BioNTech SE (BNTX) Earnings Call Transcript & Summary

Great. Good morning, everyone. My name is Jess Fye. I'm a senior biotech analyst at JPMorgan and we're continuing the conference today with BioNTech. I'm joined by the company's CEO, Dr. Ugur Sahin. He's going to give a presentation on the company and then we're going to move right into Q&A. If you have a question in the room, just raise your hand and someone will bring you a microphone or alternatively, if you want to submit questions on the portal, you can do that too, and I'll read them up here. So with that, let me turn it over to Ugur.

Thank you, Jessica. Good morning, everyone, and welcome also on behalf of my colleague, Jens Holstein here. I wish you -- I wish everyone a happy new year, healthy, prosperous and with peace. So some statements. So let me start with introducing slide, which is known for many of you. BioNTech was founded 15 years ago with the vision to harness the power of the immune system to fight human disease. We built the first COVID-19 vaccine and this marks our first critical contribution to mankind. And we believe that we can do more and can build on this transformative achievement. And to do that, we have decided to focus on the next years -- in the next years on 3 key objectives. The first one is creating a sustainable respiratory infectious disease vaccine business based on the leverage of our Comirnaty vaccine business. The second goal is to continue to develop our precision pipeline with developing multiple late-stage products to ensure product approvals in the comiing years. And automotive goal is to establish a multiproduct company based on our pioneering technologies and science to address medical needs worldwide. So let's summarize the key execution aspects in 2023. In the last year, we developed and approved the first mRNA vaccines. We shipped in the meantime 4.5 billion doses in more than 180 countries. And in 2023, we have been able to deliver 400 million total vaccine doses worldwide. We introduced a single-dose vials and never-frozen prefilled syringe in the U.S. And we maintained our market leadership in the main markets. So we have counting 27 programs in the clinical stage, 20 in oncology. From this 11 in Phase II and Phase III setting. We have started in oncology 7 new clinical trials and in-licensed 6 new clinical assets. In infectious disease, we started first-in-human trials for shingles, tubercolosis and Mpox and have, at the moment, 7 clinical programs. Most importantly, we have bought several assets into mid- and late-stage clinical trials, Phase II and Phase III clinical trials, covering technologies like checkpoint molecules, ADCs as well as mRNA vaccines. In 2024, we aim to advance additional product candidates to late stage, and we expect to have in total 10 plus potentially registrational trials running at the end of this year. What we also did is that we further build on our AI capabilities, BioNTech from the early days, has strong ties in computational medicine and data science, which are sub-summarized today in AI. With the acquisition of InstaDeep, we entered into the next level of AI by integrating world-class capabilities in supercomputing, AI research and generative AI. And we are going to use this to further build our pipeline, identify optimized molecules and speed up workflows. And at the end of the day, become a fully integrated AI integrated company. In summary, the corporate execution in 2023 shows that the company has now a 27 clinical program, we go. We are now on 5 continents with manufacturing and offices. We have 1,600 new employees who joined us in 2023. We accomplished to in-licensed 6 new clinical stage candidates and in addition, we have built a strong balance sheet with more than EUR 17 billion total cash plus security investments, which is one of our strongest assets for the future. So now more details on the infectious disease programs. We already stated in 2020 that COVID will become stable and we continue to believe that seasonal vaccines will be of key importance to deal with the challenges coming with COVID-19. This is driven by the continuous evolution of the virus. This is driven by continued high risk for severe COVID-19 in vulnerable populations. This is driven by long-term half consequences, consequences of COVID-19 infections and this is also driven by the success of variant adapted vaccines. What we believe is that seasonal vaccination will become more and more an approach combining vaccines, for example, COVID and other respiratory -- respiratory vaccines. And together with our partner, Pfizer, we are developing and evaluating, clinical evaluating various vaccines, combinations vaccines for respiratory diseases. We have, based on data in Phase I and Phase II clinical trials, showing a strong immunogenicity and tolerability of the combination of a flu and COVID-19 vaccine, we have started a Phase III clinical trial, aiming to assess the safety, tolerability and immunogenicity of COVID-19 and flu vaccine in the population of 18 to 64 years old adults, other clinical trials in other age groups will be announced later this year. So summarizing the COVID-19 franchise is, we are following the track in developing seasonally adapted vaccines. And the commercialization shift in the commercialization model, the shift in key markets from the pandemic supply to supply into direct supply to the population. We expect also a shift towards single dose price and prefilled syringe in other regions. We have several clinical trials running to improve the Comirnaty properties, for example, extend the shelf life and improve the immunogenicity. And from 2025 on, we expect if we get approval for the combination vaccines to deliver the first combination respiratory vaccines. In the vaccine field, we are engaged into other infectious diseases. Infectious diseases are responsible for more than 14 billion -- 14 million deaths every year. And we have selected and the infectious diseases with a high mortality rate in to develop mRNA vaccines. This includes programs in HSV, malaria, tubercolosis, Mpox and shingles that are all in the clinical stage. In 2024, we are going to report for all of these clinical trials and data, immunogenicity and safety data and some of these programs will enter Phase II. We are driven by healthcare and social responsibility. We have inaugurated our first mRNA manufacturing facility in Africa, in Kigali in December 2023, aiming to manufacture up to 15 million doses of mRNA vaccines per year. This manufacturing facility will also serve for some of the other mRNA vaccines that are currently in development like our malaria and tuberculosis vaccines once planning. Now focusing on our oncology development. The key focus of our oncology program is driven by understanding the key challenges in cancer. Cancer is a highly personal disease with every patient and every individual having different type of tumor cells. This is driven by the sequential acquisition of mutations and consequently, one consequence of that is that many treatments have an initial effect, but most of the treatments are not associated with definitive cure because of the evolution of cancer cells and the tumor heterogeneity. What we want to accomplish with BioNTech is to address the continuum for cancer treatment. We want to bring novel therapies to cancer patients starting from the disease onset after surgery but also address diseases, which are metastatic in the advanced stage. That means to address that, we are building a portfolio strategy covering different compound classes, which have synergistic mechanisms of action. These are immunomodulators. These are target therapies and personalized mRNA vaccines. And our aim is to develop each of these classes on its own but also enable combination of that. To visualize that in a more detailed way, we have created [indiscernible] outcome showing how -- what are the key mechanistic function of these classes of treatments. These are immunomodulators like anti-PD-1, targeted therapies like our CAR-T cell therapies, ADCs, but also T-cell receptor therapies and mRNA vaccines, yes. Let me start to guide you to this class immunomodulators. We have built a disease agnostic armamentarium of immunomodulators, aiming to exploit different mechanisms including mechanisms for checkpoint blockade like CTLA4 and anti-PD1 blockade but a number of bispecific molecules allowing to combine, for example, a 2 modalities, checkpoint blockade and immune agonistic approaches or combine or target 2 molecules, 2 molecules, which are addressing established and clinically validated pathways. For example, our bispecific antibody BNT327, which combines anti-VEGF and anti-PD-L1 blockade. So we have reported on results for several of these molecules in the last year. And here is one of the updates for PM8002, which is a bispecific molecules. Molecule, which is inhibiting the VEGF and PD-L1 pathway. This is in -- this is a clinical trial in first-line triple-negative breast cancer patients where the bispecific molecule was combined with chemotherapy in the population of 42 patients, we saw an objective response rate of more than 75% with a disease control rate of more than 95%. And this is in this entity, the best-in-class result. And we expect by combining PM-8002 also with our ADC programs to further further build on this mechanism of double mechanism of action. The second asset class is our target treatments like ADCs and CAR-T cell therapies. We had a strong focus in 2023 in acquiring new assets in the ADC field. ADCs will become more or less the backbone treatment in cancer for advanced cancers in all indications. And we understand that even though the ADC field is very broad, that small differences, for example, in linker, small differences in the toxin composition, the type of the antibody, the epitopes will make a big difference with regard to the safety and efficacy profile. So we in-licensed a number of modules and we are also using our own targets to develop new ADCs, which will come in 2025 and 2026. Our strategy for acquisition of these assets was based on differentiated profile, safety profile and efficacy profile and by the idea to cover as many as possible indications. The idea is very simple. For advanced cancers, ADCs will become the standard of care and we can combine that with our immune oncology portfolio and personalized vaccines. To the personalized vaccines, our mRNA vaccines are one of our core immunotherapy group, they have Tier 2 programs. This is -- I'm sorry, could you go back. This is our fixed back programs, we are using multiple antigens, shared antigens for vaccination, for example, tumors like prostate cancer, tumors like melanoma or HPV-positive head and neck cancer. And then we have the fully individualized program where we identify neoantigens and create a fully individualized neoantigens mRNA vaccines. A few words on our individualized vaccine approach. We are focusing for our late-stage clinical task in the adjuvant setting and in the adjuvant setting, we are focusing currently on tumors with low mutational burden. These are the challenging tumors, but these are also the tumors with the highest medical need. Examples are colorectal cancer and pancreatic, rectal adenocarcinoma, both tumor types are not amenable for classical checkpoint treatment, both tumor types have a high medical need. The 5-year survival is of local regional disease in colorectal cancer, 70% for pancreatic cancer; pancreatic cancer, the 5-year survival is around 10%. So this provide high medical need and we started randomized Phase II clinical trials aiming to assess the safety and efficacy in this patient statics. So the key is having these assets give us the opportunity to go for combination therapies. And our strategy for that is assessing the single compound activity for each of the compounds and then assessing synergism and based on synergism, defining classes, combination classes. So the combination classes are, for example, CAR-T cells, plus cancer vaccines, IO-plus cancer vaccines or IO with ADCs, which have been recently validated by independent clinical trials, for example, in bladder cancer. I will give you an example how 2 innovations, both developed by BioNTech can be combined to further increase the impact of the treatment approach for this. We use Claudin 6 CAR. Claudin 6 is a target, which is expressed on testicular cancer, ovarian cancer, but also in many other cancers, for example, in about 6% to 8% of non-small cell lung cancer. And we combined this CAR-T cell treatment adoptive CAR-T cell treatment with vaccination using our mRNA approach to stimulate, stimulate CAR-T cells with the question whether we can further enhance the CAR-T cell function. What we have seen is in a study we have reported in 2022 that was a manual process, we have around 50% objective response rate. In 2023, we changed the process, have now automated process, giving us a higher scale and we confirmed objective responses in ovarian cancer, testicular cancer, but also, for example, in patients with lung cancer. And we plan to start registrational trial in 2024 for this approach. But what we have also seen is that combining CAR-T cells, CAR-T cells with an mRNA vaccine improves the persistence of T-cells. This is the first demonstration that CAR-T cells in solid tumors can be -- the persistence can be enhanced by using an mRNA vaccine. And we have seen that this is visible, not only with a higher increased CAR-T cell numbers, but also longer duration of the CAR-T cells. So summarizing now our oncology, oncology business is the biggest goal for 2024 is to prioritize the molecules to identify those, which are accelerated to the market. We have a number of ongoing mid- and late-stage clinical trials in multiple indications and we aim to start additional registrational trials in 2024. By the end of this year, we want to have 10-plus potential registrational trials running in for at least 6 programs. And we will start combination trials for our other assets. And we are now in the process in building a fully integrated global oncology organization to discover, develop and commercialize a multi-product portfolio. By the end of 2025, expecting our first oncology approvals in 2026. So this is a slide that we showed in a similar fashion 3 years ago, but we are on path with our vision. We have currently 27 programs running. This programs will be selected to start registrational Phase II and Phase III clinical trials. We expect from 2025 to 2029 multiple product launches in oncology. We expect to launch our next-generation COVID-19 vaccines and combination -- respiratory combination vaccines. And this should give us multiple product approvals in the time frame of 2025 and 2029. And the long-term vision is as defined from the very beginning to maintain and deepen our COVID-19 vaccine leadership to have both oncology portfolio and infectious disease portfolio and then engaged into new disease areas. Thank you for your attention.

Great. Thanks for the presentation. So maybe starting with the pipeline, the company that's got capabilities in a number of modalities, I think are probably of varying degrees of risk going after a number of different targets with varying degrees of risk. How do you kind of balance the R&D portfolio across modalities and targets?

So indeed, we have different modalities. And at the end of the day, we believe that we can differentiate cancer into 2 boxes. The one type is cancer at the early stage after surgery. We know that a large number of patients, the relapse in the coming years. I gave you some examples, like colorectal cancer, pancreatic cancer, to the negative breast cancer, all GI tumors. And even after surgery, they will relapse. And for this, we clearly see that our personalized vaccines either alone or in combination could make a difference. So this is the focus for the early stage. And then we have the advanced cancers. And for the advanced cancer, it is very clear that the field for advanced cancers are going to combination therapies. And as a company developing innovations, you have to get the pieces together to be able to do combination therapies. So that means having now the 3 asset classes, IO, ADCs and personalized vaccines gives us really the opportunity for each ADCs to identify the best combination. And before coming into the combinations, we are selecting those assets, which could give us the opportunity for fast to market applications. So one example is, for example, we have seen a strong signal in endometrial cancer for one of our ADCs and we got a grade 4 signal in this indication and now the clinical trial is a single-arm trial is running in this indication to enable us a potential product launch in end of 2025. So that means the combination of pragmatism and long-term vision is the way how we deal with that. And of course -- of course, at the end of the day, we have to ensure that we bring products, which are sustainable and can compete against other developments from potential competitors.

And you also talked about continuing to access external innovation. Thus far, the deals you've done haven't been at a huge scale relative to the company's financial firepower. So what's the right way to think about that going forward?

Yes. So I can take that. So I think what you've seen us do in 2023 is bring in house 6 different clinical stage assets. Some of those we profiled here today. And the sweet spot for us has been to move on the back of Phase I data for novel technologies. You've seen us go after a couple of validated targets because we thought that the technology improvement from the latest generation was sufficient to disrupt even against known targets where there's established franchises in place. And we brought those 6 assets in-house with about EUR 500 million of spend in total. So of course, there'll be more R&D investment behind those assets, but we think that's really the sweet spot for us because it allows us to really assess mechanism of action, technology and really go deep on diligence, both preclinical, but also to have human to base those decisions on. We've already seen 2 of those assets move into pivotal trials within 6 months of the deal being struck. We think that's really the sweet spot for us to move on the back of some data and to quickly progress into pivotal trials.

And one important aspect, of course, is doing registrational clinical trials, the highest is achieving as that ratio in a safe fashion. And combination prices allow us really to get better as that ratios. And the new way in focusing in oncology as we see it, is going for combination therapies. So I don't think that in oncology, any new treatment will have a lasting effect in the advanced cancer setting being as a stand-alone compound without a combination partner.

Maybe turning to some of the guidance you provided today. Is it possible to reconcile the top line guidance you gave, I think, for about EUR 3 billion of revenue in '24 with the commodity guidance EUR 5 billion of sales in '24 that Pfizer provided maybe a month ago?

Yes. So I think we work very closely with Pfizer. Of course, we have a joint commercialization arrangement where the 2 teams exchange notes and compare on a regular basis. But at the end of the day, we're 2 separate companies. And I think what you've seen us do here is try to give a sort of base assessment for the year. And there are some differences between how Pfizer reports, how we report. We've got some slight differences in the booking of international sales, for example, late in year and there's also some other adjustments. So we've tried to put out a base case view, and that EUR 3 billion essentially assumes similar vaccination rates to what we've seen in the second half and the fall season of 2023. So that's the underlying assumption.

And I guess speaking of 2023, it looks like Comirnaty lost share in the U.S. relative to prior years. What happened there? Is there a way to reverse that?

Well, I think we have to take a broader perspective. In COVID, comirnaty is a global product business. We've distributed the product to over 180 countries and regions, as Ugur mentioned, since the onset of the pandemic and we've actually gained share through 2023 in a number of geographies, just to mention a few, Japan, Europe, we've maintained a very high share for 2 years plus and building on our original sort of position in the early pandemic. I think in the United States, there has been a sort of aggressive competition. There's been aggressive discounting in the U.S. market. But I think overall, we've maintained a market-leading position even in the United States, above 50% by our account. And I think globally, our market position continues to be very strong. So I think we feel good about how we've defined the brand and I think well positioned to bring the next generation of innovations forward next year.

You also talked about a return to top line growth in '25 off of '24. What's kind of baked in there for COVID versus, is that growth coming from other assets?

Yes. So I think -- so we're expecting COVID to continue to be a highly cash-generative, profitable product business for us well into the future. I think as was noted in the presentation, we actually have 2 potential drivers over the next 2 years that could start to add top line growth potential. One is the COVID franchise, next-gen vaccines and combination vaccines, which we expect to move into pivotal trials this year with Pfizer. And the other is, of course, the oncology portfolio, which is now in pivotal trials. We talked about that and where we think there could be some opportunities if the data plays out as we expected could for accelerated approval. So I think on both fronts, infectious disease and oncology, we're expecting potential for top line growth from '25 onwards.

Maybe switching to the vaccine pipeline. I think one of the vaccines you're pursuing is for -- so I wanted to ask about here, shingles. What do you think you could differentiate in shingles or kind of add value with the new shingles vaccine?

Yes. I think shingles is a great example of highly efficacious vaccine. But we see really the opportunity to further improve that by more tolerable application and also by providing the opportunity, for example, to have instead of 2 vaccinations or single vaccination.

Can you talk a bit about how you think about the market opportunity for the 4-1BB bispecifics?