Biontech / BNTX - value play, lots of cash

Investing Strategies Falling Knives
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(I’ve updated my Pfizer thread with a new post btw.)

Biontech is my second pick for ‘obvious value play’ in the market right now. Again, it’s considered very unsexy by the market because ‘covid is so 2021’ right now. I hold some Biontech personally.

  • if you add up cash/receivables, it comes to a substantial fraction of the company’s present value (around $90/share IIRC vs $102 share price the other day. Currently $106).

  • ongoing revenue currently covers expenses and leaves some profit too. If you strip out the net cash, the effective PER is well under 10x on ongoing ‘post-covid-boom’ earnings.

  • (unlike many smaller companies in biotech), they have proved they can design, build and deliver a massively valuable service to humanity, using a novel approach, at a cheap price, and yet make a LOT of money doing so.

  • Like Pfizer, they stand to become the monopoly supplier of covid vaccines to the EU under current negotiations for the next 4-5 years.

  • Biontech have 26 big projects in the pipeline, mostly addressing cancers. Personally I really like the idea of a simple MRNA injection that magically teaches your body how to find and wipe out tumours. Much nicer than chemotherapy, radiotherapy, or surgery! There have already been very nice results vs melanoma from a Moderna candidate drug.

https://www.biontech.com/int/en/home/pipeline-and-products/pipeline.html

  • if you like AI hype, they bought one of the biggest UK/european AI / Deep Learning companies (Instadeep) for $0.5 billion in January. And they are using that expertise wisely, for example using DL to try to determine which covid strains are likely to become dominant and dangerous globally from their RNA sequence + likely mutations, so they can develop vaccine updates effectively rather than chase unimportant strains.

https://investors.biontech.de/news-releases/news-release-details/biontech-acquire-instadeep-strengthen-pioneering-position-field

Since it’s a value play, what might out the value / uncoil the value spring? New strain of covid, success of a trial, EU negotiations? Random market noise?

In the past few years, the price has swung from around $115 to $180 a few times randomly. This is the cheapest it has been in the vaccine era, yet they have far more money in the bank than before. So it’s actually cheaper than it was at $115 on previous dumps.

It’s an unusual play, not many companies have this much cash, a diverse set of targets for pharma approaches, a proven track record of delivery and a super low share price.

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The price of Biontech soared from $102 last week / $106 over the weekend (when I made my post), straight to $119.00 on Tuesday.

That’s a 12% gain since I posted on Sunday, in less than 2 days of trading!

So I sold most of what I had bought, yesterday, for $118.50.

And then I bought some back this morning when it dumped straight back to $111.50.

Interesting times.

(Pfizer is also behaving quite interestingly this week. From $36.15 last week to $40.15 on Tuesday.)

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Luxmain,

What is your take on Moderna…and isnt Moderna and BNTX sort of same play? Would you favor one over the other and if so, why?

Thanks,
Charlie

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What is your take on Moderna…and isnt Moderna and BNTX sort of same play? Would you favor one over the other and if so, why?

They are very similar structurally and different in terms of the books.

What follows is purely my opinion and you should fact check it for yourself:

  • Biontech looks set to obtain a complete legal monopoly/duopoly with Pfizer over supply over covid vaccines to the EU for the next 5 years.

  • Biontech has a TON of cash saved from the covid era compared to Moderna + receivables to come in.

  • Both companies are debt free.

  • Biontech has a FAR better price/earnings ratio etc compared to Moderna after deducting net cash/recievables from the price. In fact, Moderna is projected to have negative earnings next year, while Biontech is projected to make money.

  • MRNA has a P/S of 3ish and BNTX has a P/S of 2ish. Adjusted for net cash/recievables though, BNTX is far superior.

  • For a long time, both companies share prices moved in parallel and were very similar (to within a few dollars). However, BNTX became cheaper over time, despite having stronger financial results/books.

  • Largely, the most lucrative applications of MRNA tech are in cancer and so BNTX/MRNA are chasing similar goals in similar ways.

  • Moderna has the cooler name, and cooler stock ticker, and as an American company is better known to US investors.

  • But personally I’d rather have the one with the cash in the bank.

Compare:

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BNTX has dumped to $105.00 again. If you wanted to get in and missed your chance when it randomly bounced to $118.00 on Tuesday, here’s your chance again.

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