BioNTech's Next Act Has Nothing to Do With COVID. Here's the $500 Billion Market Some Investors Are Ignoring

BioNTech (NASDAQ: BNTX) rose to prominence several years ago thanks to its role in the coronavirus market. The company developed Comirnaty, one of the best-selling COVID-19 vaccines, with Pfizer (NYSE: PFE). However, vaccination rates have dropped significantly due to a combination of factors, including stricter market regulations. As a result, BioNTech's coronavirus business hasn't performed well recently. The good news is that the company's future no longer depends on its work in this industry. There is another much larger area BioNTech is targeting. Here's what investors need to know.

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The industry's largest therapeutic area

The weight-loss market is grabbing headlines for its rapid growth. But the largest area in the industry by annual sales remains oncology. There are several reasons for that. Let's consider four of them. First, cancer is one of the world's leading causes of death. According to some estimates, in the U.S., one person in three will be diagnosed with cancer at some point in their lives. So, it is a fairly common disease with a significant annual death toll. Second, the oncology market is massive. There are dozens of types of cancer, and some corners of the industry remain underserved, which can attract even more drugmakers.

Third, because cancer is a life-threatening condition, regulators often grant cancer medicines in development special designations that can help speed up approval, a factor that incentivizes drugmakers to develop more of them. Lastly, cancer medicines often command high prices and can sometimes be administered over years. The cancer therapeutics space will continue to expand, and, according to some estimates, it will be worth $516.2 billion by 2035, with a compound annual growth rate of 9.3% over that period. That's the market where BioNTech is looking to carve out a meaningful niche. Can the company pull it off?

BioNTech's exciting pipeline

BioNTech has more than 25 phase 2 or phase 3 ongoing oncology clinical trials. This large pipeline should lead to at least a few approvals. Several of the company's products look particularly promising. Perhaps the most interesting is pumitamig, which BioNTech is developing in collaboration with Bristol Myers Squibb (NYSE: BMY). Pumitamig is a bispecific antibody, a class of medicines that bind to two different targets simultaneously, enabling it to direct the body's immune system to attack diseases like cancer more effectively than conventional antibodies.

Bispecific antibodies like pumitamig could gain significant traction in the coming years. The medicine has been dubbed a potential "Keytruda killer," or next-generation oncology medicines that could challenge Keytruda, currently the best-selling cancer drug on the market. Pumitamig is being investigated across cancers of the lung, kidney, breast, liver, colon, and rectum, among others. Pumitamig is well-positioned to earn approval within a couple of years and, eventually, generate well over $1 billion in annual sales. And that's just one of BioNTech's oncology candidates. Expect the company to improve its financial results significantly as it continues to make headway in this market.

Is BioNTech stock a buy?

BioNTech's pipeline looks promising, even beyond its oncology-related work. The biotech is developing products in other areas, notably infectious diseases. It is working on vaccines for tuberculosis and even HIV. Clinical progress over the next few years could significantly strengthen its prospects. However, BioNTech's valuation is concerning. The stock is worth $23.2 billion, despite posting just $3.3 billion in revenue over the trailing-12-month period, and its sales are declining. The company isn't consistently profitable either.

The market appears to be placing a lot of faith in BioNTech's pipeline. That won't be a problem so long as the company's work in this area goes smoothly, but its share price could fall off a cliff at any sign of trouble. And there likely will be at least some signs of trouble -- it's hard for any biotech company to run a pipeline that large without encountering clinical or regulatory setbacks. My view is that, even though its pipeline looks exciting, BioNTech isn't attractive at current levels. Investors would be better off waiting for the stock to fall from its current levels before initiating a position.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb and Pfizer. The Motley Fool recommends BioNTech Se. The Motley Fool has a disclosure policy.