Another BioNTech Cancer Vaccine Just Hit a Major Setback. Is BNTX Stock Still a Buy?

The personalized cancer vaccine landscape is arguably at an inflection point. Moderna (MRNA -7.82%), one of the leaders in the space, posted outstanding Phase 3 clinical trial results for one of its candidates, intismeran autogene. That was one of the first-ever major Phase 3 wins for an mRNA-based cancer vaccine. BioNTech (BNTX -2.76%) is another biotech seeking breakthroughs in this field. However, the company has experienced several clinical setbacks in recent months. Should investors stick with BioNTech through these troubles?

Another clinical trial failure

First, a little bit of background. BioNTech partnered with Pfizer (PFE +0.48%) to develop and market Comirnaty, a leading coronavirus vaccine. Even though the biotech was handsomely rewarded for its efforts, the COVID-19 market is no longer what it once was. Demand for vaccines has decreased significantly, leading to declining sales of Comirnaty. In the second quarter, BioNTech’s revenue was 105.6 million euros (about $118.3 million), a decrease of almost 60% compared to the year-ago period. The company posted a net loss per share of 3.24 euros (about $3.63), significantly worse than the 1.60 euros (about $1.79) loss per share reported in the prior-year quarter.

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BioNTech’s poor financial results partly explain its underperformance in recent years, but the hope is that the company’s deep pipeline will enable it to launch new products over the medium term and deliver much stronger results. However, recent clinical setbacks have put a bit of a dent in those plans. The first of these was in late August. BioNTech announced that it was stopping a Phase 2 clinical trial for autogene cevumeran, which it was testing as an adjuvant treatment for certain patients with colorectal cancer. The company made that decision following the recommendation of an independent group of experts who oversee clinical trials.

Autogene cevumeran is still undergoing a Phase 2 study in combination with Tecentriq and chemotherapy in some patients with pancreatic ductal adenocarcinoma. So it could still earn approval. Even so, recent developments have made that outcome less likely. More recently, on Oct. 13, BioNTech announced even more bad news. The company said that one of its candidates, BNT113, failed to meet one of its dual primary endpoints in a Phase 2/3 clinical trial in certain patients with head and neck cancer. BNT113 is being tested in this study in combination with Keytruda versus Keytruda alone.

But it has failed to demonstrate a statistically significant improvement in progression-free survival compared to Keytruda. The study is ongoing, and BioNTech hopes that BNT113 will meet its other primary endpoint, overall survival. That’s arguably the most important endpoint in oncology clinical trials. So, all isn’t lost for BNT113. But this was another important setback, sending BioNTech’s shares down by about 5%.

Can BioNTech bounce back?

BioNTech still has a deep pipeline. The company is running more than 25 Phase 2 or Phase 3 clinical trials in oncology. One of its most promising candidates is pumitamig, which the company is developing in collaboration with Bristol Myers Squibb (BMY -1.35%). Pumitamig is a bispecific antibody. It combines two cancer-fighting mechanisms in a single drug, which could, in theory, lead to stronger efficacy than medicines that utilize only one of those mechanisms. Pumitamig has already produced promising results in clinical trials.

Now, it is undergoing multiple Phase 2 and Phase 3 studies across various potential indications, including breast, lung, and gastric cancers, among others. Pumitamig could turn out to be a pipeline-in-a-drug. But there is a very real possibility that it will also face clinical setbacks, as could BioNTech’s other candidates. Meanwhile, the biotech has a market cap of about $23 billion, which is a lot for a company that generates little revenue and is unprofitable. BioNTech’s market cap reflects the depth of its pipeline, and if the company can earn enough wins to transform its approved portfolio over the next few years, the stock could perform well.

However, there is significant uncertainty, especially following recent clinical trial failures. Investors with an appetite for risk should consider the stock, but risk-averse investors will want to look elsewhere.