Is BioNTech Stock a No-Brainer Buy on the Dip?

BioNTech (NASDAQ: BNTX) has lagged the market this year. The company's shares have climbed just 6% as of writing, compared with the S&P 500's 12% gain. The biotech's performance looks even worse once we zoom out. Over the past five years, BioNTech has lost 70% of its value. Could BioNTech bounce back soon, or is the company more likely to continue sinking over the next few years? Let's find out whether it's time to buy the stock after years of underperformance.

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What's going on with BioNTech?

BioNTech developed Comirnaty, a leading coronavirus vaccine, in combination with Pfizer (NYSE: PFE). This product was highly popular in the first few years of the pandemic. It generated almost $38 billion in sales at its peak and helped BioNTech post strong financial performances. However, the pandemic waned, demand for the vaccine declined, and some governments made it harder for people to get vaccinated. As a result, Comirnaty's sales have been unimpressive over the past few years.

That's why BioNTech has been lagging the market. In the second quarter, the company's revenue was 105.6 million euros ($122.7 million), down almost 60% year over year. The biotech's adjusted loss per share was €2.22 ($2.58), worse than the €1.45 ($1.68) loss per share recorded in the year-ago period. BioNTech will likely continue generating some revenue from its coronavirus vaccine franchise, but it is unlikely to be a meaningful, consistent growth driver in the medium term. So, the company needs to look elsewhere for growth.

A landmark clinical trial win

BioNTech stock was in the red year-to-date until an important clinical trial win sent it soaring. Of note, it wasn't BioNTech's own clinical success. It was Moderna's (NASDAQ: MRNA) and Merck's (NYSE: MRK). The two corporations are collaborating to develop intismeran autogene, a personalized cancer vaccine. In a phase 3 study, intismeran autogene, in combination with Keytruda, significantly reduced the risk of recurrence and death in patients with melanoma compared to Keytruda alone. This clinical win showed the potential of Moderna's mRNA vaccine platform beyond infectious diseases and into the lucrative oncology market.

BioNTech, another company that specializes in mRNA vaccines, suddenly became more attractive to many investors. BioNTech has several mRNA-based candidates in phase 2 or phase 3 studies. For instance, the company's BNT113 is being developed for head and neck cancer, while BNT116 is being investigated in patients with lung cancer. Over the next five years, BioNTech could record important clinical and regulatory wins, significantly improve its approved portfolio, and post much better financial results.

Is the stock a buy?

Perhaps BioNTech's most promising candidate is pumitamig, a cancer medicine it is developing in collaboration with Bristol Myers Squibb (NYSE: BMY). Pumitamig is a bispecific antibody, a newer class of drugs that could become increasingly important in oncology. BioNTech is hoping pumitamig can become a pipeline in a drug: The medicine is being developed to treat cancers of the lung, breast, liver, colon, and rectum, and more. Clinical trial wins across several of these niches, particularly in lung cancer -- the leading cause of cancer death worldwide -- would likely send BioNTech stock much higher. But does any of that make the stock a strong buy? "No-brainer" is likely too optimistic.

A lot could go wrong with BioNTech stock, including clinical and regulatory setbacks for some of its leading candidates. The vaccine maker also has a market cap of $25.4 billion as of writing. For a biotech company that generates little revenue and is consistently unprofitable, that can seem like a lot. But the market is betting on BioNTech's deep pipeline, so if the company fails to meet Wall Street's expectations, the stock will fall off a cliff. But even accounting for potential clinical setbacks, BioNTech looks somewhat attractive, especially given Moderna's clinical win that makes BioNTech's entire mRNA pipeline far more valuable. Given the breadth of BioNTech's pipeline, which gives it multiple shots at developing blockbuster products, the company could survive a few clinical trial failures. All good reasons why the stock looks attractive.

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