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Will BioNTech's loss-making finally end?

Andreas Rostek-Buetti
November 10, 2020

A day after BioNTech announced it had developed a vaccine against COVID-19, the German firm unveiled earnings that far from match its scientific achievement. But its fortunes could soon be turning around.

A road sign identifying the BioNTech headquarters in Main and reading At the Goldmine 12
Image: picture alliance/dpa

When German biotech pioneer BioNTech reported company results for the third quarter of this year, no-one really expected miracles. In contrast to Monday's surprise announcement that together with US pharma giant Pfizer it had produced a coronavirus vaccine that is 90% effective, the Mainz, Germany-based company is still lagging far behind in terms of profitability.

As a matter of fact, ever since BioNTech was founded 12 years ago, it has never turned a profit, which didn't change between June and August this year when it reported a record loss of €210 million ($248 million) for the period.

Yet BioNTech's stock is worth more than that of Germany's flagship airline Lufthansa or the country's second-largest private bank, Commerzbank. With a market capitalization of €18.4 billion in mid-October, the biotech company was highly valued before the news of its vaccine breakthrough.

Founded in 2008 by the married scientists Özlem Türeci and Ugur Sahin and the Austrian oncologist Christoph Huber, the company originally set out to develop new types of immunotherapy against cancer. Before it made its debut on the US stock market about a year ago, it had received large parts of its funding from the German billionaire brothers, Thomas and Andreas Strüngmann, who made their fortune with generic drugmaker Hexal, which they sold to the Swiss pharma giant Novartis in 2005.

Pressure and profits

BioNTech currently employs 1,300 people in about 60 countries, with 500 of them working in the company's German headquarters situated aptly in a street called An der Goldgrube, or At the Goldmine.

Although BioNTech hasn't struck it massively rich yet, it was relatively successful in securing seed funding for its research. Apart from the millions from the Strüngmann brothers, the company received venture capital to the tune of €290 million last year, getting the lion's share of the total of €479 million in seed capital for biotech startups provided in Germany in 2019.

When BioNTech entered the race to develop a vaccine against the coronavirus earlier this year, it clinched a deal with Pfizer to co-develop a shot at research sites both in the United States and Germany. The two companies began human testing of the vaccine in April, well before the Trump administration launched its Operation Warp Speed against the COVID-19 pandemic.

A picture showing various glass bottles containing a coronavirus vaccine
The partnership with US drugmaker Pfizer will give BioNTech both production capacity and access to markets for its vaccineImage: Zeljko Lukunic/PIXSELL/picture alliance

In September, the German government gave the company $445 million (€376 million) under an agreement aimed at accelerating the vaccine by building manufacturing and development capacity in its home market. According to a report in the German news magazine Spiegel, the BioNTech-Pfizer alliance will be capable of making 1.5 billion doses of its vaccine by the end of 2021.

Pfizer, which has collaborated with BioNTech on flu vaccines since 2018, paid $185m upfront toward the development of the coronavirus vaccine. It will release another $563m when the development is complete. Profits from the effort will be shared equally between the two companies, although BioNTech founder Ugur Sahin told Spiegel recently that the company's mRNA scientific method "is our technology" and would remain in the hands of the company.

The 'Amazon of biotechnology'

Meanwhile, the BioNTech-Pfizer alliance has also entered into a partnership with China's pharma giant Fosun to deliver some 10 million doses of the vaccine to markets in China, Hong Kong and Macau. According to several news agencies, Fosun will support vaccine production at Pfizer with a $50 million investment and pay license fees to the tune of $85 million for future deliveries.

Also countries in the European Union stand to benefit from BioNTech's new vaccine, with the EU Commission saying on Tuesday that it had "secured a contract" with the two companies. All of the bloc's 27 member states will have simultaneous access to the first supplies delivered by Pfizer, Brussels said following months of negotiations for some 300 million doses of the vaccine.

A generic picture showing a hand that is holding a syringe with a vaccine before a background with the BionTech company logo
Pfizer has signed contracts worldwide to deliver 570 million doses of BioNTech's vaccine this year and in 2021Image: picture-alliance/dpa/F. Hoemann

Monday's milestone is a triumph for BioNTech's scientific method, as its vaccine pioneers an entirely new technology that involves injecting part of the virus's genetic code in order to train the immune system. If there are no unforeseen problems, the company could apply for an emergency-use authorization in the US this month, meaning it may be late December or even early January when the vaccine becomes available.

So there's little wonder that one of the company's early investors, Andreas Strüngmann, already uses big comparisons when he talks about BioNTech's technological and financial future. In a recent interview for the German business weekly Wirtschaftswoche he said the company could become "the Amazon of the biotech sector."

This article was adapted from German