After the slump in biotech stocks - Bavarian Nordic, XPhyto and Evotec under review

XPhyto with positive developments

As recently as the end of January, the share price of XPhyto, a diversified life sciences accelerator focused on investing in next-generation drug delivery, diagnostics and new pharmaceutical entities, stood at EUR 1.10. About 4 months later, and after quite a positive news flow from the Canadian Company, the share price has dropped to currently EUR 0.60 and the market value has shrunk to EUR 45.86 million. Even if the stock is still in the "speculative" category at the current stage, in the long term, there could be a disproportionately good entry opportunity at the current level.

XPhyto has research and development sites in North America and Europe with an operational focus in Germany and is currently focused on regulatory approval and commercialization of medical products for European markets. The latest success story was published upon completion of a human bioavailability study conducted in Europe for its rotigotine TDS product. The Company's rotigotine patch is based on the TDS platform technology developed by its German subsidiary Vektor Pharma. In this context, the market potential for transdermal skin patches is gigantic. While the volume in 2020 was already USD 6.5 billion, this is expected to rise to around USD 20 billion by 2028.

A study on this was already successfully conducted in 2021. Vektor Pharma is now working on optimization, which includes the recently completed skin permeation study on human cadaver skin. XPhyto, in turn, is accelerating the commercialization of the rotigotine patch (TDS). Scaling effects also arise from the fact that rotigotine is a single product built on Vektor Pharma's platform technology. Opportunities for additional TDS drug development and manufacturing programs are thus available.

Monkeypox is probably no match for Corona

When even the chief admonisher of the republic, Health Minister Karl Lauterbach, steps away from the fear brake, the population should breathe a little easier after the Corona pandemic, which has still not been overcome. In the ARD program "Report from Berlin", Lauterbach said that he does not believe "that monkeypox poses a danger in the sense of a pandemic." Nevertheless, the spread must be contained, Lauterbach said, "because we do not want it to take hold either." Thus, 40,000 vaccine doses against monkeypox are to be delivered before the end of June, followed by another 200,000. The vaccine in question is the Imvanex vaccine from the Danish company Bavarian Nordic, which is approved in the United States and Canada. The Company holds the world's only approval for a vaccine against monkeypox. Approval in the EU is already being planned, a company spokesman said.

In addition to Germany, several undisclosed countries ordered the vector vaccine developed in Martinsried, Bavaria, prompting Bavarian Nordic to raise its annual forecast again. With the new orders, the Danes expect 2022 sales to range between 1,400 and 1,600 Danish kroner, translating into a range between EUR 188.22 million and EUR 215.10 million. On the other hand, the EBITDA loss is expected to be lower, between minus EUR 121.00 million and minus EUR 147.9 million. Paul Chaplin, CEO of Bavarian Nordic, commented: "The current monkeypox outbreak continues to require a rapid and coordinated response from public health authorities. We look forward to helping more countries with vaccine supply as we continue our dialogue with other governments to make vaccines available as quickly as possible to mitigate the situation."

Despite the positive news, the chart situation for Bavarian Nordic is currently rather negative. On the one hand, the share price bounced off the important resistance area at EUR 30. On the other hand, indicators such as RSI are already in the oversold zone, and the trend follower MACD is already forming negative divergences, which could lead to a stronger correction.

Evotec with acquisition in Italy

The shares of Hamburg-based Evotec, a global company in the field of pharmaceutical drug discovery, have been hit particularly hard in recent months. The Company pursues approaches to researching and developing therapeutic strategies in research alliances and development partnerships with pharmaceutical and biotechnology companies. Despite sustained good news flow, the stock has lost more than 50% of its value since the beginning of the year and has given back all of its gains since the outbreak of the Corona pandemic. Since the low of EUR 21.53 in mid-May of the current year, Evotec has again been able to enter a countermovement. The next prominent resistance lurks at EUR 27.29. Should this be overcome, a price above EUR 30 is likely to follow. Incidentally, Deutsche Bank sees EUR 30 as a price target and upgraded the share from "hold" to "buy".

With the signing of a binding agreement, the Hamburg-based company now announced the acquisition of one of the leading cell technology companies. For EUR 23 million, Evotec secured 100% of Rigenerand Srl, which emerged back in 2009 from a spin-off from the University of Modena and Reggio Emilia. With its highly specialized team, Rigenerand operates a world-class certified facility that integrates state-of-the-art cGMP manufacturing with research laboratories, as well as quality assurance and development laboratories, a company statement said.

The correction in the biotech sector is enormous and already comparable to that of the beginning of the new millennium. Evotec has been able to move off the lows and has further potential. Caution is already advised for Bavarian Nordic due to overheating. In contrast, XPhyto is interesting in the long term.