If you had invested $ 5,000 in the BioNTech IPO, this is how much money you would have now

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Coronavirus vaccine center BionNTech (NASDAQ: BNTX) made its public debut in the United States less than a year ago in October 2019, when it raised $ 150 million by selling 10 million U.S. Depositary Shares (ADS) at $ 15 per ADS. Investing $ 5,000 in the US initial public offering would be worth more than $ 21,300 right now, an excellent treble in about 10 months.

Of course, it is unlikely that anyone investing last October could have anticipated the rapid rise in valuation of BioNTech, which is primarily linked to the development of the drugmaker’s coronavirus vaccine which recently entered Phase 3 of development. clinical.

A new vaccine technology

BioNTech, like Modern (NASDAQ: ARNM) which uses the same technology, was able to quickly design and develop its vaccine using the company’s messenger RNA (mRNA) technology.

MRNAs are the intermediaries between DNA genes and the proteins for which they code. DNA has been used successfully as the basis for gene therapy, and protein-based drugs have been around for decades, but mRNA-based drugs and vaccines are a relatively unproven but promising technology.

The biggest advantage of mRNA vaccines is the ease with which it is possible to transform the genetic information of the virus into a potential vaccine. The development of traditional protein-based vaccines requires the creation of a process of expression of the viral protein – typically in cells grown in an incubator – followed by the development of a purification rod to separate the viral protein from the rest of the cells. proteins used by expression cells. grow and survive.

By injecting an mRNA encoding a viral protein, BioNTech is able to skip the tedious manufacturing step and have the cells of patients produce the viral protein. At this point, mRNA and protein vaccines follow a similar course, with patients’ immune systems recognizing the viral protein as foreign and developing an immune response.

Because the structure of mRNAs is relatively similar, it was easy for Moderna and BioNTech to design and manufacture their mRNA-based vaccines faster than protein-based vaccines. In fact, BioNTech chose to design and test four different candidate vaccines in an early clinical stage before deciding which to move on to advanced stage testing.

Image source: Getty Images.

A little help from his friends

BioNTech would arguably not have been able to scale as quickly as it has without a partnership with Pfizer (NYSE: PFE), as well as one with Fosun Pharma in China. Together, the two companies have invested $ 236 million in capital in the company which, along with cost sharing and upfront payments, will cover the majority of BioNTech’s development costs for the coronavirus vaccine.

In addition to the money, Pfizer undoubtedly offers BioNTech expertise in conducting clinical trials. The coronavirus vaccine is not BioNTech’s first drug candidate, but biotechnology had not advanced any of its candidates to phase 3 until its coronavirus program reached its primary candidate.

What if you invest $ 5,000 today?

BioNTech’s ability to continue to ramp up its current valuation largely depends on whether – and for how long – its coronavirus vaccine is able to protect patients against COVID-19.

The vaccine faces substantial competition from Moderna and other coronavirus vaccine developers, but the final evaluation will likely be determined by the vaccine’s long-term effectiveness.

The best financial opportunity for BioNTech is a vaccine that protects patients for about a year. While lifetime protection would be best for patients, if BioNTech’s vaccine requires an annual booster, biotechnology could thrive on sales of its coronavirus vaccine year after year.

If, however, the vaccine protects patients from the coronavirus responsible for COVID-19 for several years, it is difficult to see how BioNTech is poised to experience substantial growth from its current market capitalization of $ 15 million.

Assuming a single vaccine at around $ 20 per dose and 500 million doses per year, BioNTech would generate $ 10 billion per year – split with Pfizer – but the one-off nature of the treatment would limit the long-term evaluation of BioNTech. .

Of course, showing that its mRNA technology can create a vaccine against COVID-19 would provide certainty that BioNTech can advance the rest of its infectious disease pipeline, helping to support its assessments a bit. Ultimately, however, investors should keep in mind that this is an unusual time and future vaccine development is unlikely to be so rapid.



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