Is BioNTech About to Take a Major Stake in Matinas BioPharma?

Over the past week, BioNTech (BNTX) has experienced an 8% decline in stock value with no apparent news to explain the drop. In contrast, Matinas BioPharma's (MTNB) stock has soared by 40% during the same period after releasing data on previously announced news. This divergence in stock performance has spurred speculation that BioNTech may be considering taking a major stake in Matinas BioPharma or even buying out the smaller company.

The recent news from Matinas BioPharma involves the clinical impact of its drug, MAT2203, in treating a patient with a rare and challenging fungal infection called Rhodotorula mucilaginosa (R. mucilaginosa). The data was presented at the 33rd European Congress of Clinical Microbiology & Infectious Diseases. The patient had a foot infection that put her at risk of amputation and had to discontinue IV-amphotericin B due to electrolyte abnormalities and associated toxicities. After transitioning to MAT2203, the patient responded well and experienced no renal adverse effects, allowing for six continuous months of treatment. (Matinas BioPharma plans to conduct a Phase 3 program for MAT2203 with the FDA to evaluate its significant potential in treating invasive fungal infections.)

Matinas and BioNTech have been collaborating since April 8th, 2022, when they signed an exclusive one-year research agreement. The partnership aims to explore the potential of Matinas's LNC technology to deliver oral mRNA vaccines, leveraging BioNTech's successful COVID-19 vaccine as a test case. The partnership's goal is to transform the COVID-19 vaccine into an oral version using Matinas's lipid nano-crystal technology.

Despite the initial hopes of Matinas's CEO to sign a full licensing agreement within 90 to 120 days, that never materialized. According to the CEO's comments on various conference calls, investors learned that BioNTech wanted a broad license for all of mRNA and that they were making lowball offers.

Following the completion of in-vitro work, both companies liked the results and moved on to start in-vivo work in Q2 of 2023. If they gave an oral mRNA vaccine to a mouse in early April, they would already know whether the vaccine survived in the GI tract. It's possible they have already completed an immunogenicity assessment and know whether the oral COVID-19 vaccine works or not, as it only takes a few weeks to develop an immune response.

Since the one-year exclusivity agreement has expired, Matinas is free to talk to sell a license other companies, like Moderna. If the in-vivo data is good, then BioNTech is under pressure here to sign a deal. They can’t let their competitors get access to oral mRNA.

However, taking a large stake in Matinas BioPharma, or even buying out the company, would likely be seen as a controversial move. Before last Tuesday's news release and subsequent jump, Matinas's market cap was less than $100 million. Matinas seems to want a considerable sum for an exclusive licensing agreement that encompasses all of mRNA. Given that a single license for a single indication could be $50 million, an all-encompassing license for mRNA could be $500 million or more. This investment would be worthwhile for BioNTech if the in-vivo results are promising. But Matinas is a relatively unknown company with a current market cap of only about $140 million. If they were to receive a cash injection or equity investment, it would cause the stock to skyrocket.

When large companies make significant investments in small companies and investors in the large company don't fully understand how great an investment it is, the price of the large company tends to drop. This phenomenon may explain the recent decline in BioNTech's stock price.

BioNTech is set to report its Q1 earnings on May 8th, 2023. It is possible that the slides from this presentation have leaked, and someone is both selling BioNTech and buying Matinas. If true, this information leak could be another contributing factor to the recent fluctuations in the stock prices of both companies.

The possibility of BioNTech taking a significant stake in Matinas BioPharma or acquiring the company outright has far-reaching implications for the biotechnology industry. If BioNTech's partnership with Matinas results in a successful oral mRNA vaccine, it could revolutionize the vaccine industry by providing an easier and more accessible way to administer vaccines. Furthermore, the collaboration between these two companies could lead to new advancements in mRNA technology, with broader applications beyond COVID-19.

Such a move would not be without its challenges. Acquiring or investing heavily in Matinas BioPharma could initially result in a negative market reaction, as investors may question the wisdom of BioNTech's decision to make a substantial investment in a relatively unknown company. Additionally, the costs associated with obtaining an exclusive licensing agreement for all of mRNA could be substantial, potentially straining BioNTech's resources.

The potential benefits of BioNTech taking a major stake in Matinas BioPharma must be weighed against the associated risks and costs. If the in-vivo results of the oral mRNA vaccine are promising, it could be a transformative investment for BioNTech, allowing the company to solidify its position as a leader in the mRNA vaccine market and crush their competitors. On the other hand, the significant costs and potential market backlash could pose substantial challenges for the company.

As BioNTech's Q1 earnings announcement approaches, the market will be closely watching for any indications of the company's intentions with Matinas BioPharma. If the recent stock price fluctuations are indeed related to a potential investment or acquisition, the upcoming earnings report may shed light on this matter and provide crucial information for investors.

Stocks don’t move like this for no reason. Something is going on behind the scenes and someone is either taking a massive, risk, or material news has leaked. Which isn’t impossible. News leaks all the time. There are a lot of people involved in business deals, and it only takes one person to share confidential information for the cat to escape the bag.

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