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June 26th, 2023 | 09:20 CEST

Bayer, BioNxt Solutions, BioNTech - Biotech facing a rebound?

  • Biotechnology
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Due to the Corona pandemic, the pharmaceutical and biotech sector received a lot of attention. Many investors invested too late and could hardly benefit from the significant upward movements. After the hype, a sense of disillusionment set in. The vaccine manufacturers felt the effects because as soon as the pandemic subsided, the stock market also went down. Large and small companies experienced sell-offs, with some trading below their cash reserves. These low prices led to a wave of takeovers. Most recently, Novartis snapped up the biotech company Chinook for up to USD 3.5 billion. Therefore, today, we look at three companies from the healthcare sector.

time to read: 4 minutes | Author: Armin Schulz
ISIN: BAYER AG NA O.N. | DE000BAY0017 , Bionxt Solutions Inc. | CA0909741062 , BIONTECH SE SPON. ADRS 1 | US09075V1026

Table of contents:

    Bayer - New CEO brings a fresh perspective

    Since the beginning of June, Bayer's long-time CEO Werner Baumann has been history. He has been succeeded by Bill Anderson, who is regarded as a pharmaceutical expert. In recent years, Bayer has almost always been dominated by the Monsanto takeover and the associated lawsuits concerning glyphosate. In mid-June, another case was settled against payment of a single-digit million sum. Looking ahead, the group wants to expand its Crop Science segment to include adjacent markets and thus double its current market potential to EUR 200 billion. This controversial takeover may prove advantageous for Bayer.

    The pharmaceuticals division, on the other hand, has performed well. With the new CEO, there could be further upside. In his previous positions, he promoted personal responsibility among the staff and thus ensured more productivity. The development pipeline is full; for example, Nubeqa, a prostate cancer drug, has a lot of potential. Nevertheless, investments are also being made in the future. A licence agreement was concluded with Cedilla Therapeutics, whose products are still in the preclinical stage. A new Phase III trial has started with Finerenon, which is used for chronic kidney disease and diabetes. So far, Finerenon has been prescribed for type 2 diabetes. Now it is to be approved for type 1 as well.

    In the gene therapy field, the Leverkusen-based company will, in future, cooperate with Acuitas Therapeutics, whose lipid nanoparticle technology is to expand the portfolio. Bayer shares reached their high for the year at EUR 65.66 on February 9. Since then, the stock has lost about 23% and exited Xetra trading at EUR 50.50 on Friday. Analysts see the share as a buy. In June, there were corresponding recommendations from Barclays Capital and Bernstein Research. The price targets were EUR 80.00 and EUR 89.00, respectively.

    BioNxt Solutions - Clinical trial approved

    BioNxt Solutions went steeply uphill at the beginning of the year. On January 3, the opening price was CAD 0.49. From there, it went up more than 73% to CAD 0.85 at the peak. One of the reasons for this could be the high growth potential of the 3 business areas of innovative dosage forms, diagnostics and psychedelic agents. The Company is also preparing for the commercialization of its products. For this purpose, coating and cutting machines were purchased. Then, in April, a development and production contract was signed with an international pharmaceutical company, thus opening up another field of activity.

    On May 9, the pilot study on humans was successfully completed for the client. It involved the development of an orally soluble narcotic and a comparative bioavailability study. CEO Hugh Rogers expressed satisfaction, "This opens up an attractive opportunity for us at BioNxt to expand our capabilities from drug development to commercial manufacturing while working towards marketing approval for our own products and contract products for other companies." In mid-May, the Company received approval for a clinical trial of its rotigotine transdermal patch for the treatment of Parkinson's disease in Europe. The trial is expected to start within 6 weeks.

    Patch samples for the trial have already been produced. If the patches can successfully pass all the required trials, the product offers a great opportunity as the patent of the Parkinson's patch Neupro has been declared invalid by a court. The market for rotigotine patches was around USD 518 million in 2021 and is expected to grow to USD 766 million by 2030. Looking at the overall market, transdermal patches worth USD 6.5 billion were sold in 2020. Despite the recent good news, the stock continued to consolidate from its high for the year and is currently trading at CAD 0.55.

    BioNTech - A wave of lawsuits

    BioNTech rose on the stock market like a Phoenix from the ashes. The Corona pandemic made the Mainz-based company a stock market star. Now that the pandemic is officially over, shareholders are disillusioned. Turnover is falling rapidly, and with it, profits. In addition, the Company is confronted with more and more lawsuits accusing BioNTech of infringing other companies' patents. Most recently, a lawsuit was filed in San Diego by Promosome against Moderna, Pfizer and BioNTech, who see their rights violated.

    It may take some time before decisions are made in the proceedings. In addition to the patent disputes, there are claims for damages due to possible vaccine damage. In Hamburg, a first trial started on June 12. The more important question is, can the Company develop a new blockbuster? The Corona vaccine has opened the door to mRNA technology. Especially in the field of oncology, the Mainz-based company has some interesting candidates in the pipeline, with 6 of them already in Phase II studies.

    The most advanced is the mRNA vaccination against influenza, which is already in Phase III. The Company has the financial means to carry out the studies thanks to the high revenues from the Corona vaccine business. Positive reports from the trials could boost the share again. It went from almost EUR 400 to under EUR 100 in the last few years. On Friday, the share left Xetra trading at EUR 97.46. Analysts are taking a wait-and-see approach and recommend the share as hold, albeit with price targets between USD 120 and USD 200.

    The biotech sector is very volatile. It can go up quickly if a company is successful, but bad news can also quickly bring down the price of a share. At Bayer, the Company is broadly positioned because it does not focus exclusively on pharmaceuticals. BioNxt Solutions plays in several high-growth business areas. If it successfully lands more contract work, it could follow the MorphoSys path as a service provider. Due to its financial cushion, BioNTech can research and develop in peace. The pipeline is full, but the road to finished products is still long.

    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

    Armin Schulz

    Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

    About the author

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