BioNTech: Maintaining Our $177 Fair Value Estimate Following Management Update

We’re maintaining our $177 fair value estimate following BioNTech’s Jan. 9 presentation at the J.P. Morgan Healthcare Conference. We think the firm is on track to meet our EUR 4.3 billion revenue forecast for 2023, which incorporated Pfizer’s reduced expectations for COVID-19 vaccine sales (BioNTech books half of Pfizer’s gross profit as revenue) and is in line with BioNTech management’s EUR 4 billion guidance. Management also provided new guidance of approximately EUR 3 billion in revenue in 2024, which is ahead of our EUR 2.3 billion forecast. We continue to expect advancing oncology programs, both internal and in-licensed, to significantly boost research and development expenses beginning this year, as more studies enter 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.