BioNTech, Cardiol Therapeutics, Bayer - Prepared for the next wave

BioNTech - New wave on the way?

Since the pandemic subsided, the shares of the Mainz-based biotech company have also been on a steep downward trend. Since peaking at USD 464.00 in August 2021, the share price has lost around 82% of its value and, at USD 84.95, is only marginally above its low for the year of USD 80.09. There is currently no all-clear that the vaccine manufacturer will not see even lower prices. Should BioNTech shares slip below the lower limit of the wedge formation that has formed since February 2023, currently at USD 79.65, further stop-loss levels will likely fall. The next significant resistance level is USD 64.45. On the upside, this formation would be resolved if the USD 101.29 mark were to be overcome on a sustained basis. The EMA 50 also runs in this area.

There is currently light on the horizon from the US Center for Disease Control and Prevention (CDC). It sees increasing infection figures in 44 US states. According to the latest hospital reports published at the end of June, hospital admissions associated with COVID-19 rose by 23.3% week-on-week. The number of deaths due to the virus also rose by 14.3%.

The new virus variants KP.2 and KP.3, which are now responsible for over half of all new infections, require particular attention. These variants show increased transmissibility compared to earlier strains. This has led to a reassessment of the situation by the US CDC. While the initial focus was on vaccines against the JN.1 virus strain, attention is now turning to combating the more aggressive KP.2 variant. Pharmaceutical companies such as Moderna, Novavax, and Pfizer/BioNTech have already pledged to follow the CDC's recommendations and adapt their developments accordingly.

CARDIOL THERAPEUTICS - DISCREPANCY IN VALUATION AMIDST BREAKTHROUGH CLINICAL ACHEIVEMENTS

When analyzing the prevailing circumstances of the clinical-stage life sciences company Cardiol Therapeutics, it is challenging to understand the significant gap in market valuation despite positive clinical data. The company is dedicated to the research and clinical development of anti-inflammatory and anti-fibrotic therapeutics for the treatment of heart disease with the promising drug candidate CardiolRx™.

Following the announcement of promising 8-week topline data from their open-label Phase II MAvERIC-Pilot study, which investigated the efficacy and safety of CardiolRx™ in recurrent pericarditis, Cardiol’s share price has fallen by roughly 32% from its interim high of CAD 4.26 on June 12, 2024, to its current level of CAD 2.90. This market reaction is perplexing given that the reported clinical data in the 27 patients showed a substantial reduction in patient-reported pericarditis pain and a normalization of C-reactive protein (CRP), an inflammatory marker, in 80% of those treated. CardiolRx™ notably achieved marked reductions in pericarditis pain and inflammation, displaying a magnitude of effect comparable to the commonly used third-line immunosuppressive biologic therapies for recurrent pericarditis.

Capitalizing on the dip in share price, President and CEO David Elsley increased his share position by acquiring an additional 50,000 shares at a price of CAD 2.77, thereby expanding his holding to 1,204,500 shares. Analyst firms covering Cardiol Therapeutics have identified the current valuation to be grossly undervalued. Analyst Edward Nash of Canaccord Genuity has responded to the recent results with an issued price target of CAD 10.92. Analyst Douglas Loe of Leede Jones Gable revised their price target from CAD 4.50 to CAD 11.00. Furthermore, ROTH analyst Jason Wittes initiated coverage on the company with a buy rating and USD 10.00 price target.

The discrepancy between the Company, capitalized at CAD 200.08 million, and its peer group is dramatic. Recently, competitor Cardior Pharmaceuticals was acquired by Novo Nordisk for around USD 1 billion.

Bayer - Tense situation

Bayer shares have been working on bottoming out for months, but there is still no sign of the trend reversal that many investors are hoping for. The chart has formed a falling triangle, suggesting another test of the yearly lows at EUR 24.96 and a further sell-off. The share is also facing headwinds from the relative strength index RSI, which is turning down again and could generate a further sell signal.

In recent days, the US Food and Drug Administration (FDA) has offered a glimmer of hope, having granted "fast-track status" to a gene therapy for Parkinson's patients developed by Bayer subsidiary Asklepios BioPharmaceutical.

The AB-1005 gene therapy, the development of which Bayer began in 2020 with the acquisition of Asklepios BioPharmaceutical, could reach the market more quickly thanks to its fast-track status. However, it should be noted that the status initially only relates to the Phase I trial, which evaluates the therapy's safety. Whether the subsequent, much more costly and extensive Phase II and Phase III trials in humans will also be successful is likely to take years.

BioNTech's share price is approaching its low for the year, but the news of the increase in COVID-19 figures could provide some relief. Bayer is also still struggling from a technical perspective. Analysts see multiplication potential after successful trial data for Cardiol Therapeutics.