A Small German Biotech
Company Hopes to Make the Leap to Global Player
The Germany
company BioNTech has achieved a breakthrough with its COVID-19 vaccine. Now it
is faced with the task of becoming a global corporation, but it faces stiff
competition from Big Pharma.
By Tim Bartz, Markus Brauck, Martin U.
Müller und Thomas Schulz
13.11.2020, 18.10 Uhr
BioNTech CEO Uğur Şahin and Chief Medical Officer Özlem Türeci
Foto:
FELIX
SCHMITT
A dozen bicycle stands are located
in front of the entrance to BioNTech, but it's empty aside from a single
mountain bike. It belongs to Uğur Şahin, the founder and CEO of the Mainz-based
biotech firm, the co-developer of what is likely to be the first coronavirus
vaccine in the Western world. He is also a recent addition to the list of the
world's billionaires, but he doesn't own a car and rides his bike to the
office.
ANZEIGE
It's doubtful, though, whether Şahin
will be able to continue cycling through the Mainz city center for much longer.
Few companies have ever catapulted onto the world stage as quickly as BioNTech.
And a marketing expert couldn’t have come up with better timing. The euphoria
over Joe Biden’s election in the U.S. had hardly died down before the small
German company BioNTech released the next piece of earth-shattering news: The
company’s COVID-19 vaccine has shown more than 90 percent efficacy in clinical
trials, and approval is only a matter of time. That means that the end of the
worst phase of the pandemic is within reach. The year 2020 may be ending with
new hope as a result of the BioNTech announcement.
Stock prices shot up around the
world at the announcement of the interim clinical trial results and virologists
also expressed their enthusiasm about the development. Germany, famous for its
aging industry, hasn’t seemed to offer much in recent years by way of globally
relevant innovations, but suddenly it showed the world that it is still capable
of delivering. Even Trump tweeted about the Mainz-based company’s breakthrough.
But what made this success possible?
And will BioNTech ultimately become a winning German company? Or will it be
others who, once again, make the big money?
The most famous companies in Germany
were all founded decades ago. The only relatively young company on the DAX
index of blue-chip firms that is true global player is SAP, the software
company that was founded in 1972. Germany may still be one of the world’s
leading nations when it comes to scientific research, but most of that research
fails to be transformed into global business opportunities.
An Industry Shunned
In hardly any other area is that
more evident than in biotechnology. In no other field has progress been so
substantial in recent decades. But the industry has so far been spurned by
German banks and investors, who consider the risks to be too high.
Is BioNTech now offering proof and a
blueprint for how a big idea can be transformed into a big company in Germany?
The answer to that questions doesn’t
hinge solely on BioNTech’s success in developing a vaccine for the coronavirus.
The company isn't simply a vaccine developer, nor is it even a classical
pharmaceutical research firm. Rather, it is working on an entirely new
technological platform. If it works, it will revolutionize medicine: The first
companies to develop therapies based on the technology could rise to become
global corporations.
It would be for the medical industry
that which Google, Amazon and Facebook represented for communication and
commerce: a disruption. It would herald a complete change in the way business
is done.
"We see ourselves as immunity
engineers,” Şahin told DER SPIEGEL a few weeks ago, in an interview
shortly before the release of the efficacy study on the vaccine. "We want
to direct the immune system to protect us from certain illnesses.” He spoke
quietly and calmly, seemingly rather down to earth. His office is large, but
simple. There’s no foyer, no secretary’s office and no expensive boardroom
furniture. Şahin still sees himself primarily as a scientist. The
entrepreneurial role is more of a necessary evil - because academic research
tends to be too slow, too poorly funded and too limited.
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BioNTech has been well-known in
specialist circles for years, having been working on mRNA therapies for the
last decade. RNA is an essential component of human biology, serving as a
messenger that transports building instructions from the cell genome to the
protein factories. If you can synthesize mRNA and introduce it into the cells,
you can have a direct influence on what happens inside the body's cells. The
possible applications are numerous and significant. Once we learn how to
program these cell messengers, it will theoretically be possible to use them to
transmit all kinds of instructions, whether to set the immune system in motion
against viruses or to command T-cells to attack a specific cancerous tumor.
A Biotech Google?
As such, BioNTech has around 20
drugs in development in contrast to the two or three that are standard for
biotech startups. The chances are good that the company will be more than just
a one-hit wonder. Indeed, if the technology works as planned, the number of
possible areas of application would be vast. BioNTech has the potential to
become a platform company, a kind of biotech Google.
So far, the company has been known
primarily for the work it has done in cancer research. That in fact, is the
primary specialty of Uğur Şahin and Özlem Türeci, the company’s chief medical
officer. Şahin and Türeci, who have been married for the last 18 years, are
internationally renowned oncologists and together, they have developed
successful experimental treatments. They sold their first biotech company to a
Japanese pharmaceutical company for 422 million, with an option for more.
BioNTech first came to the attention
of the international scientific community in 2017. The company had developed a
personalized cancer vaccine that was then tested on 13 high-risk patients
suffering from melanoma. In 2017, it became clear that after almost two years,
the majority of them were still tumor-free.
The hitch is that new
biotechnologies are expensive and complex. Testing a new research approach
requires sums in the double-digit millions and it can take several hundred
million euros to turn it into a specific product, such as a drug or a therapy.
That kind of money is only available from private investors or venture
capitalists - precisely the kinds of investors who have typically shunned
biotechnology in Germany.
It’s not a field for timid
investors. Biotechnology is extremely demanding, it’s difficult to break in to
the market, it is capital-intensive and it involves the highest risks. The rate
of complete failure is high.
Nevertheless, biotech investments
are exploding in the United States and, increasingly, in China. A large number
of funds, banks and specialized venture capitalists are pumping billions into
the scene, driven by digitalization, artificial intelligence and leaps in
progress. New technologies like the gene-editing tool CRISPR have created many
companies, many of which are now worth billions.
Private Patrons
In Germany, on the other hand, it is
private patrons who keep the German biotech industry afloat. Strictly speaking,
there are three major investors: SAP co-founder Dietmar Hopp, who finances the
Tübingen-based biotech company CureVac, which is currently the second German
hope for delivering a vaccine for the coronavirus. There’s the Oetker family,
who are famous for the Dr. Oetker line of frozen pizzas and other foods. As far
back as 2003, Roland Oetker pumped several million euros into the enzyme
startup Evotec. And twins Thomas and Andreas Strüngmann, the founders of the
German pharmaceutical company Hexal and first investors secured by Şahin and
Türeci. In 2008, they invested 150 million euros in BioNTech.
The brothers are still the largest
shareholders in the Mainz-based company through a family holding. At the
current stock market price, their share is probably worth around 10 billion
euros, making the brothers' total net worth an estimated 17.3 billion euros.
Thomas Strüngmann has asked that he be described as an entrepreneur rather than
as a billionaire. He isn't fond of drawing attention to himself.
He nonetheless has trouble hiding
his pride in the success of the vaccine. "Most people still don't grasp
what this means,” he says. He believes that the vaccine, known as BNT162b2,
will be available very soon. "I expect the corona vaccine to be available
by the end of this year or early next year.” He then repeats a quote that he
attributes to former U.S. Secretary of State Madeleine Albright: "I
believe what I hope.”
Strüngmann explains his early
commitment to BioNTech as being driven more by a with than by hard-nosed
investment logic. "Thirteen years ago, my brother Andreas and I had a gut
feeling that we wanted to achieve the dream of a cancer treatment,” he says.
Helmut Jeggle manages the brothers’
business. Jeggle, who has an MBA, worked at Hexal earlier and is now the
chairman of the supervisory board at BioNTech and manages the Strüngmanns’
multi-billion euro fortune together with a team of about a dozen staff. Jeggle
describes the risk the twins took with BioNTech in 2008 as follows: "We
had five or six investments of that size back then. BioNTech made it to the
finish line. We weren’t so successful with other ventures.”
It’s not only a personal success
story for the brothers, but also one that sends a message to other investors:
Look, this works. In Germany, you don’t always have to invest exclusively in
mechanical engineering.
But this week’s success story also
partly obscures how poorly Germany is equipped structurally for transforming
scientific ideas into global products. Even rising star BioNTech wouldn’t have
made it this far without a partner, despite the financial support from the
Strüngmanns and an initial public offering in the United States last October.
As good as the Mainz-based company is at research, its staff lack experience in
testing, manufacturing, marking and distribution on a large scale. The company
was unable to find a partner in Germany to fill that role, so BioNTech joined
forces in the spring with American pharmaceutical giant Pfizer. Under the deal,
the German company is to provide the research and the vaccine, and the American
firm stepped in to steward things once the clinical trials began. The U.S.
company is now handling the approval process with the American authorities, and
it has also negotiated the purchase agreements with, for example, the European
Commission.
Pfizer will initially bear half of
the development costs for BNT162b2 and, if it succeeds, will pay BioNTech $748
million. Analysts expect that both companies will share the proceeds from sales
of the vaccine, which have been estimated at $10 billion to $15 billion for
2021.
This is how things often work in the
industry: Innovations come from small research companies. Multinational
pharmaceutical companies like Roche, Novartis or Pfizer then join as partners
or buy up the smaller biotechs at some point. But not a single one of the
world’s 10-largest pharmaceutical companies is based in Germany.
It would be for the medical industry
that which Google, Amazon and Facebook represented for communication and
commerce: a disruption.
BioNTech founder Şahin certainly has
the ambition to change this. His aspiration is to "build a large European
pharmaceutical company,” and that has been his goal from the very beginning, he
said in a recent interview with local newspapers in the Mainz area. To do that,
though, he needs a lot of money. Venture capital.
Too Risk Averse
Klaus Hommels, a prominent German
investor based in Switzerland, sees that as being the core of the problem in
Germany. "The success of BioNTech shows that there is no lack of expertise
and entrepreneurs in Germany,” he says. "It lacks a capital market
culture. There are hardly any risk financiers. Companies like BioNTech are
forced to go public in the U.S.”
Hommels says that is self-defeating
and Germany needs to change, and he also offers some prescriptions for how it
might do so. "The German federal government should take the success of
BioNTech as an opportunity to establish a biotech cluster stretching between
Heidelberg and Mainz. The same happened in Silicon Valley because the U.S.
government provided startup financing.”
It also seems as though the
government in Berlin has learned to appreciate biotechnology as a result of the
coronavirus. In June, the government acquired a 23 percent stake for 300
million euros in the Tübingen research company CureVac, which is also working
on mRNA solutions. Economics Minister Peter Altmaier spoke of the "high
industrial policy significance” of the government investment.
In the long run, however, the
government support largely has symbolic value. Promising companies like
BioNTech and CureVac need billions of euros in financing that can only really
be covered by private investors or industrial partners.
In a sense, things are relatively
simple for BioNTech with BNT162b2: The vaccine is urgently needed and countries
are going to be willing to do a lot to buy the scarce good.
The chances are good that the company
will be more than just a one-hit wonder with its coronavirus vaccine.
But the bigger wager has yet to be
decided. Can companies like BioNTech and CureVac hold their own in the
cut-throat competition with Big Pharma?
It’s a little bit like a computer
game. If you win the first level, the second level begins immediately. At that
second level is likely to be the multibillion-euro market surrounding what is
likely to be the biggest pharmaceutical business of the coming decades: new
drugs for fighting cancer.
To have any chance at all, BioNTech
products will have to have unique selling points that make them the first
choice in the treatment of a certain type of cancer. The company won’t make the
cut with well-meaning patrons and vaccine revenues alone. It’s competitors have
very deep pockets and are in no way asleep at the wheel.
Take the U.S. company Moderna. It is
likely to present the first interim results on the efficacy of its own
coronavirus vaccine in the next few days, which is also based on mRNA
technology.
Like BioNTech, Moderna also aspires to
become a platform company. And it has been showered with money from U.S.
investors since its founding. Indeed, prior to the pandemic, the company
managed to attract 10 times more capital than its competitor BioNTech in
Germany.
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