07. June 2021 | 09:37 CET
Bayer, Defence Therapeutics, MorphoSys - A paradigm shift in biotechnology
The search for a vaccine against the Coronavirus brought biotechnology back into the focus of investors last year. Companies such as BioNTech or CureVac were able to multiply in this regard. In 2020, the biotech sector in Germany raised a record sum of EUR 3 billion, and the trend is rising sharply. The fight against incurable diseases and the development of important innovations such as vaccines, cancer therapies, or sustainable products lift the segment into higher realms and offer attractive investment opportunities.
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ISIN: DE000BAY0017 , CA24463V1013 , DE0006632003
First mover in the fight against cancer
Defence Therapeutics' management sees itself as Canada's scientific pioneer, developing improved ways to treat future generations through biopharmaceutical innovation. With two wholly-owned promising technologies, this plan may well become a reality in the long term. ADC drug development serves as the foundation. Antibody-drug conjugates promise great potential in cancer therapy because they can specifically destroy cancer cells. The therapeutic window of ADCs, i.e. the ratio of efficacy to safety, compares favorably with other forms of treatment. Because the technology is highly specific, acting directly on the cancer cell, side effects can be reduced.
Platform technology with upside potential
ACCUM™ technology, the new generation platform technology, can be combined with approved antibody-drug conjugate (ADC)-based drugs. The ACCUM™ method of accurately delivering ADCs into cells has increased cell penetration 10-fold over other approved ADC solutions.
Building on the ACCUM™ platform and in collaboration with the University of Montréal's academic laboratory, Defence Therapeutics is focusing its second segment on developing vaccines against infectious diseases and viruses, using the ACCUM™ platform as a basis for targeted drug delivery and effective treatments. As a result, enormous economies of scale are expected in the future. Development priorities include a vaccine against COVID-19 and a vaccine against cancer.
Recently, initial successes were achieved in preclinical studies with mice. These were treated with the vaccine AccuVAC-D001 developed by Defence Therapeutics. In the end, 70% of the cases showed a successful cure with already established solid tumors. While there is still a long way to go for regulatory approval, the outstanding results show how this strategy can be successfully adapted to universal cell vaccines.
The scalable platform technology is innovative and holds long-term promise. One thing to keep in mind, however, as with any biotechnology company, is that there is still a tremendous risk as the Company moves through each phase. However, at EUR 120 million market capitalization, Defence Therapeutics is not too expensive at the current stage of development. The stock is traded in Toronto and Frankfurt.
Decision at Bayer
The glyphosate affair continues to put pressure on the Bayer share price. After the competent district court in San Francisco last week rejected a settlement proposal by Bayer in dealing with future lawsuits as "simply unreasonable," the Leverkusen-based Company's stock tipped and ended the week with a loss of 10% at its peak. The settlement would have been worth USD 2 billion to the pharmaceutical giant. This lawsuit was about the drug "Roundup," which can be used against weeds, but the glyphosate could also trigger possible cancer. As a result of the renewed defeat in court, management intends to withdraw from the settlement proceedings and review further sales of the product to private customers in the USA. A five-point plan for dealing with future glyphosate lawsuits was also outlined.
To be prepared for the future, Bayer is continuing to build its oncology business. With the acquisition of US radiotherapy specialist Noria Therapeutics and its subsidiary PSMA, the DAX-listed Company is strengthening its portfolio in applications against prostate cancer. The US company specializes in targeted alpha therapeutics in the field of radiation medicine. The acquisition gives Bayer exclusive rights to a differentiated alpha radionuclide therapy for prostate cancer, the second most commonly diagnosed cancer in men. Xofigo, a targeted alpha therapy already part of Bayer's oncology portfolio and a proprietary drug platform with thorium conjugates, is still being developed.
As a result of the sell-off, the share fell back again to the support area at EUR 52.10 but has been able to hold this successfully. The 200-day line is currently at EUR 51.46. From a trading perspective, a buy at the current level would make sense. The downward trend formed since June 2017 is getting closer and closer in the area around EUR 56.50. If sustainably overcome, a trend reversal in favor of the bulls could set in.
The stock market week for the biopharmaceutical Company MorphoSys was similar to that of Bayer. Here, too, it went south with a crash after an announcement in the middle of the week. The Company spooked its investors with the announcement of the billion-euro acquisition of Constellation Pharmaceuticals. In total, the Planegg-based Company wants to put USD 1.7 billion on the table. USD 34 was offered for each Constellation share, a bonus of almost 70% on the previous trading day. Despite positive analyst opinions from Deutsche Bank and Barclays, among others, and a statement from MorphoSys CEO Jean-Paul Kress that this acquisition represents a fundamental transformation, the stock plummeted more than 17% to a new four-year low of EUR 60.30.
Possible "paradigm shift"
Positive news on the drug Tafasitamab then provided some relief at the end of the week. In collaboration with Incyte, the Company presented further data from the three-year follow-up period of the ongoing Phase 2 L-MIND study with the drug. In the clinical trial, Tafasitamab was administered in combination with lenalidomide in adult patients with relapsed or refractory diffuse large B-cell lymphoma. Gilles Salles, Lymphoma Service Chief at Memorial Sloan Kettering Cancer Center and principal investigator of the L-MIND trial, sees tremendous potential in the results. "The confirmation of positive patient outcomes in the L-MIND trial are encouraging and suggest that this combination therapy may represent a paradigm shift and long-term control of the disease," Salles said.