Biotech in the scope: BioNTech, XPhyto Therapeutics, MorphoSys, Valneva - The cards are reshuffled!

BioNTech - New research capacities in Australia

The BioNTech share was one of the shooting stars in the pandemic stock market until the beginning of 2022. It marked its high in the summer of 2021 at just under EUR 385. The value has now fallen by 70% but has recently come out of the cellar again. After all, autumn has arrived and many experts expect the pandemic to return. But Corona vaccines are not the only arrows in the quiver of the Mainz-based Company!

After the success with its COVID-19 preparation Comirnaty, the Mainz-based Company BioNTech is further expanding its international presence. One of the new focal points is the search for cancer therapies in Australia. The first steps are being taken with the establishment of a research center, and a production facility, as recently agreed with the state of Victoria. The basis is a strategic cooperation in developing potential mRNA-based vaccines and therapies against various types of cancer. A jointly operated research center in Melbourne is in the pipeline, which will primarily support the scientists in translating their research projects into clinical development. According to management, BioNTech's pipeline currently includes a total of 18 product developments in 23 ongoing clinical trials. Additional sites in Africa and Singapore have already been announced.

BioNTech, more than any other research company, can still draw on the billions in profits from the COVID pandemic, so the investment mood will continue for a while. The stock reached its temporary low of EUR 111 in March and has now managed to bounce back by about 25%. With a current 2022 P/E ratio of around 8, the stock is not expensive, but what the share price is missing is a new blockbuster product. Perhaps this news will soon come from the oncology sector.

XPhyto Therapeutics - After the sell-off, now about to jump?

XPhyto recently reported in a letter of intent to get on board with a US-based thin film drug manufacturer. Since this news, the share price has increased by 50%, but what is behind this? It is about leveraging potential business synergies to manufacture, import, export and distribute joint ODF preparations. To this end, a state-of-the-art, FDA-certified pharmaceutical manufacturing facility is available in the US, led by a team with more than 50 years of experience. A yearly production capacity of more than 50 million units of XPhyto's dissolvable biosensor (ODF) products is on the cards. The partner also has a portfolio of OTC and FDA-approved products currently already sold in the US market.

On top of this, there is news from the German 100% subsidiary Vektor Pharma TF, which is focused on the development of its rotigotine transdermal patch (TDS). Rotigotine is a non-ergoline dopamine agonist approved in Europe and the United States for the treatment of Parkinson's disease and restless leg syndrome (RLS). Over the past 90 days, Vektor has focused on optimizing its rotigotine TDS formulation, bringing several novel but related formulas into development. After several trials using mouse skin samples and human tissue, the rotigotine TDS formulation is complete. The companion study has been completed, and analytical results are expected to be finalized and announced in the next few days.

According to Wissen Market Research, the market potential for rotigotine patches is approximately USD 518 million to USD 766 million by 2030, with more than 10 million people already on therapy for PD, and the trend is upward. Research and Markets calculated a volume in 2020 of almost USD 6.5 billion for the total global market of transdermal skin patches. Kuick Research estimates this figure to rise to USD 20 billion by 2028. XPhyto's stock is already in uptrend mode. If the Vancouver-based bio-accelerator captures just 0.5% of the market, annual sales would be around USD 70 million to USD 100 million. Therefore, the current valuation of EUR 32 million is almost below ground.

MorphoSys versus Valneva - Who has what in the quiver?

Opinions are divided on MorphoSys and Valneva. While some short-sellers are already at work at the biotech specialist from Martinsried near Munich, the Valneva share has gone into a tailspin due to the failure of its COVID-19 vaccine. MorphoSys is still reeling from the far too-expensive takeover of Constellation Pharma, which caused its market value to plummet by over 80%. It is currently worth taking another look at both companies, which are valued at market capitalizations in the range of EUR 600 to 750 million.

Valneva is not primarily about cancer. The French-Austrian vaccine manufacturer develops, produces and markets vaccines against all kinds of infectious diseases. Due to significantly lower EU orders, the Company has already suspended its own vaccine production for COVID-19. The Company raised another EUR 103 million via a capital increase to further develop its extensive pipeline. However, Goldman Sachs turned negative and downgraded the stock from Buy to Neutral with a price target of EUR 8. At the current price of EUR 6.15, this still represents a potential of around 30%.

The situation is not much better for the MorphoSys share. After some buybacks by short-sellers, the stock returned to the EUR 21.50 to EUR 23.50 zone, but in the last 2 weeks, the value crashed back to EUR 18.50. Now the share price is not far from its sell-off level of around EUR 16. The Company's main focus is now on Alzheimer's research, but the blood cancer drug Monjuvi may also gain significant traction. CEO Jean-Paul Kress is optimistic: "We want to have two cancer drugs on the market in 2025." That does sound very promising. From a chart perspective, it will be positive if the share price can sustainably overcome EUR 23.70; new quarterly figures will be available in just over 5 weeks on November 16. Both stocks have earned a place on the watch list because of their respective pipelines.

The biotech sector is particularly vulnerable in volatile markets. At present, of course, the high interest rate is also a burden, which puts the present value of future cash flows down. BioNTech is certainly interesting for a buyback after the current storm. MorphoSys and Valneva remain highly speculative. In the case of XPhyto Therapeutics, the stock market train seems to have already left the station again.