Bayer, Defence Therapeutics, Formycon - Biotech stocks facing transformation

Defence Therapeutics - Breakthrough platform technology

The Canadian biotechnology company Defence Therapeutics is also focusing on the development of next-generation vaccines and ADC products using its proprietary and patented Accum technology. This technology has the decisive advantage of ensuring the precise transport of vaccine antigens or ADCs in the intact form to the target cells, which significantly improves efficiency and thus efficacy against diseases such as cancer or infectious diseases.

In this context, the activities of Defence Therapeutics can be divided into two areas, as Dr. Moutih Rafei, Director and VP for Research and Development, explained in a detailed interview. One is the immuno-oncology segment, and one is the activities against infectious diseases. In the first area, the Canadians are working on vaccines against breast and skin cancer and antibody-drug conjugates (ADC). The latter primarily addresses safety and efficacy and offers significant advantages over other forms of therapy. In infectious diseases, research is being conducted on vaccines against COVID-19 and the human papillomavirus (HPV). A phase 1 study against breast and skin cancer is expected to begin no later than early 2023.

A US patent has now been announced for the breakthrough vaccine platform technology. Thus, the US Patent and Trademark Office issued a patent number covering the Company's breakthrough vaccine platform technology for the treatment/prevention of a broad range of cancers and infectious diseases, including SARS-CoV-2. For Sebastien Plouffe, CEO of Defence Therapeutics, "this patent not only represents another important milestone in protecting Accum's commercial potential but, together with the new patent families currently in preparation, demonstrates Defence's strong overall commitment to protecting the innovation and commercial potential of its entire product portfolio, as well as its ambition to be a leader in vaccine development." The market value of this broad-based biotech Company with the innovative Accum technology, which has already proven proof of concept, is EUR 111.85 million. If the positive development continues, Defence Therapeutics still has considerable potential.

Formycon - Moving up to the next level

The independent analyst firm Alster Research confirmed its "buy" rating for the leading developer of high-quality biosimilars but raised its price target from EUR 75.00 to EUR 84.00. The analysts believe that Formycon has the potential to rise to the next level. The analysts see the transformative agreement with ATHOS, the family office of Hexal founders Andreas and Thomas Strüngmann, as the reason for the upgrade, which will bring about a profound change at Formycon.

The agreement details are as follows: As part of the transaction, Formycon will acquire the development unit Bioeq GmbH. Formycon thus gains experienced experts in clinical development, regulatory affairs, business development, commercial affairs, IP and project management. Formycon acquires full project and commercialization rights to FYB202, a biosimilar candidate for Stelara. Following out-licensing in 2017, Formycon holds a 24.9% stake in the project, with 75.1% held by Aristo Pharma GmbH, a wholly-owned subsidiary of ATHOS.

Global licensing and commercialization rights to FYB201, a biosimilar candidate for Lucentis, have been held by Bioeq AG, a 50:50 joint venture of ATHOS and Polpharma SA, since 2016. As part of the transaction, Formycon will acquire ATHOS' 50% stake in Bioeq AG. FYB201 is marketed in the US by Coherus BioSciences under the brand name Cimerli and is still under FDA review, which is expected to last until August 2, 2022. If approved, Coherus is preparing to launch Cimerli in the second half of 2022 and drive adoption among retinal specialists.

The value of the consideration to be paid by Formycon in the transaction includes the issuance of 4 million new shares to ATHOS and an earn-out component, together valued at approximately EUR 650 million. Upon completion of the transaction, ATHOS will be Formycon's largest shareholder, with an indirect stake of about 26.6% of the share capital. In addition, the investor consortium, consisting of ATHOS and anchor shareholder Active Ownership, will provide a callable loan facility of up to EUR 50 million, strengthening Formycon's flexibility for short-term pipeline investments.

Bayer - The air is getting thinner

In recent months, the glyphosate legal disputes have been like black clouds over the Leverkusen share chart. Since the beginning of the year, the brakes have now been released. The share price, which was able to defend the critical support area around EUR 45 at the end of December, shot up by almost 35% despite inflation fears and the Ukraine crisis, making it one of the top performers on the German benchmark index this year.

Currently, however, the air is getting thinner, so the Bayer chart could stop in front of prominent resistance areas at EUR 68.10 as well as around EUR 69.70 and start a broader consolidation. Thus, the first target is closing the price gap at EUR 63.17. The indicators, firmly in the oversold area, also speak for a setback.

Biotechnology is becoming increasingly important, as was evident in the Corona pandemic. Defence Therapeutics has potential through its patented Accum technology. Formycon is currently undergoing a transformation. In contrast, a correction is becoming more likely for Bayer.