BioNTech's mRNA Technology Is Helping the Firm Build an Infectious Disease and Oncology Pipeline

Sector Strategist

Karen Andersen

BioNTech, founded in 2008 in Germany, has become a key player in the development of personalized mRNA cancer treatments. The emerging biotech's first commercial vaccine, for COVID-19, received its first authorization in December 2020, and its early stage pipeline and mRNA technology platforms have caught the eye of several large pharmaceutical companies, resulting in collaborations and partnerships.

BioNTech’s internal discovery platform is focused on mRNA, including off-the-shelf and personalized mRNA drugs, but opportunistic acquisitions have brought in targeted antibodies and cell therapies as well. As such, BioNTech's pipeline is not overly reliant on any one key drug candidate or drug class at this point, and it is poised to tackle cancer via many different mechanisms. 

Further, the company has a burgeoning vaccine pipeline for infectious diseases. In partnership with the Bill & Melinda Gates Foundation, BioNTech is developing vaccines for HIV and tuberculosis, and the company’s COVID-19 program in partnership with Pfizer and Fosun Pharma was built off an existing partnership with Pfizer for an influenza vaccine. The COVID-19 vaccine, Comirnaty (BNT162b2), quickly progressed through human trials, culminating in authorization in the United States and Europe in December 2020. We think the vaccine's excellent efficacy, strong supply, and early leadership on the market all support roughly $40 billion in annual Comirnaty sales in 2021 and 2022 (BioNTech books half of Pfizer's gross profits, profit share from other smaller partners, and direct sales in Germany and Turkey). While the long-term market for coronavirus vaccines is uncertain, we currently assume annual, seasonal boosters for higher-risk individuals, with BioNTech/Pfizer and Moderna continuing to dominate the market.

Business Strategy & Outlook

As an emerging biotechnology company with no commercialized medicines, BioNTech does not possess an economic moat, in our opinion. We think it has a strong but unproven portfolio of intangible assets in its pipeline, which is in early stages of development, and thus approval is highly uncertain. We like BioNTech's focus on moatworthy indications and drug classes, and regulatory approval of Comirnaty is a promising sign, but we're looking for evidence of long-term cash flow potential before awarding the firm a moat. We think the firm does face environmental, social, and governmental (ESG) risks, particularly related to potential U.S. drug price-related policy reform and ongoing potential for product governance issues (including litigation). While we have factored these threats into our analysis, we don't see them as material to our valuation or moat rating.

BioNTech has a very full but early pipeline, with more than 15 clinical stage oncology drug candidates. Personalized and off-the-shelf cancer vaccines are the company's key focus, but the pipeline also has other cancer therapies and infectious disease vaccines. BioNTech's technology platforms have won votes of confidence from several large biopharma companies, resulting in partnerships with Roche, Bayer, Eli Lilly, Pfizer, Sanofi, and Genmab. 

Beyond COVID-19, we see several oncology mRNA candidates forming the core of the company's portfolio, including off-the-shelf products BNT111 (advanced melanoma), BNT112 (prostate cancer), BNT113 (HPV-positive head and neck cancers), BNT115 (ovarian cancer), and BNT116 (lung cancer). Of these, BNT111 and BNT113 lead the way, as phase 2 studies started in mid-2021 after promising early results. These mRNA-based therapies were produced with BioNTech's FixVac technology, which produces off-the-shelf mRNA therapies based on shared antigens, in contrast to the iNeST platform, which produces personalized therapies based on a patient's individual neoantigens. The company's lead iNeST candidate is RO7198457 (or BNT122), which is partnered with Roche and had initial promising data in pancreatic cancer in combination with Roche's Tecentriq (melanoma data is expected in 2023). BioNTech is also using its mRNA technology to encode cytokines (ribocytokine programs BNT 151/BNT 152/BNT 153 are in phase 1 in solid tumors) and antibodies (BioNTech's first RiboMAb program, BNT141, entered phase 1 in December 2021). 

While the field is in the very early stages, we believe the development of individualized cancer immunotherapies is a moatworthy business, if successful in the clinic. The personalized nature of the medicine should result in unmatched efficacy and command strong pricing power in the market. Despite higher costs to manufacture personalized medicine, we expect personalized cancer vaccines to be high-margin products as the business scales. Further, we expect this business will be difficult for competitors to replicate. The process leans heavily on bioinformatics, as researchers use proprietary programs to analyze a patient's DNA, identify the patient's unique mutations caused by the cancer, and determine which genetic instructions would produce an immune response sufficient to effectively attack the cancer cells. Then, researchers can engineer mRNA that encodes those unique mutations, producing that patient's personalized cancer vaccine. BioNTech's turnaround from start to delivery is roughly six weeks, and the company has a goal of reaching less than four weeks. BioNTech's competitor Moderna is also developing personalized mRNA cancer vaccines and has similar production goals. Both BioNTech and Moderna have spent roughly a decade honing their understanding of mRNA therapies, with drug candidates only recently entering clinical trials. 

Most of the company's assets are internally developed, but BioNTech has also added to its portfolio with a couple of opportunistic acquisitions from struggling biotechs. BioNTech acquired MabVax's assets and labs in May 2019, adding BNT321, a targeted antibody in phase 1 for pancreatic cancer, which is extremely aggressive and deadly, with just a 7% five-year survival rate. In addition to establishing a U.S. research hub, this deal also brought in an antibody discovery platform, supplementing the company's already-established RNA platforms. Then, BioNTech's early 2020 acquisition of struggling biotech Neon Therapeutics for $67 million brought in cell therapy BNT 221, complementing BioNTech's in-house CAR-T cell program BNT 211 (both in phase 1). A partnership with Genmab has also brought three bispecific antibody programs to phase 1. The expansion into drug classes outside of mRNA is interesting: While BioNTech is venturing outside its established area of expertise, it's also gaining talent in new areas and possibly boosting its long-term growth potential. We like the long-term potential for innovation and combinations between drug classes, such as using CAR-T cell therapy in combination with mRNA therapy (CARVac) with BNT211 in solid tumors.

While oncology is still central to BioNTech's pipeline, BioNTech's expert knowledge of mRNA easily lends itself to the development of vaccines for viral infections, including COVID-19. The company's COVID-19 program is built on an existing partnership with Pfizer, which paid BioNTech $120 million up front in 2018 to develop a flu vaccine (BNT161) that would be more reliable and quicker to manufacture than most current vaccines. Most current influenza vaccines are produced in chicken eggs or cell cultures, which takes about six months and requires that the World Health Organization select inactivated flu strains for the vaccine far in advance of flu season. BioNTech's methods would allow production in roughly three months, which could increase the reliability of flu strain selection and allow for adjustments as the season progresses, and the mRNA-based process would limit mutations. Pfizer's mRNA flu vaccine program entered phase 3 in September 2022, only a few months behind Moderna's late-stage program.

The BNT162b2 coronavirus vaccine (Comirnaty) entered late-stage clinical trials in July 2020 and received authorization in the U.S. and Europe in December 2020. This aggressive timeline was propelled by Pfizer's interest in the asset, which resulted in an expanded collaboration agreement of $185 million up front in addition to equity investments and potential milestones. The company has also partnered with Fosun Pharma for rights in China, adding an up-front payment of $135 million plus milestones to the collaboration. The vaccine uses a rapid manufacturing process that has allowed it to reach patients faster than traditional methods. Moderna's mRNA vaccine was also authorized in the U.S. and Europe shortly after Comirnaty, and several other potential competitors are developing mRNA vaccines. However, BioNTech continues to innovate, with a new omicron-targeting bivalent vaccine launching and new studies for T-cell enhancing and pan-coronavirus vaccines. 

The rest of BioNTech's infectious disease candidates are also starting to advance. BioNTech has received funding from the Bill & Melinda Gates Foundation for the development of mRNA vaccines for HIV, tuberculosis, and three additional infectious diseases; the tuberculosis program is entering development around the end of 2022. The company has also partnered with the University of Pennsylvania school of medicine for mRNA candidates in up to 10 infectious diseases (the first, for genital herpes, entering development in 2022), and a shingles collaboration with Pfizer should enter phase 1 by the end of 2022.

Overall, we think the company has several promising candidates that could one day support a moat, but they are too early in the development process to warrant a narrow moat. We currently give the company's clinical drug candidates probabilities of approval between 20% and 60%, with most of these therapies potentially reaching the market in the 2024-25 timeframe.

None

Economic Moat

BioNTech SE

BioNTech SE engages in the development of novel medicines at the intersection of immunology and synthetic biology. Its product pipeline include BNT162b2, BNT161, BNT164, FixVac, iNeST, RiboMabs, CAR-T Cells, TCRs and Next-Gen CP Immunomodulators. The company was founded by Christopher Huber, Ozlem Tureci and Ugur Sahin on June 2, 2008 and is headquartered in Mainz, Germany.

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BioNTech SE operates as immunotherapy company, which engages therapies for cancer and other serious diseases. Its product pipeline include BNT162b2, BNT161, BNT164, FixVac, iNeST, RiboMabs, CAR-T Cells, TCRs and Next-Gen CP Immunomodulators. The company was founded by Christopher Huber, Oezlem Tuereci, and Ugur Sahin on June 2, 2008 and is headquartered in Mainz, Germany.

BioNTech's shares have fallen this year, along with its revenue. The company said it expects $5 billion in 2023 revenue from its COVID-19 vaccine, Comirnaty.

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MAINZ, Germany, and ROCKVILLE, Maryland, USA, June 2, 2023 (GLOBE NEWSWIRE) — BioNTech SE (Nasdaq: BNTX, “BioNTech”) and OncoC4, Inc. (“OncoC4”), today announced positive preliminary data from the ongoing Phase 1/2 trial with the companies' anti-CTLA-4 antibody candidate, BNT316/ONC-392 (gotistobart), in a patient cohort with metastatic, PD-(L)1-resistant non-small cell lung cancer (“NSCLC”). The preliminary results show encouraging clinical anti-tumor activity for BNT316/ONC-392 as a monotherapy in a hard-to-treat patient population, as well as a manageable safety profile. The data will be presented in a poster discussion session at the 2023 American Society of Clinical Oncology (ASCO) Annual Meeting by Kai He, M.D., Ph.D., Pelotonia Institute for Immuno-Oncology, The Ohio State University Comprehensive Cancer Center – Arthur G. James Cancer Hospital and Richard J. Solove Research Institute, Columbus, Ohio, USA.

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BioNTech SE has initiation of a phase 3 study using BNT316 as a monotherapy for PD-1/PD-L1 refractory non-small cell lung cancer patients that is expected to take place in 2023. Updated results from the expansion cohort from phase 1/2 study using BNT316 for the treatment of non-small cell lung cancer patients will be presented at ASCO June 2 - 6 of 2023.

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BioNTech SE (NASDAQ:BNTX ) Q1 2023 Results Conference Call May 8, 2023 8:00 AM ET Company Participants Dr. Victoria Meissner - Vice President of Strategy and Investor Relations Ugur Sahin - Chief Executive Officer and Co-Founder Ozlem Tureci - Chief Medical Officer and Co-Founder Jens Holstein - Chief Financial Officer Ryan Richardson - Chief Strategy Officer Conference Call Participants Tazeen Ahmad - Bank of America Daina Graybosch - Securities Chris Shibutani - Goldman Sachs Karen Flynn - Morgan Stanley Yaron Werber - Cowen Bill Maughan - Canaccord Zhiqiang Shu - Berenberg Operator Welcome to the BioNTech First Quarter 2023 Update Call. I would like to hand the call over to Dr. Victoria Meissner, Vice President of Strategy and Investor Relations.

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COVID-19 vaccine franchise focused on vaccine adaptation readiness ahead of the fall season and advancing next generation vaccine candidates and combinations BioNTech and partner OncoC4 plan to start a Phase 3 clinical trial evaluating anti-CTLA-4 antibody BNT316 (ONC-392) as monotherapy in NSCLC patients who progress after PD-1/PD-L1 treatment Added new class of precision therapeutics to clinical-stage oncology portfolio, with next-generation Antibody-Drug Conjugate (ADC) candidates Presenting clinical data on antibody candidate BNT316 (ONC-392), ADC candidate BNT323 (DB-1303) and CAR-T candidate BNT211 at the 2023 American Society of Clinical Oncology Annual Meeting Broadened clinical-stage infectious disease vaccine pipeline with the start of a First-in-Human clinical trial for the first mRNA-based Tuberculosis vaccine candidates Reiterates BioNTech COVID-19 vaccine revenue guidance of approximately €5 billion in 2023 First quarter1 revenues of €1.3 billion2, net profit of €0.5 billion and fully diluted earnings per share of €2.05 ($2.203) Conference call and webcast scheduled for May 8, 2023, at 8:00 am EDT (2:00 pm CEST) MAINZ, Germany, May 8, 2023 (GLOBE NEWSWIRE) --  BioNTech SE (Nasdaq: BNTX, “BioNTech” or the “Company”) today reported financial results for the three months ended March 31, 2023, and provided an update on its corporate progress. “In the first quarter of 2023, we expanded our toolkit of cutting-edge technologies to new modalities and added a novel immune checkpoint inhibitor candidate targeting CTLA-4 and two investigational antibody-drug conjugates to our arsenal against cancer.

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