BioNTech Is Ripe For A Rebound In 2023

Key Points

• BioNTech had a strong quarter despite slowing COVID sales. 
• A robust pipeline makes it a takeover target for larger pharma companies. 
• A share repurchase program should help support price action in 2023. 

BioNTech NASDAQ: BNTX got a substantial boost from the pandemic and its mRNA vaccine, developed with Pfizer NYSE: PFE. The stock has seen a substantial correction since then due to slowing COVID sales, but the bottom is in. While COVID sales have slowed, this company is not dependent on COVID for its bread and butter and is set up for a rebound in 2023. Not only does it have a growing pipeline of drugs and candidates in the pipeline advancing toward approval, but there are factors in play that make it a potential takeover target in 2023. 

BioNTech Is A Takeover Target In 2023

The stock is trading at a ridiculously low valuation for a significant biopharma company, about 9X its 2023 consensus EPS target, which is several multiples below the group average. This is a value for investors and potentially attractive for a larger biotechnology company looking to grow, but there is more. Major pharma companies are approaching a patent cliff that will shave billions off their top lines. AbbVie NYE: ABBV and Merck NYSE: MRK are already struggling with biosimilar compounds competing with Humira and Januvia, and others, like Bristol-Meyers Squibb NYSE: BMY/Pfizer’s Eliquis and Merck’s Keytruda, are fast approaching theirs. 

BioNTech’s Q4 earnings release included an update to the pipeline, making it an attractive candidate for larger pharma companies approaching their patent cliffs. The company expanded its advanced oncology pipeline to 20 programs, including 24 trials. There are at least 5 candidates in phase 2 trials and several in phase 1 trials with potential registration dates in late 2023 or early 2024. The pipeline also includes phase 1 trials for 4 mRNA vaccine candidates. 

“We made significant progress in 2022 by advancing our pipeline and launching the world’s first Omicron BA.4/BA.5 adapted bivalent COVID-19 vaccine. In addition, multiple new modalities achieved encouraging clinical data and we progressed nine new programs into clinical trials,” said Prof. Ugur Sahin, M.D., CEO and Co-Founder of BioNTech.

Pfizer is an obvious choice. Pfizer has 2 blockbusters in the top 10 list of drugs exposed to patent expiration. These drugs account for nearly $10 billion in revenue for Pfizer and its partner (in Eliquis) Bristol-Myers Squibb, a double-digit figure relative to their gross revenue. The caveat is that Pfizer and Bristol-Myers both have robust pipelines of their own and may not need to buy patents to drive sales. Pfizer has more than 100 trials, with 34 in phase 1. 

BioNTech Has a Robust Quarter 

BioNTech had a robust quarter driven by substantial revenues from COVID and the newer Omicron-specific vaccine. The bad news is the company reported a 22% decline in revenue, but the expectations offset that. The revenue fell but beat the Marketbeat.com consensus by 1080 basis points, and there was also notable margin strength. The company reported €9.26 in EPS, also down YOY but 2000 bps ahead of the consensus due to top-line strength, leverage, and a decline in SG&A expenses. 

Marketbeat.com’s analysts' tracking tools haven’t picked up any post-release commentary, but the trend going into the report is promising. The price target has been falling, offset by the expectation of a 60% upside and firming sentiment. The price target is trending lower, but the sentiment is trending higher and a Moderate Buy compared to last year’s hold. If not set up for a reversal, this combination has the stock price bottoming. 

The price action is down following the Q4 release, but at a critical support level, so it may not move lower. The stock price will probably continue to move sideways within its range in this scenario. If not, this stock may move to a new low that would open up an even deeper value.