BioNTech Stock Has Surged on Covid Vaccine. Its Next Big Hit Might Take a While.

Dr. Ugur Sahin, the German professor who co-founded the biotech firm

BioNTech,

is a multibillionaire, at least on paper.

He owns just under a fifth of BioNTech, whose market capitalization has soared to $27.5 billion since the U.S. Food and Drug Administration authorized the Covid-19 vaccine it developed in partnership with

Pfizer

(ticker: PFE).

Yet Sahin hasn’t cashed in. “No time to sell,” he jokes.

Investors haven’t cashed in, either. American depositary receipts of BioNTech (BNTX) are up more than 235% since the start of 2020. BioNTech expects revenue of more than $11 billion from the 1.4 billion Covid-19 vaccine doses that it and Pfizer are contracted to deliver this year. And BioNTech says the companies could make another 1.1 billion doses in 2021.

It is an enormous cash infusion for what is, in every other respect, an early-stage biotech. While BioNTech is working on a long list of cancer and infectious-disease programs, all are years away from a marketable product.

That could be a problem for the stock. Investors have piled in amid the excitement over the company’s Covid-19 vaccine. But will they stick around for the long term once the pandemic fades, and they are faced with a long wait for a new product?

It depends in large part on how long the Covid-19 vaccine revenues last. It also depends on Sahin himself.

“I am a cancer physician,” the CEO tells Barron’s over Zoom, wearing a gray T-shirt. “I started [the company] not to become a billionaire, but just to be able to bring our ideas and our innovation to patients.”

Two years ago, BioNTech was an oncology-focused biotech with a bunch of infectious-disease programs on the side. Covid-19 changed that, winning BioNTech its first marketed product and turning the obscure company into a household name with enormous revenues.

“We are well prepared to spend the money,” Sahin says. The company is moving forward with a pipeline that includes promising messenger RNA–based cancer vaccines, cell therapies, and bispecific antibodies that could represent the next generation of cancer immunotherapy.

“If you have this funding, you can solve problems in a better way,” he says. “It gives us the opportunity to increase our resources, and [be] able to get even more experienced people into our company.”

The question is how long investors will have to wait between when the Covid-19 vaccine revenues stop flowing, and sales of one of the experimental drugs begin. None of BioNTech’s other programs have progressed past Phase 2 trials.

“I think it’s a great setup—but for the long term,” says SVB Leerink analyst Daina Graybosch. She doesn’t expect any program but the Covid-19 vaccine to produce revenues for BioNTech until 2025. “People who haven’t studied this company…are going to be shocked, I think, when they realize how early everything else is.”

BioNTech bulls say that the success of the Covid-19 vaccine increases the chances for the rest of its products. “The odds of success of this business being able to create more value beyond Covid are actually improved by Covid,” says Ziad Bakri, who manages T. Rowe Price’s Health Sciences fund, which holds BioNTech shares.

Much depends on the future sales of the Covid-19 vaccine. There is no consensus on how long the Covid-19 vaccine market will last, or how big it will be. Analysts see Pfizer’s vaccine revenue dropping to $1.1 billion in 2023 from $15.1 billion in 2021, according to FactSet. Sahin would make no predictions. But he notes that growing concern over the long-term effects of even mild infections will mean regular redosing. In the future, he says, “it will be important to prevent infection, which means we will need more often revaccinations.”

To maintain high levels of protection offered by his vaccine, patients may need to be redosed six to nine months after their second dose, Sahin says. Subsequent doses might come every 12 or 18 months. There has been little public discussion yet of third doses, but he says it is coming.

If that’s the case, that could mean short-term sales of the vaccine well beyond the initial $11 billion. The U.S. government bought 300 million doses of the vaccine for $19.50 a dose for delivery by the end of July. If each of the 150 million people who received those shots needs another one within six months, that could be $2.9 billion split between Pfizer and BioNTech in the U.S. market alone in 2021, not to mention annual shots that follow.

Still, there is a lingering worry hanging over BioNTech shares: Did the stock grow too much, too fast?

Biotech firms don’t usually clock immense sales years ahead of schedule. Even for investors confident in the long-term potential, the midterm could be bumpy. Sahin says the long-term bet is worth the wait.

“It is always difficult to value a company if you’re asked what its value could be in three months,” he says. “But if you’re asked what its value could be in five years, I can tell you that [you’re dealing with] a multiproduct biopharmaceutical business.”

He says that from the start the goal was to make BioNTech the next

Amgen

(AMGN) or Genentech, the two companies whose scientific discoveries launched the biotechnology industry in the early 1980s.

But BioNTech’s story may remind investors of another biotech:

Gilead Sciences

(GILD), which introduced a hepatitis C cure in 2013, tripling its revenue and doubling its stock price until the patient population ran dry, sales fell, and the stock crashed. Gilead’s stock today sits at little more than half the peak it hit in 2015.

For Sahin, the analogy doesn’t work. “Gilead did not have a disruptive new technology,” he says. “They had a disruptive product.”

The question for BioNTech stock is whether the market will have enough faith in Sahin’s science, and the CEO himself, to feel the same way.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com