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BioNTech Earnings: Maintaining Our $177 FVE Following Further Oncology Pipeline Boost

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We’re maintaining our $177 fair value estimate following third-quarter results that put BioNTech BNTX on track to meet our recently updated forecast for 2023, which incorporated Pfizer’s reduced expectations for COVID-19 vaccine sales (BioNTech books half of Pfizer’s gross profit as revenue). While we added a couple of advancing or newly licensed oncology programs to our long-term sales forecast, we also significantly increased our assumptions for research and development expenses beginning in 2024, given the number of programs that BioNTech anticipates moving to pivotal trials. Despite this increase, we expect BioNTech to remain profitable during this period of investment prior to oncology drug launches, due to its emphasis on controlling costs. We see shares as undervalued, as we continue to think the market underestimates the long-term tail for COVID-19 vaccine sales as well as the potential for mRNA technology in oncology and BioNTech’s ability to build a more diversified oncology pipeline with multiple novel biologic and cell therapies. That said, we think the firm is still in the process of building a moat, given the mRNA vaccine competitive landscape and the high-risk nature of oncology drug development.

Management lowered its full-year 2023 guidance for COVID-19 vaccine revenue from EUR 5 billion to EUR 4 billion, which we see as in line with our EUR 4.3 billion forecast. The Pfizer/BioNTech COVID-19 vaccine has slightly lost market share in the U.S., falling from 64% share last season to somewhere between 55%-60% so far this season, based on numbers from Moderna and BioNTech. However, Pfizer’s global contracts have secured a dominant 90% share of sales in Europe and Japan. Both Moderna and Pfizer/BioNTech are poised to launch combination COVID-19/flu vaccines in 2025, which we think could begin to improve demand for COVID-19 vaccines following the current trough, as COVID-19 vaccines can piggy-back off the reliable demand for annual flu shots.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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Karen Andersen, CFA

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Karen Andersen, CFA, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She is responsible for biotechnology research.

Before joining Morningstar in 2005, Andersen received a master’s degree in business administration from Rice University, where she served as senior healthcare analyst for the M.A. Wright Fund and earned the distinction of Jones Scholar. She has scientific research experience in both academia (at Rice University and the University of Queensland in Australia) and industry (at Lexicon Genetics and a subsidiary of Genzyme).

Andersen also holds a bachelor’s degree in biochemistry from Rice University, where she graduated magna cum laude. She is a member of Phi Beta Kappa and holds the Chartered Financial Analyst® designation. She ranked first in the biotechnology industry, and had the highest score overall, in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

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