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.
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.
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.
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.
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.
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.