November 30th, 2022 | 13:33 CET
Advances in the fight against cancer: Arcus Biosciences, Gilead Sciences, Defence Therapeutics, BioNTech
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"[...] At the end of 2022 or the beginning of 2023, we plan to start a Phase I study around each of our activities against breast cancer and skin cancer. [...]" Dr. Moutih Rafei, Director and VP of research and development, Defence Therapeutics
Arcus Biosciences: Good news, limited potential
After the US company Arcus Biosciences recently announced interim results of its randomized Phase 2 study around the active ingredient domvanalimab, in which the active ingredient combination and effectiveness with the two established active ingredients zimberelimab and etrumadenant were investigated, the share price of the biotech rose significantly. Before Christmas, on December 20, the Company plans to announce further details on the studies. The study investigates the use of the compounds in non-small cell lung cancer. The results indicate continued meaningful differences in the use of Arcus' compound domvanalimab. As a result, a potential market entry of the compound has become more likely.
Nevertheless, shareholders of Arcus Biosciences should wait to look forward to a windfall. Although the share price rose significantly, Arcus Biosciences's potential is limited. The reason: the biotech company already entered into a partnership with Gilead Sciences in 2020. The collaboration is set to run until 2030 and allows Gilead to provide capital to its junior partner and take a stake in the Company. The total investment at the time was USD 375 million, plus a flexible research budget of up to USD 1.6 billion. In return, Gilead gets half of the sales of any subsequent deal within the United States and most of the sales share in the rest of the world. Arcus' revenue share internationally is now only in the "double digits." Given this existing deal, it is no wonder that Arcus Biosciences' stock was up "only" about 8% after the positive trial results - Arcus' potential is limited.
Defence Therapeutics: Synergistic projects and many links to pharmaceutical giants
By contrast, the Canadian biotech Defence Therapeutics has every opportunity. The Company has a flexible technology portfolio and offers vaccination projects against breast cancer, skin cancer, human papillomavirus (HPV) and COVID-19. Defence Therapeutics plans to start Phase 1 trials against both cancers in early 2023. At the core of all Defence Therapeutics activities is its own patented Accum™ drug enhancer. This can transport active ingredients and channel them precisely into the nucleus of malignant cells. In this way, active ingredients that are actually toxic can be made more tolerable. Back in February, Moutih Raffei, Director and VP of Research and Development at Defence Therapeutics, said, "Accum™ has the potential to solve many problems related to efficacy and safety, and it has multiple applications. It is also far from complicated to add Accum™ to an existing project. I am convinced our technology can give many projects the positive boost they need."
Defence Therapeutics' portfolio could thus be of interest to a large pharmaceutical company similar to that of Arcus Biosciences. Over the past few months, Defence Therapeutics has repeatedly published encouraging interim results. Examples include the clear effects of active ingredients against cancer in mice and also the effectiveness of Accum™ as a single agent. While the upside potential is limited for stocks such as Arcus Biosciences, investors in Defence Therapeutics can still fully benefit from the opportunities offered by the broad technology spectrum. The downside is increased risk in the event that no backers can be found for the Company. Given Defence Therapeutics' numerous links to projects of large multinationals - for example, in the field of HPV vaccination to GlaxoSmithKline or Merck, the Canadians are in a good starting position. While Arcus Biosciences is valued at around USD 2 billion, Defence is worth just USD 53.9 million on the stock market.
BioNTech: Biotech blue chip can make a difference
The success of BioNTech shows just how far just one promising product can go at the right time. Currently, the Company brings a whopping USD 39.2 billion in market capitalization to the table. Although the pandemic fortunately no longer has such a significant impact on our daily lives, the stock has held steady recently. On a six-month view, an investment resembles a zero-sum game. Most recently, the unrest during the Corona protests in China shows that a good Covid vaccine has its place and can give freedom to a long-suffering population. The Comirnaty® vaccine is likely to remain a cash cow for BioNTech. A positive side effect of the blockbuster is the financing of further research. BioNTech has long focused on active ingredients to combat cancer and has recently expanded its research sites worldwide. The Corona billions are not only flowing to shareholders but also benefiting important projects. It is also possible that BioNTech will make strategic acquisitions, for example, to secure patents or projects. The current market environment should be favorable for investors with cash and expertise.
Where BioNTech might make a concrete move is likely to be the subject of discussions at scientific conferences. Especially in the biotech sector, it is important to be able to evaluate technical perspectives. Defence Therapeutics' projects have repeatedly received positive coverage in the specialist media in recent months. Given the low market capitalization, investors can make a note of the value. On Dec. 7, there will be an opportunity to get first-hand information about Defence Therapeutics and ask questions of management. The journey of Arcus Biosciences is also exciting - but the share price potential is limited due to the existing partnership with Gilead.
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