BNT327 Trials And BLA Filing Will Spur Oncology Amid Risks

Key Takeaways

• BioNTech's oncology advancements, including BNT327 and BNT323, could drive revenue through innovative treatments and first-in-class approvals.
  
• Acquiring Biotheus strengthens IP control and reduces dependencies, optimizing costs and boosting net margins.
  
• High R&D expenses and reliance on COVID-19 vaccine sales, coupled with supply chain and settlement challenges, pose risks to BioNTech's financial stability and future growth.

Catalysts

A biotechnology company, develops and commercializes immunotherapies to treat cancer and infectious diseases in Germany.

• BioNTech is advancing its oncology portfolio with BNT327, a bispecific immunomodulator, and mRNA cancer immunotherapies, which might become new standards of care, potentially improving revenues from new product launches.
  
• The company plans to file a BLA for BNT323, an HER2 ADC, by end of 2025, aiming for commercialization as early as 2026, which could boost revenue with first-in-class approvals in oncology.
  
• BioNTech's acquisition of Biotheus enhances its control over BNT327, strengthening its IP and reducing external dependencies, which could improve net margins by optimizing its R&D and production costs.
  
• The ongoing and planned Phase II and III trials for BNT327 and mRNA candidates across various cancer indications signal potential positive outcomes which could boost earnings through expanded product offerings.
  
• BioNTech's strategic investments in expanding manufacturing capabilities and building commercial functions for oncology support future growth and revenue generation as a multiproduct biopharmaceutical company.

BioNTech Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming BioNTech's revenue will decrease by 3.8% annually over the next 3 years.
• Analysts are not forecasting that BioNTech will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate BioNTech's profit margin will increase from -27.9% to the average US Biotechs industry of 16.4% in 3 years.
• If BioNTech's profit margin were to converge on the industry average, you could expect earnings to reach €402.6 million (and earnings per share of €1.62) by about May 2028, up from €-766.0 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 88.9x on those 2028 earnings, up from -26.1x today. This future PE is greater than the current PE for the US Biotechs industry at 18.3x.
• Analysts expect the number of shares outstanding to grow by 1.12% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.21%, as per the Simply Wall St company report.

BioNTech Future Earnings Per Share Growth

Risks

• The net loss of €416 million in the first quarter of 2025, primarily due to high R&D expenses, suggests potential financial strain and could impact future earnings if new products do not offset these expenses quickly.
  
• Dependence on COVID-19 vaccine sales, which made up the majority of the €183 million in revenues despite a decrease from the previous year, poses a risk to revenue if vaccination rates decline further or market conditions change.
  
• Ongoing reliance on a China-based CDMO for manufacturing BNT323 poses a supply chain risk amid potential geopolitical tensions, which could affect revenue stability if tariffs or trade barriers impact biopharmaceutical supply chains.
  
• The substantial R&D investment (€526 million) without corresponding revenue increase may pressure net margins unless clinical trials result in successful commercialization shortly, affecting overall financial health.
  
• Settlement agreements requiring payments of approximately USD 800 million and expected additional USD 400 million, with delayed reimbursement from Pfizer, could strain cash flow and reserve levels, potentially impacting overall net income and future financial flexibility.

Valuation

• The analysts have a consensus price target of $136.999 for BioNTech based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $171.7, and the most bearish reporting a price target of just $110.45.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €2.4 billion, earnings will come to €402.6 million, and it would be trading on a PE ratio of 88.9x, assuming you use a discount rate of 6.2%.
  
• Given the current share price of $94.74, the analyst price target of $137.0 is 30.8% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.