We Raise Our Fair Value for BioNTech Vaccine Profits

After analyzing recent developments in the evolving COVID-19 vaccine landscape, we’ve added BioNTech’s BNTX vaccine candidate to our model with a 60% probability of success. On a probability-weighted basis, we model about EUR 3.6 billion in 2021 revenue or EUR 2.4 billion in 2021 gross profits for BioNTech. After accounting for probability-weighted milestones to BioNTech and development costs that the company will pay back to Pfizer, we’re raising our fair value estimate to $56 per ADR from $40 and maintaining our no-moat and very high uncertainty ratings.

On July 27, BioNTech and partner Pfizer announced the selection of vaccine candidate BNT162b2 to move forward in late-stage trials. While we have not seen the full published early data for this candidate, the companies reported that b2 (which encodes the full spike protein) showed similar neutralizing antibodies as BNT162b1 (which encodes just the receptor-binding domain of the spike protein), as well a favorable safety profile and T-cell response compared with b1. Importantly, the companies reported that older adults (ages 65-85) vaccinated with b2 demonstrated a higher neutralizing antibody response than that seen in patients who naturally contract the virus. We expect early clinical data for b2 to be published soon.

The global COVID-19 vaccine market is not likely to be a winner-take-all market, given the positive early data we’ve seen from other companies like Moderna and AstraZeneca, manufacturing constraints, and rhetoric from companies like Astra and Johnson & Johnson about not-for-profit pricing. Further, we expect the bulk of vaccine demand to be spread over 2021 and 2022 and believe a long-term revenue stream from BNT162b2 is highly uncertain at this point.

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