BioNTech SE(BNTX) - 2022 Q3 - Quarterly Report

Unaudited Interim Condensed Consolidated Financial Statements Interim Condensed Consolidated Statements of Profit or Loss BioNTech's Q3 2022 revenues and net profit significantly decreased year-over-year, while nine-month figures showed a slight revenue decline and marginal profit increase Consolidated Statements of Profit or Loss (Q3 & 9M 2022 vs 2021) | Indicator (in millions €) | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | €3,461.2 | €6,087.3 | €13,032.3 | €13,444.2 | | Commercial Revenues | €3,394.8 | €6,040.1 | €12,923.3 | €13,348.1 | | R&D Revenues | €66.4 | €47.2 | €109.0 | €96.1 | | Operating Income | €2,387.5 | €4,723.5 | €9,349.8 | €10,584.1 | | Profit for the period | €1,784.9 | €3,211.0 | €7,155.7 | €7,126.3 | | Diluted EPS (€) | €6.98 | €12.35 | €27.70 | €27.46 | Interim Condensed Consolidated Statements of Comprehensive Income Total comprehensive income for Q3 2022 decreased significantly year-over-year, while the nine-month period showed a slight increase, primarily influenced by foreign exchange differences Consolidated Statements of Comprehensive Income (Q3 & 9M 2022 vs 2021) | Indicator (in millions €) | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :--- | :--- | :--- | :--- | :--- | | Profit for the period | €1,784.9 | €3,211.0 | €7,155.7 | €7,126.3 | | Other comprehensive income | €10.9 | €2.9 | €24.3 | €6.3 | | Total Comprehensive Income | €1,795.8 | €3,213.9 | €7,180.0 | €7,132.6 | Interim Condensed Consolidated Statements of Financial Position Total assets and equity significantly increased as of September 30, 2022, primarily driven by a substantial rise in cash and cash equivalents Consolidated Statements of Financial Position | Indicator (in millions €) | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | €22,660.6 | €15,830.8 | | Cash and cash equivalents | €13,423.7 | €1,692.7 | | Trade and other receivables | €7,309.4 | €12,381.7 | | Total Liabilities | €4,294.3 | €3,937.1 | | Total Equity | €18,366.3 | €11,893.7 | Interim Condensed Consolidated Statements of Changes in Stockholders' Equity Total equity significantly increased by September 30, 2022, primarily due to net profit, partially offset by share repurchases and dividend payments - Total equity increased to €18,366.3 million as of September 30, 2022, primarily due to the profit for the period of €7,155.7 million[15] - Significant equity transactions during the first nine months of 2022 included a share repurchase program (€930.7 million), dividend payments (€484.3 million), and issuance of share capital related to the redemption of a convertible note and an equity investment by Pfizer[15] Interim Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly increased for the nine months ended September 30, 2022, driven by trade receivable collections, leading to a strong cash position Consolidated Statements of Cash Flows (9M 2022 vs 2021) | Indicator (in millions €) | 9M 2022 | 9M 2021 | | :--- | :--- | :--- | | Net cash from operating activities | €12,748.2 | €1,089.2 | | Net cash from / (used in) investing activities | €125.7 | €(466.2) | | Net cash from / (used in) financing activities | €(1,354.6) | €143.1 | | Net increase in cash | €11,519.3 | €766.1 | | Cash and cash equivalents at end of period | €13,423.7 | €2,025.7 | Selected Explanatory Notes to the Unaudited Interim Condensed Consolidated Financial Statements Corporate Information BioNTech is a global biotechnology company focused on novel medicines, expanding its corporate structure with new subsidiaries in Germany and Rwanda in 2022 - BioNTech is a fully integrated global biotechnology company specializing in novel medicines, with a broad toolkit including mRNA vaccines, cell and gene therapies, and targeted antibodies[21] - In 2022, the company expanded its corporate structure by establishing new subsidiaries in Germany (BioNTech Innovation GmbH, BioNTech BioNTainer Holding GmbH, BioNTech Idar-Oberstein Services GmbH) and Rwanda (BioNTech Rwanda Ltd.)[22][24] Basis of Preparation and Significant Accounting Policies Financial statements adhere to IAS 34, consistent with 2021 policies, noting Pfizer collaboration profit estimates, COVID-19 trial delays, and no anticipated energy disruptions to manufacturing - The determination of the company's share of gross profits from its collaboration with Pfizer relies on preliminary data from the partner, and these estimates may be adjusted prospectively in future periods[30] - The COVID-19 pandemic caused delays in the commencement of several clinical trials, including for BNT111, BNT113, and BNT122, though multiple Phase 1 and 2 trials were initiated in 2021 and 2022[38] - The company monitors the natural gas supply situation in Europe but does not anticipate energy-related disruptions to its commercial COVID-19 vaccine production, as it can be powered by alternative fuel sources if needed[39] Revenues from Contracts with Customers Total revenues for Q3 2022 and the first nine months were primarily driven by COVID-19 vaccine sales, with a significant portion from the company's share of partners' gross profit Disaggregated Revenues (in millions €) | Revenue Stream | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 | | :--- | :--- | :--- | :--- | :--- | | COVID-19 Vaccine Revenues | €3,378.1 | €6,021.6 | €12,883.9 | €13,303.2 | | Sales to collaboration partners | €259.4 | €312.3 | €1,470.9 | €514.3 | | Direct product sales | €564.5 | €1,350.8 | €2,284.6 | €2,586.2 | | Share of partners' gross profit | €2,554.2 | €4,358.5 | €9,128.4 | €10,202.7 | | R&D Revenues | €66.4 | €47.2 | €109.0 | €96.1 | | Total Revenues | €3,461.2 | €6,087.3 | €13,032.3 | €13,444.2 | Income and Expenses Major cost components include decreased Q3 cost of sales but increased nine-month cost of sales, significant rises in R&D and G&A expenses, and increased other operating income from foreign exchange gains Cost of Sales Cost of sales decreased in Q3 2022 but increased for the nine-month period, primarily driven by COVID-19 vaccine revenues Cost of Sales (in millions €) | Period | Cost of Sales | YoY Change | | :--- | :--- | :--- | | Q3 2022 | €752.8 | -38% | | 9M 2022 | €2,811.5 | +21% | Research and Development Expenses R&D expenses significantly increased in both Q3 and the nine-month period of 2022, driven by higher spending on supplies and increased personnel costs Research and Development Expenses (in millions €) | Period | R&D Expenses | YoY Change | | :--- | :--- | :--- | | Q3 2022 | €341.8 | +31% | | 9M 2022 | €1,027.2 | +52% | General and Administrative Expenses General and administrative expenses more than doubled in Q3 and the nine-month period of 2022, primarily due to increased costs for purchased services, IT, and personnel General and Administrative Expenses (in millions €) | Period | G&A Expenses | YoY Change | | :--- | :--- | :--- | | Q3 2022 | €141.0 | +107% | | 9M 2022 | €361.8 | +134% | Other Operating Expenses Other operating expenses significantly increased in Q3 2022, primarily driven by losses on derivative instruments related to foreign exchange forward contracts - Losses on derivative instruments at fair value, related to foreign exchange forward contracts, were the primary driver of other operating expenses, totaling €581.7 million for the first nine months of 2022[53] Other Operating Income Other operating income more than doubled in Q3 2022, primarily due to net foreign exchange gains from valuing U.S. dollar-denominated trade receivables - Net foreign exchange differences were the main component of other operating income, amounting to €1,090.1 million for the first nine months of 2022, largely due to the valuation of U.S. dollar trade receivables[54] Finance Income Finance income significantly increased for the nine months ended September 30, 2022, driven by fair value adjustments of financial instruments and net foreign exchange differences - Fair value adjustments of €216.8 million in 9M 2022 were derived from remeasuring the derivative embedded in the company's convertible note and the equity investment from Pfizer[56][57] Finance Expenses Finance expenses dramatically decreased for the nine months ended September 30, 2022, due to the absence of large fair value adjustments on the convertible note derivative seen in 2021 - The significant decrease in finance expenses year-over-year is due to the absence of large fair value adjustments on the convertible note derivative that were present in 2021[58] Income Tax The effective income tax rate decreased for the first nine months of 2022, partly due to lower trade tax rates and the recognition of a significant deferred tax asset from an ESOP settlement change - The effective income tax rate for the first nine months of 2022 was 26.8%, compared to 31.0% for the same period in 2021[59] - A change in the settlement mechanism for the company's ESOP resulted in the recognition of a deferred tax asset of €395.2 million as of September 30, 2022, with €372.0 million recognized directly in equity[62] Financial Assets and Financial Liabilities Financial assets as of September 30, 2022, were primarily Pfizer trade receivables, while total financial liabilities decreased due to convertible note redemption, with currency risk managed by forward contracts - Trade and other receivables decreased to €7,309.4 million from €12,381.7 million at the end of 2021. These receivables predominantly relate to the gross profit share from the COVID-19 collaboration with Pfizer[65][67] - The company fully redeemed its convertible note with a fund associated with Temasek in March 2022 by issuing ordinary shares[71][75] - Foreign exchange forward contracts are used to manage transaction exposure related to U.S. dollar-denominated trade receivables[76] Inventories Inventories decreased as of September 30, 2022, following significant write-offs and reserves totaling €559.4 million, primarily due to the transition to the Omicron-adapted bivalent vaccine - Inventory write-offs and reserves of €559.4 million were recognized in the first nine months of 2022. This was mainly due to the transition to an Omicron-adapted bivalent vaccine and reserves for raw materials[83] Issued Capital and Reserves The company's capital structure in the first nine months of 2022 was impacted by a Pfizer equity investment, convertible note redemption, a $1.5 billion share repurchase program, and a special cash dividend - Pfizer made an equity investment of €110.6 million for 497,727 ordinary shares in connection with a collaboration to develop an mRNA-based shingles vaccine[84] - A share repurchase program of up to $1.5 billion was authorized. In the first nine months of 2022, 6,545,030 ADSs were repurchased for a total of $945.4 million (€930.7 million)[86] - Shareholders approved a special cash dividend of €2.00 per share, resulting in an aggregate payment of €484.3 million in June 2022[87] Share-Based Payments Share-based payment expenses increased for the nine months ended September 30, 2022, influenced by a new LTI program and a reclassification of the Management Board Grant to cash-settled arrangements Share-Based Payment Expenses (in millions €) | Period | Total Expense | YoY Change | | :--- | :--- | :--- | | Q3 2022 | €61.4 | +109% | | 9M 2022 | €86.4 | +17% | - The Management Board Grant for 2022 was modified from an equity-settled to a cash-settled arrangement, resulting in a reclassification of €3.5 million from equity to liabilities[96] Provisions and Contingencies Provisions for contractual disputes and redundant CMO capacities totaled €359.1 million and €321.2 million respectively as of September 30, 2022, with patent infringement lawsuits ongoing and uncertain outcomes - Provisions for contractual disputes increased to €359.1 million as of September 30, 2022, from €177.9 million at the end of 2021[104] - A provision of €321.2 million was recognized for obligations to CMOs for production capacities that became redundant due to the switch to the Omicron-adapted bivalent vaccine[105] - The company is defending against patent infringement lawsuits filed by Alnylam, CureVac, and Moderna. It considers these matters as contingencies and has not recorded a provision, stating it has strong defenses but the outcomes are uncertain[108][112][114] Related Party Disclosures Transactions with related parties, primarily ATHOS KG controlled entities, were not significant to the financial statements for the reporting period - Transactions with related party ATHOS KG and its controlled entities, mainly for rental and property management, did not have a significant impact on the financial statements[117] Events after the Reporting Period Post-reporting period events include the founding of a new subsidiary in Australia and the authorization of a second $0.5 billion share repurchase program tranche - In November 2022, the Management and Supervisory Boards authorized a second tranche of the share repurchase program for up to $0.5 billion, starting December 7, 2022[118] Operating and Financial Review and Prospects Operating Results BioNTech advances its global immunotherapy strategy with successful Omicron-adapted vaccine launches, manufacturing expansion in Africa, and significant progress across its broad oncology and infectious disease pipeline - The company is advancing its global presence with the construction of an mRNA vaccine manufacturing facility in Rwanda and a new research and manufacturing center in Australia[129] - The first tranche of the share repurchase program, valued at up to $1.0 billion, was completed, and a second tranche of up to $0.5 billion was authorized for December 2022[129] - The company's pipeline includes over 19 clinical-stage candidates across infectious diseases and oncology, with plans to provide up to ten clinical trial updates in Oncology in 2023[122][169] Infectious Disease Pipeline The infectious disease pipeline, a core growth pillar, launched Omicron-adapted COVID-19 vaccines and expanded with new clinical trials for combination COVID-19/influenza, standalone influenza, shingles, HSV 2, and malaria - Successfully launched Original/Omicron BA.1 and BA.4/BA.5-adapted bivalent COVID-19 vaccines in Q3 2022, with approximately 300 million doses invoiced as of mid-October 2022[137][139] - A Phase 1 trial for a combined COVID-19/influenza mRNA vaccine was initiated in October 2022[156] - Multiple new infectious disease clinical trials are expected to start in late 2022 or early 2023 for shingles (HZV), herpes (HSV 2), malaria (BNT165), and tuberculosis (BNT164)[159][161][162][163] Oncology Pipeline BioNTech's oncology pipeline, leveraging multiple platforms, initiated three first-in-human trials in Q3 2022 and presented encouraging CAR-T therapy data with a 57% overall response rate in testicular cancer patients - The oncology pipeline includes 19 product candidates in 24 ongoing clinical trials, with five randomized Phase 2 trials[168] - Presented encouraging data for CAR-T therapy BNT211 at ESMO 2022, with an overall response rate (ORR) of 57% and a disease control rate (DCR) of 85% in testicular cancer patients at dose level 2[186] - Initiated three first-in-human trials in Q3 2022: BNT116 (FixVac for NSCLC), BNT142 (RiboMab for solid tumors), and BNT313 (HexaBody targeting CD27 for solid tumors)[168][193] Financial Operations Overview Q3 2022 revenues decreased significantly due to pandemic dynamics and order re-phasing, while R&D and G&A expenses increased, leading to lower nine-month operating income despite a slight revenue decline - The decrease in Q3 2022 revenues is attributed to the dynamic pandemic situation, the switch to Omicron-adapted vaccines, and a re-phasing of orders, with an expected uptake in demand in Q4 2022[206] - Cost of sales for the nine months of 2022 was impacted by inventory write-offs and expenses for redundant CMO production capacities resulting from the switch to the Omicron-adapted vaccine[213] - R&D expenses for the nine months of 2022 increased by 52% to €1,027.2 million, driven by clinical program advancement and increased headcount[215] Liquidity and Capital Resources BioNTech maintained a strong liquidity position as of September 30, 2022, with capital allocated to R&D, global expansion, and acquisitions, alongside significant share repurchases and dividend payments - Cash and cash equivalents stood at €13,423.7 million as of September 30, 2022. The company collected an additional €3,185.9 million in trade receivables by October 15, 2022[243] - Key financing activities in the first nine months of 2022 included a share repurchase program (€930.7 million outflow) and a special cash dividend (€484.3 million outflow)[251][252] - Future cash commitments for the remainder of 2022 include €30.7 million for CMO purchase obligations and €10.6 million for lease payments[269] Risk Factors The company faces extensive risks, including heavy dependence on uncertain COVID-19 vaccine revenues, intense competition, adverse events, adaptation challenges, and complexities across its mRNA development, manufacturing, intellectual property, regulatory, and financial operations - A summary of key risks includes: - Heavy dependence on uncertain future revenues from the COVID-19 vaccine - Potential for unsuccessful adaptation of the vaccine to new variants - Significant competition from other COVID-19 vaccine makers - Risks of adverse events during clinical trials or post-approval - Challenges to intellectual property rights from other companies - Fluctuations in operating results and potential need for substantial additional financing - Risks associated with novel mRNA drug development and manufacturing complexities[275]