Biontech Se (NASDAQ:BNTX) SE enjoyed an initial IPO pop only to fade and see its price fall in subsequent trading, leading some investors to cast doubt on the future performance of biotech IPOs. While the German company initially had a relatively solid market debut that generated about $150 million, prices ultimately closed down by more than 5 percent, demonstrating that early investors may not be as confident in the company as proponents had hoped they would be.
Here are the details behind BioNTech’s IPO and subsequent market performance, and how the rest of the biotech IPO market is looking in the wake of this depleted market debut.
BioNTech sold 10 million shares
Early concerns became apparent when BioNTech (NASDAQ: BNTX) decided to cut the size of its offering on its IPO day, selling 10 million shares to investors. The company had earlier marketed 13.2 million shares at a price range of $18-20 apiece, but by the end of its IPO day shares closed down by as much as 5.1 percent to be valued at $14.24 in New York trading. Some doomsday predictors are arguing that BioNTech’s relatively lackluster market performance could spell out gloom for future biotech performers, though it’s likely too soon to say if BioNTech will truly be the start of a broader market rout. The market was already fairly volatile when BioNTech decided to foray into the world of trading for the first time; the ongoing trade war between the United States and China and tense negotiating differences between the UK and the EU have left many traders in a multitude of industries extraordinarily paranoid and uncomfortable. Nevertheless, BioNTech can’t chock up the entirety of its disappointing results to market jitters. As Reuters alleges, for instance, the biotech market is generally immunized to broader market jitters because of its specialized investor base. Despite the relatively dismal gains the company enjoyed on the open market, however, BioNTech has enjoyed vibrant success in the past when it came to private rounds of fundraising. This past July, for instance, BioNTech generated plenty of positive press coverage for itself by managing to bring home a whopping $325 million in private funding for mRNA therapy. The company’s experimental messenger RNA therapies are clearly interesting the specialist investors who are infatuated with forthcoming solutions to pressing medical problems, demonstrating that it may not be too severely decimated from a disappointing IPO.
BioNTech is focused on beating cancer
BioNTech may be focused on producing cutting-edge solutions to pressing medical problems, but that doesn’t mean you have to be a specialist to understand their essential mission. The company is focused on beating cancer and was created in 2008 to explicitly focus on individualized treatment solutions, which offer tantalizing profits when they’re perfected. According to S-1 filings made with the SEC ahead of its market debut, BioNTech has managed to generate $1.3 billion in private placements before its market debut, demonstrating that some investors have extensive faith in the company’s innovative potential.
According to the company’s prospectus, it intends to leverage its newly-acquired funds for a variety of purposes, including the continued development of therapy treatments and insurance against claims action. BioNTech has both ongoing and planned clinical trials that must be completed before it can bring products to the open market, for instance, a notoriously lengthy and expensive process that will be partially expedited by its newly-acquired IPO funds. The company has also mentioned it will use some of its proceeds to develop “additional product candidates” which may become developed, profitable treatment solutions far off in the future. Nevertheless, the company didn’t issue specific figures to explain how much money it intended to spend in each of these (and other) areas. It’s likely the broader biotech market will take a hit from BioNTech’s lackluster performance, but that can’t be entirely blamed on the company; ongoing market volatility has led others, like ADC Therapeutics, to withdraw their own planned offerings, demonstrating that BioNTech’s problems aren’t specifically related to its internal management. Company officials will nevertheless be hard-pressed in forthcoming days to appease worried investors who fear future declines in share prices. Investors should take BioNTech’s valuation haircut very seriously, but don’t consider the company down and out for the count just yet.