Messenger RNA technology leader BioNTech ((NASDAQ: (BNTX))), has seen its stock rally by about 11% over the last week (five trading days) and remains up by almost 21% over the last month. This is well ahead of the S&P 500 which has returned about 2% over the last month. The rally comes as the company’s much sought-after Covid-19 vaccine, developed in partnership with Pfizer, continues to go from strength to strength. Earlier this week the U.S. said that it would donate 500 million doses of the Pfizer–BioNTech shot to low- and middle-income countries through the first half of 2022. Moreover, the vaccine was recently opened up for use in children between the ages of 12 and 15 in the U.S. Separately, governments worldwide have been focusing on securing orders for booster doses of the vaccine to tackle potential new variants of the virus. So will the rally in BioNTech stock continue? It sure looks like it. According to the Trefis Machine learning engine, which analyzes historical stock price movements in the stock, (BNTX) has a 57% chance of a rise over the next month, after rising by about 21% over the last 21 trading days. See our analysis BioNTech Stock Chances Of Rise for more details.
So what’s the fundamental picture like for BioNTech? The Covid-19 vaccine has been very lucrative for the company as BioNTech shares gross profits on the vaccine with Pfizer on a 50:50 basis. Over Q1 2021, the company posted revenue of about $2.5 billion, with Net Margins coming in at an incredible 55%. However, BioNTech stock trades at just 7x projected 2021 earnings, as the markets expect sales to drop post the pandemic. That said, the cash generated from the Covid-19 vaccine over the next year or two will help BioNTech significantly bolster its pipeline of other mRNA drugs which includes 14 candidates focused on oncology and vaccines candidates for HIV and tuberculosis.
Messenger RNA technology leaders Moderna (NASDAQ:MRNA) and BioNTech ((NASDAQ:(BNTX))) have seen their stocks rally by around 75% and 150% respectively year-to-date driven by strong demand for their Covid-19 shots and also as investors see tremendous potential in leveraging mRNA technology beyond Covid, to fight a variety of diseases. So how do the two companies compare, following the big rally?
Both companies are on an equal footing, more or less, in terms of financial performance. Consensus estimates peg Moderna’s sales at about $18.5 billion this year, while BioNTech is on track to post over $15 billion in sales. Both companies are also likely to post net margins of upward of 50% this year. Moderna stock trades at about 4x projected 2021 revenues, while BioNTech trades at a slightly lower 3.3x projected sales. However, picking between the two companies really comes down to their development pipelines, as Covid-19 vaccine sales are likely to decline meaningfully post 2022, as the pandemic recedes.
With the success of their Covid-19 shots, both companies have plenty of cash to fund their research pipelines in the coming years. Moderna’s development pipeline includes nine vaccines and 13 therapeutic candidates in areas including immuno-oncology and rare diseases. Four of the company’s developments, including its CMV vaccine and personalized cancer vaccine, are in phase 2 trials. BioNtech’s pipeline is heavily focused on oncology (a total of 14 candidates) and the company says that three of its oncology programs were moving into late-stage testing. The company is also working on vaccines for HIV and tuberculosis. Although it’s difficult to say which company’s pipeline could eventually be more valuable, given the uncertain nature of clinical trials, BioNTech’s lower valuation multiple and its oncology-focused pipeline might give it a bit more upside versus Moderna.
Messenger RNA or mRNA technology has come of age, with the first two Covid-19 vaccines (Moderna and BioNTech/Pfizer) approved by Western regulators being based on the technology. The technology promises big benefits for drug development, considering the relatively quick development times (the Covid shots were apparently designed in a matter of a few days) with manufacturing also being simpler and more cost-efficient. Boston-based Moderna (NASDAQ:MRNA) and Germany’s BioNTech ((NASDAQ:(BNTX))) – the two companies behind the first Western Covid shots – are the most prominent names in the mRNA space. Let’s take a closer look at the two company’s Covid vaccines, their financials, future drug pipelines, and relative valuations to find out which of the two stocks could be the better bet for investors.
Both Moderna and BioNTech and its partner Pfizer commenced deliveries of their Covid-19 vaccines last month and it’s safe to assume that the shots will be the biggest driver of their Revenues over the next two years. While both vaccines have proven to be over 90% effective and will require two doses per person, Moderna’s shot is easier to distribute and doesn’t need to be stored at super-cold temperatures, unlike the BioNTech vaccine. BioNTech and Pfizer are targeting production of over 1.3 billion doses in 2021, compared to Moderna which has guided between 600 million to 1 billion doses for the year. However, Moderna is likely to post higher revenues and profits from its vaccine, considering that its shot is more expensive (as much as $37 per dose, versus $19.50 per dose for BioNTech/Pfizer) and also because BioNTech will likely split the revenue with partner Pfizer.
Financials & Relative Valuations
The Covid-19 vaccine will be the first commercial product for both companies, with 2021 being the first full year of sales. The consensus estimates BioNTech’s 2021 Revenue at about $7 billion, while Moderna’s Revenue is estimated to come in at $8.5 billion. Working back from consensus EPS figures, Net Margins for both companies for this year are estimated to stand in the 50% range (although this appears high, in our view). Coming to valuations, BioNTech trades at 3x projected 2021 Revenue while Moderna trades at about 5x 2021 Revenue. Relative to projected earnings, Moderna trades at about 10x 2021 EPS, while BioNTech trades at about 5.5x. While this appears very reasonable for high growth companies, the bump from the Covid-19 vaccine will be temporary with sales moderating post-2022. Investors will need to look at Moderna and BioNTech pipelines more closely to value them for the long-term.
BioNTech’s research pipeline is largely focused on cancer drugs (around 21 of its 27 candidates), while Moderna’s is more diverse, focusing on infectious diseases, vaccines, rare diseases, and cancer. The most advanced candidates for Moderna include an experimental vaccine for cytomegalovirus (CMV) that is expected to begin phase 3 trials in 2021 and a personalized cancer vaccine mRNA-4157, to be given in combination with Merck’s Keytruda, which is currently in phase 2 of the clinical timeline.  BioNTech has one drug in the phase 2 stage – BNT122 that is targeted at treating metastatic melanoma. The company’s other drugs are in the pre-clinical or phase 1 stage. 
Although there are many moving parts relating to research pipelines, and it’s difficult to say which company’s pipeline could eventually be more valuable, BioNTech’s lower valuation multiple and its oncology-focused pipeline (cancer drugs are usually very lucrative) could give it more upside potential compared to Moderna. That said, there are risks, considering that the BioNTech pipeline is more concentrated and it’s still too early to tell just how effective mRNA technology is outside of infectious diseases such as Covid-19.
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