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June 1st, 2022 | 14:03 CEST

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

  • Biotechnology
  • Monkeypox
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Biotechnology experienced a boom in March 2020, when the world realized what biotech innovations could do to fight COVID-19. Investors pounced on the many promising technologies, driving up the stock prices of vaccine producers and making it easier for companies to raise capital for financing. However, since September of last year, the biotech sector has been on a steep downhill slide, at least on the stock market. The NASDAQ Biotechnology Index has lost more than 30% of its value since its high of 5,449.26 points until today. This drastic decline is reminiscent of the bursting of the bubble in the year 2000. But where are the opportunities now, and which stocks should investors rather refrain from investing in?

time to read: 4 minutes | Author: Stefan Feulner
ISIN: BAVARIAN NOR NAM. DK 10 | DK0015998017 , XPHYTO THERAPEUTICS | CA98421R1055 , EVOTEC SE INH O.N. | DE0005664809

Table of contents:

    David Elsley, CEO, Cardiol Therapeutics Inc.
    "[...] As a company dedicated to developing treatments for rare heart diseases, we see this as an opportune moment to contribute to the fight against heart disease and make meaningful strides in improving heart health worldwide. [...]" David Elsley, CEO, Cardiol Therapeutics Inc.

    Full interview


    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.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

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    Commented by Stefan Feulner on July 17th, 2024 | 06:30 CEST

    BioNTech, Cardiol Therapeutics, Bayer - Prepared for the next wave

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    Commented by Fabian Lorenz on July 11th, 2024 | 06:55 CEST

    Shares with breakthrough potential? Evotec, Varta, and Carbon Done Right Developments

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    Commented by André Will-Laudien on July 11th, 2024 | 06:45 CEST

    Mega rally on the cards - 500% plus is likely too low an estimate! Evotec, Desert Gold, Cogia, VCI Global, and Lufthansa

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