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March 4th, 2022 | 13:33 CET

Bayer, Defence Therapeutics, Merck KGaA - At the start of the trend

  • Biotechnology
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The biotech industry is the innovative engine for a pharmaceutical industry dependent on new concepts due to the shift from blockbuster products to personalized medicine. Even before Corona, more than EUR seven billion per year was invested in R&D in 2019. The development of new drugs is particularly important for the pharmaceutical industry, as patent protection for many blockbuster drugs is expiring or has already expired. For this reason, the pharmaceutical industry is now much more often entering biotech companies in the early development phases of a new drug. The example of vaccine manufacturers has successfully highlighted this strategy, which will also be applied to other diseases in the future.

time to read: 4 minutes | Author: Stefan Feulner

Table of contents:

    Bayer - Successful breakout

    Leverkusen-based pharmaceutical and agricultural giant Bayer delivered solid figures for the full year 2021. "We have grown significantly. We have strengthened our innovation pipeline. And we are making progress on our sustainability targets. All of this shows: Bayer is on the right track!" said Management Board Chairman Werner Baumann at the annual press conference on Tuesday. "We not only achieved the adjusted Group guidance, we even exceeded it. What is particularly pleasing is that all three divisions grew dynamically in 2021 - and more strongly than the respective market."

    He added that the Company had invested a record amount in research and development and further strengthened its innovative power with numerous acquisitions, shareholdings and partnerships. He said that the aim is to exploit the huge opportunities presented by bio-revolution, which are opening up thanks to cutting-edge technologies in the digital age. The DAX-listed Company intends to invest further in Germany in the coming years. More than EUR 1.4 billion will be invested in technologies, new production facilities and digitalization at the pharmaceutical production sites in Bergkamen, Berlin, Leverkusen, Weimar and Wuppertal, the Company announced on Thursday.

    Convinced by Bayer AG's development, many analysts see the stock as a buy candidate. After a conference call, Hamburg-based private bank Berenberg raised its price target from EUR 68 to EUR 74. The management of the agrochemicals and pharmaceuticals group has been more optimistic than it has been for a long time, wrote analyst Sebastian Bray. From a chart perspective, the picture has also turned positive. With the breakout above the horizontal resistance at EUR 57.73, the bottoming out would be completed, and the way towards EUR 65 would be clear.

    Defence Therapeutics - The most sought-after tool in the pharmaceutical industry

    In an extensive interview, the CEO of Defence Therapeutics, Dr. Moutih Rafei, commented on the development of the Canadian Company, which is tradable on the TSX as well as in Frankfurt. The stock is currently valued at EUR 94.79 million, with the share price forming a bottom at EUR 2.80, and last year's high was at EUR 5.90.

    Defence Therapeutics is divided into two segments. The first segment is immuno-oncology, the second is research against infectious diseases. The Canadians are working on vaccines against breast and skin cancer as well as antibody-drug conjugates (ADC). The latter primarily address the areas of safety and efficacy and offer significant advantages over other forms of therapy. In the area of infectious diseases, Defence Therapeutics is researching vaccines against COVID-19 and the human papillomavirus (HPV). In late 2022 or early 2023, a Phase I study is scheduled to start for our activities against breast and skin cancer. Until then, the necessary preliminary work will be carried out according to the principles of good laboratory practice (GLP). Further data will be collected that may be useful for the subsequent approval process.

    The first peer-reviewed study on the efficacy of AccuVAC-D001L has been announced and published in the prestigious journal Cell Reports Medicine. Currently, only one FDA-approved DC vaccine is on the market to treat prostate cancer. However, the vaccine did not achieve the hoped-for clinical effect due to major obstacles related to antigen presentation by dendritic cells (DCs) versus responding T cells. It is here that the AccumTM technology proves to be an important advantage, as it allows circumventing the main enemy of any antigen, which is its entrapment in the endosome.

    Although Defence Therapeutics is at an early stage, the advantages of the Accum technology are already clearly evident.

    Merck KGaA - Another solid fiscal year

    After the first corona year in 2020 with a remarkable boom, the Darmstadt-based Company also benefited from a strong laboratory division in 2021 due to its cooperation with vaccine producers. However, the pharmaceuticals division and the semiconductor business ran dynamically and contributed positively to the jump in sales and earnings.

    Last year, sales grew by a good 12% to just under EUR 19.7 billion. Merck increased its profit by 17%. Earnings before interest, taxes, depreciation and amortization adjusted for special items rose to EUR 6.1 billion.

    Profit rose by more than half to nearly EUR 3.1 billion. "In fiscal 2021, we achieved record growth and increased our margins," said CEO Belén Garijo. She reiterated the target of EUR 25 billion in sales by 2025, and the dividend was raised to a record EUR 1.85 per share, up EUR 0.45 from the previous year. US bank JPMorgan left its rating on Merck KGaA at "overweight" with a price target of EUR 270 after fourth-quarter figures. The pharmaceutical and technology group largely performed as expected, analyst Richard Vosser wrote. Given the strong outlook, market expectations for operating profit before special items are likely to rise.

    Research activity in biotechnology will continue to accelerate over the next few years. With its Accum technology, Defense Therapeutics has clear advantages over its competitors but is still at an early stage. Merck delivered its second successful year, and Bayer's share price could soon take off.

    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") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    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 also 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

    Related comments:

    Commented by Fabian Lorenz on November 30th, 2023 | 07:10 CET

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    Morphosys is not for the faint-hearted. After unclear study results, the stock gave up its annual gains within a few days. Analysts are also divided on what the future holds. On December 10, the study details will be released, hopefully shedding light on the situation. Bayer shareholders are currently seeing dark clouds. The stock plummeted from EUR 40 to EUR 30 in a short time. Is the dividend now at risk, or is the entire company in jeopardy? There is a slew of positive news for Defence Therapeutics. Can the stock break out of its sideways trend? A potential partner for the Canadians could be BioNTech. The German biotech favourite is working with full coffers on cancer vaccines. However, analysts remain cautious.


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