels seen a few years ago.

What Is Fair Value For BioNTech Stock?

Fair value for BioNTech stock is $114.24 per share according to the consensus of 18 analysts. A discounted cash flow forecast analysis is more muted with an intrinsic value per share of $107.

Notably, 4 analysts have revised their estimates lower for the upcoming quarter so it appears sentiment is shifting moderately negative. That’s likely due to the fact that net income is forecast to fall this year too.

There are reasons to be positive though with an abundance of cash on the balance sheet, management buying back shares signaling they see the stock as undervalued, and a strong cash flow yield.

With all that said, much of the upside will depend largely on the progress in its oncology pipeline candidates. A few successes will deflect the naysayers and likely power the share price higher and back closer to fair value.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.