BioNTech SE

Why I Chose To Close My Position in BionNTech?

Although I still believe BioNTech is undervalued at current levels, I have chosen to close my position and free up some cash after Iran attacked Israel on April 13, 2024, right after the opening of the stock market on Monday the 15th. Thankfully, the market didn’t plummet in response to escalating global tensions. However, since my portfolio primarily consists of Russian stocks hindered by sanctions, I’m content to hold onto some cash until signs of eased global tensions emerge, or until an irresistible opportunity presents itself.

The Total Return on my investment in BioNTech from the initial purchase date on March 4, 2024, to the final closing date on April 15, 2024, amounted to -0.65% in local currency (EURO).

For reference, I’ve included my original investment thesis for BioNeTech below.

Why I Chose to Invest in BioNTech SE (BNTX.NASDAQ – 22UA.DE)

To be honest, I was a bit skeptical when I was first introduced to BioNTech. Like most of you, you probably first heard of this company when it revealed it developed the first COVID-19 vaccine in partnership with Pfizer. Just to be clear: as an investor I have different views about the mRNA-vaccines compared to my personal believes. Personally, I believed mRNA-vaccines entered the market really quickly, perhaps even too quickly. As an investor, I thought mRNA-vaccines could be very promising, especially in treating various diseases beyond COVID-19.

On February 26, 2024 I was browsing my feed on X where I read the following post from @Quality_stocksA: “10 stocks with huge cash position vs capitalization”. Among the listed companies, BioNTech caught my attention, boasting a market capitalization of $22.4B alongside a net cash position of $18.9B. I was intrigued, while I was fully aware that my trading possibilities were limited due to my current sanctioned holdings in Russian stocks.

Due to the sanctions, I do not spent much time myself in analyzing potential new stocks as my options are now very limited. Instead, I spent my time reading and summarizing more and more investment books. Due to this newfound knowledge, I tend to improve my investment thesis, and the subject which sees to come back is to value a company’s intangibles. Previously, I always deducted a company’s goodwill and intangibles blindly before I started valuing a company. However, this new knowledge led me to rethink this strategy. I know believe to not just substract it from book value (although I of course still prefer not to pay for it), but try to determine it’s value for a company’s business model.

When I studied the company’s investor presentation of January 9, 2024 titled: “J.P. Morgan Healthcare Conference Presentation”, I found out the BioNTech is much more than Pfizer’s partner in the COVID-19 vaccine. They are developing an innovative pipeline focused on oncology and infectious disease by leveraging their capabilities of computational medicine and artificial intelligence. After adding >1,600 new employees during 2023 and acquiring the AI company InstaDeep they were supposed to still have ~€17.5B in cash as of December 31, 2023. Therefore, on February 26, 2024, the opportunity to acquire this innovative biotech company, with a robust pipeline, for approximately €2.5B appeared undervalued, especially considering its 2023 earnings of ~€930 million.

I also learned that Pfizer had to write down COVID-19 vaccines inventory, which negatively impacted the results of BioNTech too. However, although this is probably the main reason why BioNTech’s share price decreased recently, I don’t see this as a structural reason for the company to perform badly, rather an opportunity to benefit from a temporarily low share price.

As I decided to invest in BioNTech I chose to buy ticker 22UA.DE as this German listing is trading in my base currency, the EURO, which I prefer when a company publishes it’s financial statements in that currency too. As I needed to free up the necessary funds, I chose to divest Sinopec Kantons Holdings (934.SEHK), as I believe currently BionNTech has more potential and this switch will lead to better diversification among different sectors as I still have a lot of exposure to the oil sector through my Russian holdings.

Disclaimer: This is not financial advice. Always conduct thorough due diligence before making any investment decisions.

Financial Data Analysis

The following financial data were relevant when I made my initial investment in BioNTech’s shares (further details about my trading activity is provided below). The calculated “Key Metricsprovide a window into my approach to valuation. For a deeper understanding of this approach, as well as comprehensive explanations on what these revealing ratios truly signify, I encourage you to read the following article.

For my due diligence, I primarily focus on the most recent annual Cash Flow and Income Statements to gauge the company’s performance relative to the previous years. However, when reviewing the Balance Sheet, I always refer to the most recent quarterly statements. This allows me to accurately understand the present state of the company’s assets and liabilities, essentially giving me a snapshot of what I’m investing in at that moment.

Selected Quarterly Balance Sheet Data as of December 31, 2023Key Metrics
Total Inventory357.7Current Ratio19,527.3 / 2,070.50 = 9.43
Total Current Assets19,527.3Quick Ratio(19,527.30 – 357.7) / 2,070.50 = 9.26
Total Goodwill362.5Book Value per Share23,006.3 / 242.7 = 94.79
Total Intangibles804.1Tangible Book Value per Share(23,006.30 – 362.5 – 804.1) / 242.7 = 89.99
Total Assets23,006.3Price to Book Value81.04 / 94.79 = 0.85
Total Current Liabilities2,070.50Price to Tangible Book Value81.04 / 89.99 = 0.90
Total Equity20,245.9Total Equity / Total Assets20,245.9 / 23,006.3 = 0.88
Total Common Shares Outstanding242.7Total Tangible Equity / Total Tangible Assets(20,245.9 – 362.5 – 804.1) / (23,006.3 – 362.5 – 804.1) = 0.87
Selected Annual Income Statement Data as of December 31, 2023Key Metrics
Diluted Net Income930.3Diluted Normalized EPS930.3 / 242.7 = 3.83
Diluted Weighted Average Shares242.7Price to Earnings Ratio81.04 / 3.83 = 21.16
Selected Annual Cash Flow Data as of December 31, 2023Key Metrics
Total Cash Dividends PaidN/ADividend per ShareN/A
Dividend YieldN/A

Catalysts for Future Revaluation

In March 2023, BioNTech authorized a share repurchase program for 2023 worth up to $0.5 billion. By December 31, 2023, a total of 4,646,965 ADSs were repurchased at an average price of $107.58 (€98.24), for total consideration of $0.5 billion (€456.5 million). I believe buying back shares around Book Value is a very good investment, especially considering the amount of cash available to the company and the company’s future prospects. If the company announces a new share repurchase program for 2024 at the current depressed share prices, I believe this will have a positive effect on the company’s share price in the longer term.

For 2024, BioNTech provided a revenue guidance of €2.5 billion to €3.1 billion, R&D expenses of €2.4 billion to €2.6 billion, SG&A expenses of €700 million to €800 million and CAPEX for operating activities of €400 million to €500 million. Thus, the company will be bleeding cash. However, if revenue surpasses expectations or costs are mitigated, the market may interpret this positively, leading to higher share prices.

As announced on March 20, 2024, I anticipate BioNTech will diversify its revenue streams away from the COVID-19 vaccine in the future, aiming for first oncology launch in 2026 and ten indication approvals by 2030. Any significant news regarding the development of its drug pipeline could trigger a revaluation of the company’s future prospects, impacting its share price.

Looking at the beneficial owners in the latest 20-F report for the fiscal year ended December 31, 2023, two shareholders stand out: AT Impf GmbH, a subsidiary of ATHOS KG, a family office owned by the brothers Andreas and Thomas Strüngmann, who owned >104mln shares (43.8%) and Medine GmbH and it’s sole shareholder Ugur Sahin, the company’s CEO, who owned >41mln shares (17.4%). Given their significant holdings in BioNTech, any decision to divest their shares could negatively impact the company’s share price. While I would interpret a divestment by the Strüngmann brothers as a way to diversify their investments, any divestments by Mr. Sahin could be seen as a lack of trust in the company’s future prospects, possibly impacting the share price negatively. Thus, monitoring their holdings will be crucial for me.

Company Information

BioNTech SE is a Germany-based clinical-stage biotechnology company. The Company focuses on patient-specific immunotherapies for the treatment of cancer and other serious diseases. The Company is providing technologies including mRNA-based therapies, cell therapies, small molecules and antibodies, which can be utilized for specific purposes or can be even combined with each other in a synergistic manner. It also develops a broad product pipeline using different scientific approaches and technology platforms, including individualized mRNA-based product candidates, chimeric antigen receptor T-cells, checkpoint immunomodulators, targeted cancer antibodies and small molecules. In addition, the Company offers diagnostic products and drug discovery services for other therapeutic areas, including infectious diseases, allergies and autoimmune disorders.

Company Website:

Trading Activity – When I Bought These Shares

  • March 4, 2024 – EUR 81.04

Dividend Activity – When I Received Any Dividends

  • Not Applicable Yet

Trading Activity – When I Sold These Shares

  • April 15, 2024 – EUR 80.55

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