BioNTechSE (BNTX) is a clinical-stage biotechnology company focused on developing cutting edge technologies and pharmaceutical treatments in an effort to individualize the treatment of serious cancerous tumors. Based in Mainz, Germany, BioNTech was founded by current CEO Ugur Sahin and others in June 2008 and has grown to employ over 1,300 employees. Currently, the company has a market capitalization of $19.1 billion and is attracting significant investor attention as it continues clinical testing of a vaccine intended to inoculate patients against COVID-19.
At present, BioNTech generates approximately $125M in annual revenues and has over 20 pharmaceutical drugs in development, with 10 drugs in ongoing clinical trials designed to prove their efficacy. Although BioNTech typically focuses on developing drugs to treat cancerous tumors, the company has teamed up with the pharmaceutical giant Pfizer (PFE) to develop and distribute a vaccine to treat the novel coronavirus. This vaccine, which is scheduled to being final clinical trials the week of July 27th, and the potential value of a successful COVID-19 treatment has led BioNTech stock to return over 490% since October 2019.
BioNTech Stock Chart
In contrast to its high valuation, BioNTech has reported negative earnings per share for the last several quarters and recorded -$167.5M in EBITDA on $125M in Revenues. This dynamic reflects a broader trend in the biopharmaceutical industry that sees markets pricing in the potential value of drugs that are in clinical testing but are not yet approved for distribution. Since the cost of developing and testing new pharmaceutical drugs is so high and the timeframe required to adequately test new drugs is so long, the share price of pharmaceutical companies depends heavily on the strength of a companies drug pipeline and can fluctuate wildly as results from clinical tests are reported. The ongoing coronavirus pandemic has only heightened the stakes for BioNTech in this regard.
Alongside the company’s heightened valuation has come an increasing number of analysts rating the stock as “Overvalued”. According to EEON’s research, as of 7/27/2020, BioNTech stock was trading approximately 28% over the average analyst’s price target of $62.14, making it a suitable target for investors seeking to bet against the company’s efforts to develop a COVID-19 vaccine.
Not all analysts, however, are advising clients to sell BNTX. Although it’s current price is above the analyst average, most analysts have kept BTNX at a “Hold” or “Buy” rating, reflecting the fact that continued success of BionNTech’s COVID-19 vaccine in clinical trials would provide the catalyst required for the stock to continue its impressive run.
The future share price of BNTX will be highly correlated to the outcome of the stage 3 clinical trials that are scheduled to begin this week. Should the vaccine prove to be effective, investors holding calls and shares should be in a position to trade the news. Alternatively, disappointing clinical results will likely see BioNTech shares trading in firmly negative territory. Given the nature of the ongoing COVID-19 pandemic and the dynamics that drive the price of shares in biotechnology and pharmaceutical companies, BioNTech represents an interesting opportunity for investors seeking to take a position on the success or failure of the company’s COVID-19 vaccine.