BioNTech SE Quarterly Report for the Three and Nine Months ended

Quarterly Report for the Three and Nine Months ended September 30, 2020

Quarterly Report for the Three and Nine Months ended September 30, 2020

Interim Condensed Consolidated Financial Statements

Operating and Financial Review and Prospects

Interim Condensed Consolidated Financial Statements

Interim Condensed Consolidated Statements of Financial Position

The accompanying notes form an integral part of these interim condensed consolidated financial statements.

Interim Condensed Consolidated Statements of Operations

The accompanying notes form an integral part of these interim consolidated financial statements.

Interim Condensed Consolidated Statements of Comprehensive Loss

The accompanying notes form an integral part of these interim condensed consolidated financial statements.

Interim Condensed Consolidated Statements of Changes in Stockholders' Equity

The accompanying notes form an integral part of these interim condensed consolidated financial statements.

Interim Condensed Consolidated Statements of Cash Flows

The accompanying notes form an integral part of these interim condensed consolidated financial statements.

Selected Explanatory Notes to the Interim Condensed Consolidated Financial Statements

BioNTech SE is a limited company incorporated and domiciled in Germany. American Depositary Shares ("ADS") representing BioNTech's shares have been publicly traded on the Nasdaq Global Select Market since October 10, 2019. The registered office is located in Mainz, An der Goldgrube 12, 55131 Germany. The accompanying International Financial Reporting Standards, or IFRS, unaudited interim condensed consolidated financial statements present the financial position and the results of operation of BioNTech SE and its subsidiaries, hereinafter also referred to as "BioNTech" or the "Group" and have been prepared on a going concern basis in accordance with the IFRS as issued by the International Accounting Standards Board, or IASB.

BioNTech combines decades of groundbreaking research in immunology, cutting-edge therapeutic platforms and a suite of patient profiling and bioinformatic tools to develop immunotherapies for cancer and other diseases. BioNTech leverages powerful new therapeutic mechanisms and exploits a diverse array of biological targets to harness the power of each patient's immune system to address the unique molecular signature of each patient's underlying disease. The breadth of BioNTech's immunotherapy technologies and expertise has enabled the Group to develop therapies to address a range of rare and infectious diseases, and BioNTech has recently rapidly mobilized these with the aim of addressing the COVID-19 pandemic.

During the nine months ended September 30, 2020, the following changes to the Group structure occurred:

These unaudited interim condensed consolidated financial statements of the Group as of and for the three and nine months ended September 30, 2020 were authorized for issuance in accordance with a resolution of the audit committee on November 10, 2020.

Basis of Preparation and Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2020 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The unaudited interim condensed consolidated financial statements do not include all the in-formation and disclosures required in the consolidated financial statements and should be read in conjunction with the Group's consolidated financial statements and accompanying notes included in the Group's Annual Report on Form 20-F as of and for the year ended December 31, 2019.

BioNTech prepares and presents its unaudited interim condensed consolidated financial statements in Euros. Numbers have been rounded, may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

The unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2020 include BioNTech SE and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

The preparation of the unaudited interim condensed consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts. Management continually evaluates its judgments and estimates in relation to assets, liabilities, which also includes the fair value measurement of derivatives, contingent liabilities, revenue and expenses. Management bases its judgments and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which forms the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions and may materially affect the financial results or the financial position reported in future periods.

Significant Accounting Policies

The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's consolidated financial statements for the year ended December 31, 2019. Certain policies have been further specified as described below due to the activities related to and the progress made in the Covid-19 vaccine development.

Research and Development Expenses

Research and development expenses consist of costs incurred in performing research and development activities, including personnel-related expenses, contract services and costs for purchased materials, laboratory supplies and non-capital equipment used in the research and development process. Research and development expenses include BioNTech's share of expenses under the terms of collaboration agreements and 100% of the expenses for wholly-owned product candidates. Research and development expenses shared under collaboration agreements which are initially incurred by the collaboration partners and subsequently charged to BioNTech are recorded as purchased services classified within research and development. Cost reimbursements from partners for research and development expenses initially incurred by BioNTech and due to BioNTech under the agreements, are recorded as a reduction to purchased services classified within research and development expenses. The value of goods and services received from contract research organizations and contract manufacturing organizations in the reporting period are estimated based on the level of services performed and progress made in the respective period. Amounts are recorded as accrued expenses in cases where BioNTech has not received an invoice from the service provider. Advance payments for goods or services that will be used or rendered for future research and development activities are recognized as other current assets or other current financial assets respectively. The amounts are currently expensed as the related goods are delivered or the services performed. Management's estimates are based on the best information available at the time. However, additional information may become available in the future and management may adjust the estimate in such future periods. In this event, BioNTech may be required to record adjustments to research and development expenses in future periods when the actual level of activity becomes

more certain. BioNTech considers resulting increases or decreases in cost as changes in estimates and reflects such changes in research and development expenses in the period identified.

Research costs are expensed as incurred. Development expenditures on an individual project are recognized as an intangible asset if, and only if, all of the following six criteria can be demonstrated by the Group:

Due to the inherent risk of failure in drug development and the uncertainty of approval, management has determined that these criteria are not met in the Biotech business sector until regulatory approval has been obtained. Therefore, as the Group has not yet obtained regulatory approval for any of its programs, or product candidates, no development expenditures have been capitalized. The related expenditure is reflected in the statements of operations in the period in which the expenditure is incurred.

Prior to initial regulatory approval, costs relating to production of products are expensed as research and development expenses in the period incurred. If pre-launch products are sold, the respective product gross margin may be higher compared to the expected recurring margin as the underlying costs will not be included in cost of sales. For the three and nine months ended September 30, 2020 and 2019, no revenues have been recorded related to pre-launch products.

The Group has specified its accounting for government grant with respect to the presentation of grants related to assets. In September 2020, in connection with becoming eligible for funding from an initiative by the German Federal Ministry of Education (Bundesministerium f r Bildung und Forschung, or the BMBF), the Group elected to present grants received related to assets as deferred income within the statements of financial position. Income is subsequently recognized in profit or loss over the useful live of the underlying asset subject to funding.

The standards applied for the first time as of January 1, 2020, as disclosed in the notes to the consolidated financial statements as of December 31, 2019, had no impact on the unaudited interim condensed consolidated financial statements of the Group as of September 30, 2020. In the course of 2020 an amendment to IFRS 16 Leases with an effective date June 1, 2020 was issued by the International Accounting Standards Board addressing COVID-19-related rent concessions which does not have an impact on the interim condensed consolidated financial statements of the Group.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread around the world.

In response, BioNTech's BNT162 program is evaluating several vaccine candidates against COVID-19, including BNT162b2 as the lead candidate currently being developed in a global Phase 3 trial. As part of the program, BioNTech executed two strategic collaborations with large pharmaceutical companies to globally develop BioNTech's vaccine candidates and to support a global supply of a vaccine upon approval. The collaboration with Pfizer Inc. (NYSE: PFE), or Pfizer, aims to rapidly advance multiple COVID-19 vaccine candidates based on BioNTech's proprietary mRNA vaccine technology. As part of their strategic collaboration, BioNTech and Shanghai Fosun Pharmaceutical (Group) Co.,

Ltd (Stock Symbol: 600196.SH, 02196.HK), or Fosun Pharma, will jointly conduct clinical trials in China, leveraging BioNTech's proprietary mRNA vaccine technology and Fosun Pharma's clinical development and commercialization capabilities in China. Fosun Pharma will commercialize the vaccine in China upon regulatory approval.

As BioNTech advances its clinical programs, it is in close contact with its principal investigators and clinical sites, which are located in jurisdictions affected by the COVID-19 pandemic, and is assessing the impact of the COVID-19 pandemic on its clinical trials, expected timelines and costs on an ongoing basis. BioNTech has modified its business practices, in response to the spread of COVID-19, including restricting employee travel, developing social distancing plans for employees and cancelling physical participation in meetings, events and conferences. In addition, for certain programs, including BNT111, BNT113, BNT122, BNT141 and BNT142 (RiboMabs), BNT151 and BNT152/153 (RiboCytokines), BNT221, BNT161 (Influenza) and BNT171 (Rare Disease), the commencement of trials has been delayed, partially due to slowed patient enrollment or other delays as a result of the COVID-19 pandemic. This delay had an impact on revenue recognition related to non-COVID-19 collaborations. The partial disruption, even temporary, may severely impact BioNTech's operations and overall business by delaying the progress of its clinical trials and preclinical studies. BioNTech's operations, including research and manufacturing, could also be disrupted due to the potential of the impact of staff absences as a result of self-isolation procedures or extended illness. Such factors were evaluated and considered carefully when preparing these unaudited interim condensed consolidated financial statements. BioNTech will continue to evaluate potential effects of the COVID-19 pandemic.

For the three and nine months ended September 30, 2020 and 2019, respectively, the following tables present revenue and operating results for the Group's operating segments consistent with the presentation in the notes to the consolidated financial statements as of December 31, 2019. The tables below reconcile segment figures to Group figures for the periods indicated.

The segments are managed based on external sales and operating profit/loss, which represents the operating profit/loss incurred within each segment. Segment figures are reported consolidated, which reflects the way management steers the business.

BioNTech's internal reporting is generally in accordance with IFRS and in line with the Group's accounting policies, except for deviations in classification between cost of sales and research and development cost. In order to reconcile the segment figures to the Group's unaudited interim condensed consolidated financial statements, some of the research and development expenses are reclassified to cost of sales. Whenever revenues are attributable to different segments, these revenues are split based on the cost incurred. Internal overhead costs are allocated to segments based on revenues when they are directly attributable to a service rendered. Sales and marketing expenses, general and administrative expenses and other results that are not directly attributable to one of the segments are allocated to Business Service.

Revenue at BioNTech is differentiated between revenues resulting from collaboration and license agreements and revenues from other sales transactions. The Company collaborates with pharmaceutical and healthcare companies and several global academic collaborators. During the three and nine months ended September 30, 2020, revenue generated from the Genentech, Inc., or Genentech, and Pfizer collaboration agreements each represented more than 10% of BioNTech's overall revenue from collaboration and license agreements. Revenues were partly recorded in the Clinical and the Manufacturing segment and, with respect to Pfizer, in the Technology Platform segment as well. During the three and nine months ended September 30, 2019, revenue generated from the Genentech and Pfizer collaboration agreements represented more than 10% of BioNTech's overall revenue from collaboration and license agreements. Revenues were recorded in the Clinical segment and, with respect to Genentech, also in the Manufacturing segment. Total amounts of revenues from these collaboration and license agreements in the periods presented are disclosed in Note 4.

Revenues from other sales transactions are from the sale of medical products (e.g., peptides and retroviral vectors) for clinical supply. Research and development activities are managed on a worldwide basis while manufacturing facilities and sales offices are located and managed in Germany. External sales originate in Germany.

Disaggregated revenue information

Set out below is the disaggregation of the Group's revenues from contracts with customers:

During the nine months ended September 30, 2020, revenues from BioNTech's two new collaboration agreements aimed at developing a COVID 19 vaccine were recognized for the first time.

On March 13, 2020, BioNTech entered into a collaboration and license agreement with Fosun Pharma. Fosun Pharma paid BioNTech a non-refundable upfront cash payment of k 901 (k$1,000) upon signing the agreement in addition to an equity investment of k 45,568 (k$50,000) (see Note 12 for the capital contribution). BioNTech is eligible to receive future milestone payments of up to k$84,000 for potential aggregate consideration of k$135,000.

The non-refundable upfront cash payment received from Fosun Pharma was subsequently fully recognized as revenue. In addition, during the three months ended September 30, 2020, revenue of k 1,697 was recognized by achieving a development milestone. In total, during the nine months ended September 30, 2020, k 2,598 revenue was recognized from the Fosun Pharma collaboration and license agreement.

On April 9, 2020, BioNTech entered into a collaboration and license agreement with Pfizer in which BioNTech and Pfizer equally share development costs. Pfizer agreed to pay BioNTech k 170,146 (k$185,000), including an equity investment of k 103,890 (k$113,000) (see Note 12 for the capital contribution) and a non-refundable upfront cash payment of k 66,256 (k$72,000) which were received in late April 2020 and May 2020, respectively. BioNTech is eligible to receive future milestone payments of up to k$563,000 for potential aggregate consideration of k$748,000.

The non-refundable upfront cash payment received from Pfizer that was initially classified as a contract liability was fully recognized as revenue during the nine months ended September 30, 2020 based on costs incurred. During the three and nine months ended September 30, 2020, revenues of k 45,643 and k 66,256 were recorded respectively.

As services are performed under a collaboration agreement, revenue recognition will be continued in future periods in accordance with BioNTech's accounting policy as described in "-Critical Accounting Policies and Use of Estimates" and Note 2.3.4 to BioNTech's consolidated financial statements included in its Annual Report on Form 20-F as of and for the year ended December 31, 2019.

Product sales included within revenue from other sales transactions are displayed below:

In December 2019, BioNTech Delivery Technologies GmbH (previously BioNTech Protein Therapeutics GmbH), or BioNTech Delivery Technologies, a wholly-owned subsidiary of BioNTech SE, entered into an agreement to acquire all assets, employees and proprietary know-how of Lipocalyx GmbH, or Lipocalyx, and its related parties in exchange for a total consideration of cash at an amount of k 6,516 and additional contingent consideration estimated at the closing date of January 6, 2020 at an amount of k 572. The employees of Lipocalyx were transferred automatically to BioNTech Delivery Technologies with effect as of the closing date.

The Group acquired the assets of Lipocalyx and its related parties to combine the acquired technologies and the related know-how with already existing product candidates of the Group to improve their functionality and performance.

The final fair values of the identifiable net assets of Lipocalyx as at the date of acquisition were:

The interim condensed consolidated statements of operations include the result of Lipocalyx since the acquisition date. From the date of acquisition through September 30, 2020, Lipocalyx contributed k 1,082 to operating loss in the Technology Platform business segment of the Group. From the date of acquisition through September 30, 2020, Lipocalyx generated k 176 in revenues. Given the timing of closing, the contribution to operating loss and revenues, if the transaction had occurred at the beginning of the reporting period, would not differ materially. Goodwill recognized is primarily attributed to the expected synergies and other benefits from combining the assets and activities of Lipocalyx with those of the Group. The goodwill resulting from the Lipocalyx acquisition during the nine months ended September 30, 2020 was allocated to the Technology Platform segment.

Transaction costs of k 17 relating to the acquisition have been expensed and are included in the general and administrative expenses in the interim condensed consolidated statements of operations and are included in cash flows used in operating activities in the interim condensed consolidated statements of cash flows.

The purchase agreement with Lipocalyx includes the following contingent cash considerations to the previous owners:

At the acquisition date, the fair value of the contingent consideration was k 572. The contingent consideration is presented in non-current financial liabilities' in the interim condensed consolidated statements of financial position (see Note 10).

BioNTech US Inc. (formerly Neon Therapeutics, Inc.)

On May 6, 2020, BioNTech acquired Neon, a biotechnology company developing novel neoantigen-based T-cell therapies ("the Merger"). Through the acquisition, BioNTech will be able to leverage Neon's expertise in the development of neoantigen therapies, with both vaccine and T cell capabilities.

Based on the acquisition date share price, the aggregate value of the merger consideration was k 89,890 (k$97,144) financed by issuing 1,935,488 American Depositary Shares representing BioNTech's ordinary shares as a stock transaction and including a de minimis cash consideration which was paid to settle Neon's outstanding stock options.

The fair values and values in accordance with IFRS 3 of the identifiable net assets of BioNTech US Inc. as at the date of acquisition were as follows:

As at the date of acquisition, k 8,043 of deferred tax liabilities had been provisionally recorded arising from the assets acquired in the business combination. Provisionally, tax benefits acquired as part of the business combination were assessed as not satisfying the criteria for separate recognition. During the three months ended September 30, 2020, BioNTech finalized its assessment of deferred taxes related to the acquisition of Neon and determined that loss carryforwards which existed as of the acquisition date, should be recognized to the extent of acquired deferred tax liabilities (k 8,043) and therefore recorded a deferred tax asset of k 8,043 against goodwill. Since the conditions to offset were fulfilled, the deferred tax assets and liabilities were offset. Additionally, the deferred tax asset on tax losses incurred since acquisition through June 30, 2020 (k 2,317) which had been offset against the acquired deferred tax liability as of June 30, 2020, was reversed through income tax expense during the three months ended September 30, 2020 as this deferred tax asset was no longer deemed recoverable as the entire acquired deferred tax liability was offset with the acquired deferred tax asset with the finalization of the purchase price allocation. The net impact on income tax expense in the nine months ended September 30, 2020 is nil.

The interim condensed consolidated statements of operations include the results of BioNTech US since the acquisition date. From the date of acquisition through September 30, 2020, BioNTech US contributed k 17,912 to the operating loss in all biotech business unit operating segments of the Group, primarily in the Technology Platform segment. If the transaction had occurred at the beginning of the reporting period, k 49,202 would have contributed to the operating loss. This amount includes expenses resulting from the Merger and should not necessarily be considered representative of the future consolidated results of operations or financial condition on a consolidated basis. From the date of acquisition, BioNTech US did not generate any revenue and no revenue would have been generated if the transaction had occurred at the beginning of the reporting period.

Goodwill recognized is primarily attributable to the expected synergies and other benefits from combining two organizations with a common culture of pioneering translational science and a shared vision for the future of cancer immunotherapy as described above. The goodwill resulting from the BioNTech US acquisition during the nine months ended September 30, 2020 was allocated to the Technology Platform segment.

Transaction costs of k 1,073 relating to the acquisition have been expensed and are included in the general and administrative expenses in the interim condensed consolidated statements of operations. In the interim condensed consolidated statements of cash flows they are included in cash flows used in operating activities. The attributable costs of the issuance of the shares of k 1,320 were recorded in equity as a deduction from the capital reserve and are included in cash flows from financing activities in the interim condensed consolidated statements of cash flows.

Reconciliation of goodwill

The reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period is presented below

The amount of goodwill recognized from acquiring subsidiaries and businesses includes the measurement period adjustment of k 8,043 resulting from the subsequent recognition of deferred tax assets during the reporting period (see above and Note 7).

BioNTech's nature of business and primary focus of activities, including development of its platforms and manufacturing technologies, generate a significant amount of research and development expenses which are the largest component of total operating expenses.

The research and development expenses recognized during the three and nine months ended September 30, 2020 and September 30, 2019 are shown in the following table:

During the three and nine months ended September 30, 2020, research and development expenses increased mainly due to an increase in development expenses from BioNTech's BNT162 program, the vaccine program against COVID-19. Research and development expenses include BioNTech's share of expenses derived from the collaboration with Pfizer under which shared development costs are shared equally between the partners.

The Group calculates the interim income tax expense using the tax rate that would be applicable to the expected total annual earnings. Deferred tax assets on tax losses of subsidiaries incorporated in Germany have not been capitalized as there is not sufficient probability that there will be future taxable profits against which the unused tax losses can be utilized. During the three months ended September 30, 2020, BioNTech finalized its assessment of deferred taxes related to the acquisition of Neon and determined that loss carryforwards which existed as of the acquisition date, should be recognized to the extent of acquired deferred tax liabilities (k 8,043) and therefore recorded a deferred tax asset of k 8,043 against goodwill. Since the conditions to offset were fulfilled, the deferred tax assets and liabilities were offset. Additionally, the deferred tax asset on tax losses incurred since acquisition through June 30, 2020 (k 2,317) which had been offset against the acquired deferred tax liability as of June 30, 2020, was reversed through income tax expense during the three months ended September 30, 2020 as this deferred tax asset was no longer deemed recoverable as the entire acquired deferred tax liability was offset with the acquired deferred tax asset with the finalization of the purchase price allocation. The net impact on income tax expense in the nine months ended September 30, 2020 is nil. Accumulated tax losses relate to Germany and the United States. There is no expiration date for any of the accumulated tax losses under German tax law. With respect to accumulated losses incurred at the level of BioNTech USA Holding LLC and BioNTech Research and Development Inc. since their incorporation and tax losses of BioNTech US incurred since 2018 have no expiration date under U.S. tax law. The carry forward of tax losses prior 2018 of BioNTech US is partially limited in time and amount. Deviating federal and state rules apply.

During the nine months ended September 30, 2020, the Group acquired intangible assets with a cost of k 5,248 (nine months ended September 30, 2019: k 13,721), excluding intangible assets acquired through business combinations (see Note 5). The acquisitions during the nine months ended September 30, 2020 mainly related to advance payments (k 2,626) as well as concessions, licenses, in-process R&D and similar rights (k 2,622). During the nine months ended September 30, 2019, the acquisitions mainly related to concessions, licenses, in-process R&D and similar rights (k 8,318) as well as advance payments (k 5,403).

During the nine months ended September 30, 2020, the Group acquired property, plant and equipment with a cost of k 40,664 (nine months ended September 30, 2019: k 28,621), excluding property, plant and equipment acquired through business combinations (see Note 5). The acquisitions during the nine months ended September 30, 2020 were related to construction in progress and advance payments (k 30,036), equipment, tools and installations (k 8,034) as well as land and buildings (k 2,594). During the nine months ended September 30, 2019, the acquisitions were related to construction in progress and advance payments (k 12,012), equipment, tools and installations (k 9,433) as well as land and buildings (k 7,176).

Set out below, is an overview of financial assets, other than cash and cash equivalents, held by the Group as of September 30, 2020 and December 31, 2019: