February 7th, 2022 | 12:14 CET
Bayer, Perimeter Medical Imaging AI, Siemens Healthineers - Diagnostics as an upcoming trend in the pharmaceutical industry
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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.
Bayer - Cooperation failed
Bayer is an old hand in diagnostics and has been active in the field of radiology for over 100 years. The Company is aware that the cure only begins with finding. But the focus, of course, is still on prescription pharmaceuticals. The two areas are combined in the Group under the Pharmaceuticals segment. In the first half of 2021, the segment generated sales of around EUR 8.8 billion. The Company is consistently seeking to expand in this area.
The collaboration with Evotec on the development of a cough medicine, on the other hand, ended last Friday. For the Group, the risk-benefit ratio was no longer promising enough. A collaboration with Mammoth Biosciences was agreed to strengthen its new cell and gene therapy platform. The Californian Company owns a gene-editing technology that enables Bayer to develop therapies much faster. As a first step, the collaboration will focus on developing treatments for the liver.
The stock reacted much less than Evotec shares after the Evotec announcement. Bayer's stock fell by just 0.64% and is currently trading at EUR 52.62. This year, the Group's shares have been in demand and have already gained more than 15% at their peak. Citigroup recently issued a Buy recommendation with a target price of EUR 70. The analyst sees the Group in a better position in all areas. The established upward trend is only broken with closing prices below EUR 49.89.
Perimeter Medical Imaging AI - New gold standard for breast cancer
Breast cancer is the most frequently diagnosed new cancer. For this reason, Toronto-headquartered Perimeter Medical Imaging AI (Perimeter) has turned its primary focus to this disease. The medical technology company offers an optical coherence tomography (OCT) imaging system that allows surgeons to visualize removed tissue in real-time. The novel technology can display cross-sections and margins 1-2mm below the surface, giving surgeons clues as to whether more tumor cells are present. These can then be removed in a single operation, saving the need for another surgery while improving the chances of recovery.
Until now, the gold standard was histological tissue examination, which took up to 7 days. The Perimeter S-Series has 510(k) clearance from the FDA in the US and is already used by a commercial user in Texas. In the future, ImgAssist AI will be added to the system and will be called the B-Series. This artificial intelligence technology increases the efficiency of image review and provides a kind of second opinion to the surgeon. On January 11, the Company announced the expansion of the ongoing pivotal trial. By the end of 2022, 300 patients are expected to participate in the trial at eight sites in the United States. The FDA has granted a Breakthrough Device Designation for the B-Series.
Funding for the trial has been secured through a USD 7.4 million grant from the Cancer Prevention and Research Institute of Texas. In addition, on January 27, the Company announced the successful private placement with gross proceeds of CAD 48.7 million. That makes Social Capital a strategic partner that paid CAD 43.3 million for approximately 14.46 million common shares at CAD 3 each and as many warrants. Financially, the Company is thus well equipped for the time being. After the announcement of the strategic partner, the share jumped up to CAD 5.20. After that, consolidation set in, and the share is currently trading at CAD 3.30.
Siemens Healthineers - Good quarterly figures
Siemens Healthineers develops, manufactures and markets diagnostic and therapeutic products and services worldwide. The Company is divided into four segments. The Imaging segment offers magnetic resonance imaging, computed tomography, X-ray and ultrasound systems. The Diagnostics segment provides in vitro diagnostic products and services to healthcare providers in laboratory, molecular and point-of-care diagnostics. The Advanced Therapies segment deals with cancer treatment and image-guided minimally invasive treatments in various fields such as cardiology.
On February 3, the Company released its first-quarter numbers, reporting 9.5% revenue growth. Looking at the breakdown by area, Diagnostics grew 19.7%, driven primarily by Corona testing. Imaging contributed 5.9% growth, while Advanced Therapies was up just 3.3%. Earnings per share were 12% higher YOY at EUR 0.55 per share. At the same time, the Company raised its guidance for the fiscal year. While 2% growth was initially planned, management now expects 3-5%.
Despite the increased outlook, the share was sold after the figures and is currently trading at EUR 57.06. The only weak point in the figures was the adjusted operating margin, which at 17.6% was weaker than before. It is mainly due to supply bottlenecks and thus rising costs. The analyst outlook is mixed between Hold and Buy. The upward trend remains intact as long as the October low at EUR 54.22 is not broken.
The pharmaceutical industry is in a state of flux. In the future, diagnostics and the associated digitalization will become increasingly important. Bayer is still focusing more on pharmaceuticals and only has the radiology area in its portfolio. Perimeter Medical Imaging AI is a player from the new generation of MedTech companies. With cancer, the Company has chosen a growing market with a volume of up to USD 3.7 billion. Siemens Healthineers is at home in diagnostics and imaging. Here, the Company is well-positioned for the long term.
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