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May 2nd, 2022 | 13:27 CEST

BioNTech, Defence Therapeutics, Valneva, MorphoSys - Biotech stocks that will still be fun tomorrow!

  • Biotechnology
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One of the most churned areas on the growth stock market is the biotech sector. There was too much disappointment on the drug development side; even in the COVID sector, only a few winners remain. However, the current sell-off could turn out to be an entry opportunity in the medium term because there are more and more people on earth and, fortunately, they are getting older and older; even the Corona pandemic is not likely to change this. There are already 1 billion people worldwide over the age of 60, and forecasts predict that this figure will rise to 2 billion by 2050 - with a total population of more than 9 billion people predicted at that time. Which values have been unjustly neglected, and where are the current opportunities for investors?

time to read: 5 minutes | Author: André Will-Laudien
ISIN: BIONTECH SE SPON. ADRS 1 | US09075V1026 , DEFENCE THERAPEUTICS INC | CA24463V1013 , VALNEVA SE EO -_15 | FR0004056851 , MORPHOSYS AG O.N. | DE0006632003

Table of contents:

    BioNTech - More than 1 billion for research

    Before the Corona pandemic, the Organization for Economic Co-operation and Development (OECD) calculated that health care costs in OECD countries would rise from 6% of gross domestic product to 9.5% of GDP by 2050. That is a considerable percentage of gross value added. Biotech and pharma stocks will be able to capture a large share of the projected development.

    With a bulging cash register but sharply declining vaccination figures, BioNTech is still in a comparatively good position. According to management, the Mainz-based Company is now concentrating on research into immunotherapy approaches based on the messenger molecule mRNA and combating infectious and autoimmune diseases and cancer. At an analyst conference, CEO Sahin spoke of a "historically unique moment" to make significant advances in medicine. Research and development spending is expected to increase by about 50% this year compared with 2021, to between EUR 1.4 billion and EUR 1.5 billion.

    In the old core business "Corona vaccines", demand is falling tremendously. While more than one million doses were administered in mid-December, the number was just over 30,000 doses in April, two-thirds of which were booster or booster vaccines. In Denmark, the Corona vaccination program is even being suspended completely. This business area is expected to remain weak through the fall. However, investors should look to BioNTech's pipeline, as there should be some surprises. Currently, the stock is valued at 2 times the 2022 sales estimate. However, the forecasts could be revised even further by the experts. Re-entry into the share between EUR 115 and EUR 135 should nevertheless be enjoyable with a view to 2023; at its high, the share was just under EUR 400.

    Defence Therapeutics - Platform technology is now patent protected

    The Canadian biotech specialist Defence Therapeutics (DTC) is making a name for itself with a successful patent application. As a publicly-traded research company, it is working to enable the precise transport of antigens or ADCs in the intact form to target cells using its proprietary platform ACCUMTM.

    The US Patent and Trademark Office (USPTO), under patent number US 11,291,717 ('717), has now granted protection to the ACCUMTM technology. This is the Company's proprietary vaccine platform technology for the treatment and prevention of a broad range of cancers and infectious diseases, including SARS-CoV-2 infections. The underlying platform uses components of Accum's proprietary technology docked to the various tumor, viral or bacterial antigens. It improves both humoral and cellular immune responses, which provided strikingly high protection in challenge studies. The patent covers the immunogenic compositions of substances comprising Defence's first and subsequent generations of Accum technologies and the methods for their preparation and use in vaccination and immunotherapy.

    CEO Sebastien Plouffe sees this patent not only as another important milestone in protecting the commercial potential of ACCUM but together with the new patent families currently in preparation, it demonstrates Defence's strong overall commitment to protecting the innovation and commercial potential of its entire product portfolio. The Company aims to become a global leader in vaccine development with the latest achievements - a great focus for the still young Canadian Company.

    The DTC share has followed the price correction in the industry and is now trading at a very attractive level. It is still up 100% from its launch, but the technology has been a year in the making. With a turn in the sector, there should be a jolt to the upside for the stock. Pick up a few pieces based on EUR 2.50.

    Valneva versus MorphoSys - Which biotech stock will take off soon?

    Valneva and MorphoSys are among the best-known losers in the biotech sector after the first 4 months of the 2022 stock market year. Although Valneva was able to perform brilliantly with over 100% plus in 2021 due to the dead vaccine fantasy, the share price nevertheless halved again since December. MorphoSys started to recover in February but only achieved a gain of 25% and ended up below EUR 20 again at the end of last week. What about the crowd favourites?

    French-Austrian vaccine manufacturer Valneva is now presenting its first-quarter figures on May 5 in the midst of the approval process for its COVID-19 vaccine VLA2001. Compared to the same period last year, Valneva is expected to report a drop in sales of about 26%, about EUR 17 million instead of EUR 23.2 million. A total of five analysts expect Valneva to post average earnings of EUR 0.882 per share for the current fiscal year, compared to minus EUR 0.710 per share in the previous year. The annual sales are estimated at EUR 554 million, reflecting the expected sales after approval. In the previous year, EUR 348.1 million were still on the books. Hopes are pinned on high demand for the alternative vaccine. From a chart perspective, the share price should not fall below EUR 12; otherwise, there is a threat of trouble. Continue to observe the development calmly and log in when the momentum rises!

    Also on May 5, the biotech company MorphoSys would like to unveil its first quarter. For the year just started, the Company is targeting further growth with the important cancer drug Monjuvi in the USA. Thus, net product sales are expected to increase to between USD 110 million and USD 135 million. With the development phase now completed, the gross margin for the drug could reach an outstanding 75 to 80% this year. Research and development spending on other projects is again expected to increase at MorphoSys in 2022, with EUR 300 million to EUR 325 million expected. A total of nine analysts expect a loss per share of EUR 10.60 on average for 2022, while a negative profit of EUR 15.40 was reported in the same period last year. In terms of sales, the experts are hopeful to see a 25% increase from EUR 179.6 million to EUR 228.5 million. Currently, the Company has almost EUR 1 billion in cash on the books and is traded on the stock exchange with a price-to-sales ratio of only 3. This is historically favourable for the Munich-based biotech. Only Morgan Stanley and Berenberg still dare to give it a positive buy rating. The share should now slowly see its bottom. Conclusion: Collect at around EUR 20. The pessimism is too great!

    Biotech stocks are popular but volatile. Performance depends on development successes and approval processes but also the interest rate landscape. Interest rates rose significantly recently, which put the sector under considerable pressure. In the now bombed-out environment, we prefer the favourable BioNTech and MorphoSys as turnaround candidates. Defence Therapeutics could face a significant re-rating with success stories in 2022.

    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

    André Will-Laudien

    Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.

    About the author

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