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January 30th, 2024 | 07:15 CET

Bayer, Defence Therapeutics, Morphosys - Biotech sector still on the upswing

  • Biotechnology
  • Pharma
  • Innovations
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The market is currently in an exceptional phase in the biotechnology sector. Following the record year of 2023, the number of M&A transactions continues to increase in the current year. The reason is clear. Many pharmaceutical giants are under pressure due to the expiration of many patents for high-revenue drugs. On the other hand, smaller, innovative companies are trading at attractive valuation levels following the corrections of recent years. In previous transactions, the acquirers paid significantly more than the current market value.

time to read: 3 minutes | Author: Stefan Feulner

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


    Bayer - A harsh blow

    The 0:0 draw for Bayer 04 Leverkusen on Saturday afternoon was not the only bitter disappointment for the chemicals and pharmaceuticals group. The second shock announcement at the weekend was much more severe. The Company lost another trial concerning the herbicide glyphosate.

    A jury in Philadelphia sentenced Bayer to pay USD 2.25 billion in damages. A landscaper suffering from cancer attributed his illness to the use of Roundup, a weedkiller containing glyphosate. In this context, the court awarded him USD 250 million in compensation for losses suffered and an additional USD 2 billion in damages. This total sum represents the highest payment to date in the series of lawsuits against the controversial herbicide. Bayer, the Company behind Roundup, plans to appeal the verdict, citing scientific evidence that classifies glyphosate as non-carcinogenic. Bayer also emphasizes that in previous similar cases, claims for damages were reduced by over 90% following the appeal.

    The reaction to the horror story was devastating. At EUR 30.67, the share price plummeted by more than 5% and traded close to last year's low of EUR 30.22.

    Defence Therapeutics - Important hurdle overcome

    One of Canada's leading biotech companies in the field of immuno-oncology is also likely to have attracted international pharmaceutical interest with its versatile ACCUM™ platform technology. ACCUM™ has the unique selling point that it enables the precise transport of vaccine antigens or ADCs in the intact form to the target cells. As a result, improved efficiency and efficacy against serious diseases such as cancer and infectious diseases can be achieved.

    Defence Therapeutics announced a success story with its new formulation, AccuTOX®. After successfully completing the preclinical efficacy study, the biopharmaceutical company submitted an application for the Phase I study at the end of last year. This plan was approved by the US Food and Drug Administration (FDA). In the trials, an injectable cancer molecule is used to treat solid cancer tumors in the hope of achieving positive effects against cancer.

    The Company has now reported further success in its application to lung tumors. AccuTOX® was shown to destroy more than a dozen different mouse and human cancer cell lines. In mice, nasal administration of AccuTOX® at a dose of 3 mg per kg body weight inhibited the growth of lung nodules when used as the sole treatment. An increase in efficacy was achieved by combining AccuTOX® with the immune checkpoint inhibitor anti-PD1.

    Defence shares came under significant pressure recently when the Company announced that it was conducting a non-brokered private placement of up to CAD 2.25 million, consisting of 1.5 million units. Each unit comprises one common share of the Company and one share purchase warrant. Each warrant entitles the holder to purchase one additional share at a price of CAD 2.00 per share for a period of 24 months. Defence Therapeutics' original plan was to raise CAD 2.79 million. In this context, acquiring additional shares at a price of CAD 2.25 should be possible. As a result, the share price fell by around 20% to a low of CAD 1.66 but was able to reverse the losses within three trading days and is once again trading above the critical support level of CAD 2.05.

    Morphosys - Next takeover candidate

    The takeover carousel in the biotechnology sector continues to run at full speed. The volume of M&A transactions was already at a record level in 2023. And the hunger for innovation among pharmaceutical giants does not seem to be satisfied in the new year either. A new "takeover victim" could now lose its independence. There is speculation on the market that the recent positive study data on the active ingredient pelabresib for treating myelofibrosis has caused an international stir.

    Whether Morphosys will really be sold for the current stock market value of EUR 1.49 billion is questionable. On the one hand, a capital increase was completed last December with gross issue proceeds of around EUR 102.70 million. On the other hand, the free float is relatively high at 36.19%. Incidentally, the largest shareholders are Goldman Sachs with 9.03% and JP Morgan Asset Management with 7.71%.

    Nevertheless, the Munich-based company's shares shot up by around 17% to EUR 40.87 last Friday.

    The takeover wave is rolling. The German biotech company Morphosys is already being traded by experts as the next object of desire. Defence Therapeutics has achieved another milestone.

    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

    Related comments:

    Commented by André Will-Laudien on February 20th, 2024 | 07:30 CET

    Takeover fever in the biotech sector! Will MorphoSys now be followed by Defence Therapeutics, Evotec and Bayer?

    • Biotechnology
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    It has happened: Novartis is bidding for MorphoSys. Once again, a long-lasting and persistent rumour mill eventually confirms itself. Those who remained loyal to MorphoSys despite heavy selling last fall have now made a profit of over 300%. If we turn the analytical magnifying glass on the sector, we can see that the speculative biotech stock market segment has started to move again since the challenging year 2023. Hopes of falling interest rates in the near future, along with several other M&A hopes, have led to steady inflows into listed bio-ETFs, resulting in fund managers having recently adjusted their weightings upwards. We analyze which stocks are currently making the loudest noise.


    Commented by André Will-Laudien on February 16th, 2024 | 07:00 CET

    MorphoSys and Cardiol Therapeutics in upward mode, while Bayer and Pfizer are in slow mode

    • Biotechnology
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    The biotech sector has made a very differentiated start to the new year. While the old favorites are barely moving, the second-line stocks MorphoSys and Cardiol Therapeutics are making a real splash. At Bayer, the bad news just won't go away, and despite a successful major takeover, Pfizer has not yet found its forward gear. After a rally of almost 15% in December, the Nasdaq Biotechnology Index (NBI) has taken a pause in the current year. Now, everyone is waiting for the first interest rate cut by central banks. Inflation is already falling, and the negative economic data for the Eurozone is increasing. The ECB would normally be in demand. What should investors urgently keep an eye on?


    Commented by Fabian Lorenz on February 14th, 2024 | 07:00 CET

    Plug Power, Bayer, Defense Metals: Shares in panic mode

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    Is everything not so bad at Plug Power, after all? In January, the hydrogen specialist triggered panic among investors with an announced capital increase. Now, the CEO is suddenly rowing back. So, should one buy the stock now? One analyst advises caution. Bayer shareholders are also in panic mode. The downward trend of the share simply cannot find a bottom. Even at this level, analysts are cautious. Defense Metals, on the other hand, is benefiting from panic - because this concerns the supply of rare earths. The dependence on China is enormous. Defense Metals aims to change this with its rare earth project in Canada. The Company CEO expressed confidence in an interview, stating that an important agreement has been reached with the local population, and important dates are on the horizon.