Is Biontech Worth 100 Billion?
Cancer research is becoming the focus of investors after Biontech's vaccine success. It can be the basis of long-term profits or expensive disappointment. Could the entry be worthwhile despite the recent rally?
Biontech raised $100 billion on the New York Stock Exchange. The promising prospects for new vaccines against other diseases, and the possibility that at least some of those already twice vaccinated will have a third vaccine, have always taken the course to new heights. Biontech's IPO in 2019 has had its ups and downs – the Mainz-based company was happy to finally be valued at $3.1 billion. More than a decade later, anyone who joined the then-$15 biotech company, not to mention a product, has now invested twenty-seven times as much.
The Strongman brothers, who own almost half of the shares, would probably have made an even better cut: "The boy is making my dreams come true," said Thomas Strungmann of WirtschaftsWoche about Biontech founder Uğur Şahin in the summer of 2020. Mainz-based researchers are researching products that could be downright revolutionary, such as vaccines against cancer. Biontech is now fulfilling the dreams of shareholders with the corona vaccine. But how much money can be made with this, and then comes the next lifesaver offering investors who are still interested in buying good returns - or is there a risk of slipping into an unprofitable research phase again? An analysis.
Pre-Pandemic Biontech Company
Before the pandemic, Biontech was originally a cancer research company. The Mainz-based company focuses on the production of drugs for personalized cancer immunotherapy. There are currently 13 products in the oncology line, including vaccines, antibody therapies, and cell therapies. These include a vaccine against skin cancer. If the vaccine is effective, it will be a real medical breakthrough. However, studies and approval processes in the biotechnology sector can take years. Biontech has released only one product to the market in 13 years - the corona vaccine.
However, the vaccine is completely new: pieces of virus genetic material stimulate the body's own cells to create protection against the vaccine. A drug based on this procedure has never been approved before. Still, Biontech's vaccine was the first to be approved in Europe. Along with the Moderna vaccine, the vaccine is currently one of the most effective.
In order to meet the high demand, there is an important partner in the US company Pfizer besides Biontech. The pharmaceutical giant helps production - a seemingly fruitful collaboration. The two companies continue to raise their production targets, and discussions are ongoing with potential partners to further increase capacities. Orders continue to increase rapidly due to good results compared to many other vaccines.
But it's hard to say how demand will evolve over the long term - it's still unclear at what intervals the vaccine should be renewed. The current infection situation shows that the virus will continue to spread for a while and therefore vaccines will be demanded. Biontech's time advantage in terms of approval and its high degree of effectiveness is the basis for the long-term success of the vaccine. Because, thanks to early approval, the company has more study results and practical data than most of its competitors. In addition, the vaccine is based on technology that can be modified relatively easily without having to change the entire manufacturing process. The current discussion about possible third-party vaccines is also interesting - Biontech is currently forming a lobby group for it.
The share price recently rose after Biontech announced that it would develop the world's first malaria vaccine based on mRNA technology. Founder Şahin said, "Together we are doing everything we can to develop a safe and effective malaria vaccine based on mRNA." "It should prevent disease, reduce deaths and provide a sustainable solution for the African continent and other malaria-affected regions."
Looking ahead, Biontech's oncology business is likely to be refocused. Cancer research remains a major growth driver in the pharmaceutical industry – four of the ten best-selling products in the pharmaceutical industry are cancer drugs. Demand is likely to continue to rise in the coming years: due to an aging population in the west, due to increased prosperity in developing countries. According to Evaluate, cancer drug sales were $145 billion in 2019 and are expected to more than double by 2026. If Biontech brings an effective oncological product to market maturity in the coming years, this will increase the profitability of the Mainz company in the long run.