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May 18th, 2022 | 12:48 CEST

Biotech stocks: BioNTech, XPhyto Therapeutics, Novavax, Valneva - Crashing, the choice remains difficult!

  • Biotechnology
  • Covid19
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For pure play vaccine companies, the environment is getting tougher. On the one hand, the winter is over, and on the other, Corona has lost its horrors, especially as the Omicron variant presented like a cold for most infected people. 77.6% of the German population have received at least one vaccination dose so far. 63.1 million people have thus already received basic immunization, and 49.5 million people went for another shot. Only 4.6 million people, or 5.5%, have already received a second booster vaccination. 18.6 million people have not been vaccinated, or 22.4% of the population. With currently only 4,000 vaccinations per day, the many millions of vaccine doses ordered are likely to remain on the shelf. For vaccine manufacturers, future orders will plummet. Which Company has a plan B in place?

time to read: 5 minutes | Author: André Will-Laudien
ISIN: BIONTECH SE SPON. ADRS 1 | US09075V1026 , XPHYTO THERAPEUTICS | CA98421R1055 , NOVAVAX INC. DL-_01 | US6700024010 , VALNEVA SE EO -_15 | FR0004056851

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


    Novavax - At least it was in the black

    US biotech Novavax reported first-quarter 2022 revenue of USD 704 million, up 57% YOY. The bottom line was quarterly earnings per share of USD 2.66, compared to a loss of USD 3.05 in Q1-2021. Research and development expenses fell from USD 593 million to USD 383 million, while selling, general and administrative expenses climbed from USD 63 million to USD 96 million. The numbers primarily reflect developments in the COVID-19 vaccine Nuvaxovid. After all, cash and cash equivalents still add up to USD 1.57 billion on the balance sheet.

    Approval in India could now become a decisive factor in the second quarter. There, Novavax and its partner Serum Institute of India have received emergency approval for the vaccination of adolescents between the ages of twelve and 18. For the full year 2022, the vaccine manufacturer still expects sales of between USD 4 and 5 billion. There is no longer any sign of the euphoria around the biotech share on the stock market, and the price fell by 58% within 12 months. We had advised an exit at around EUR 80; at EUR 47, the share is now valued at a price/sales ratio of only 0.8. The low was EUR 37 in May, and the high was reached in the fall of 2021 at EUR 232. Speculatively interesting!

    XPhyto Therapeutics - Progress in TDS platform technology

    XPhyto Therapeutics has moved away from the price war in the PCR testing business and is now turning its attention to its otherwise very promising pipeline. The Canadian Company is a so-called life sciences accelerator focused on investing in next-generation drug delivery, diagnostics, and new pharmaceutical compounds. Current research is in the areas of transdermal and orally dissolvable drug formulations, rapid and cost-effective testing for infectious diseases and oral health, and the manufacturing, standardization and evaluation of psychedelic agents for the treatment of neurological disorders.

    Currently, the Company reports progress in the product development of its rotigotine transdermal patch (TDS), including results from its most recent human cadaver skin permeation study, which was first announced in April 2022. The Company's rotigotine patch is based on TDS platform technology developed by its German subsidiary Vektor Pharma. A study on this was successfully conducted back in 2021. While the Company is now advancing its rotigotine TDS product towards commercialization, its subsidiary Vektor is currently focused on optimizing the formulation, including the recently completed skin permeation study on human cadaver skin.

    The study was conducted by Vektor Pharma to compare the absorption of rotigotine between two potential drug formulations and the branded product. The study results were positive, as both new formulations showed absorption within the target range of the generic drug formulation (+/-20%) in all three skin samples. XPhyto's rotigotine transdermal product is a standalone product based on Vektor's platform technology and represents a scalable opportunity for additional TDS drug development and manufacturing programs.

    According to Research and Markets, the global transdermal skin patch market had already reached a value of nearly USD 6.5 billion by 2020 and is expected to grow to approximately USD 20 billion by 2028, according to Kuick Research.

    XPhyto is, in our opinion, in a good position to enter this market and, after a long stretch of losses, is valued at only EUR 38 million. However, we believe the chart has turned around at around EUR 0.62 and now looks promising. Courageous biotech professionals should buy the stock.

    BioNTech - Can a bottom be reached here?

    Investors still have high hopes for BioNTech's pipeline. After presenting passable figures for the first quarter, the share can at least hold its ground in the current turmoil of biotech downturns. Currently, the use of the vaccine "Comirnaty" is being discussed in China. There, once again, cities with millions of inhabitants are being sealed off, and people are being locked up again, even though the "zero-covid strategy" has failed in the past COVID waves.

    With the Corona vaccine, the Mainz-based biotech company has not only led its first substance to approval but has also been able to close the year 2021 with a full EUR 10 billion in profits. Now the financial basis exists for the further development of the existing pipeline and the exploration of new topics. In the coming years, we expect a few more surprises, and COVID-19 is still very well positioned internationally. Experts estimate the P/E ratio at a low 4.5, rising to around 7 by 2023. Sales are expected to fall to around EUR 16.6 billion, but that would not be a disaster. The US bank JPMorgan sees a price target of USD 183 and rates it as "Neutral". BioNTech remains a standard stock with good long-term opportunities.

    Valneva - Sellout after cancellation by the EU Commission

    The share of the French-Austrian biotech company Valneva SE has become one of the best vaccine stocks in 2021, although no major market launch has yet taken place. Over the year, the stock climbed 100% from EUR 12 to EUR 24. However, at the beginning of the week, the stock plummeted to below EUR 9. What had happened?

    Although demand for Corona vaccines had been hovering near zero for a while, some investors still had high hopes for Valneva's stock. But now, in 2022, disillusionment is setting in. The EU Commission has exercised its right of withdrawal due to the delays in approval. It was linked to the fact that there would be no marketing authorization by the end of April, and this is precisely what has now happened.

    The approval process itself recently came to a standstill again after the European Medicines Agency (EMA) asked Valneva unanswered questions. The Company answered and submitted these almost three weeks ago, but a quick decision is unlikely. However, the vaccine manufacturer has not given up yet. A different strategy is now being pursued for the future. Instead of selling vaccines directly to the EU, it is to be offered to the member states - an attempt! The stock should not be touched until the storm surrounding the EU cancellation has died down and the approval has been obtained.

    Biotech stocks have always been a hot potato. With the COVID pandemic, there were winners, losers and high hope stocks. Now, two years after the pandemic outbreak, it remains to be seen which management can pursue the correct approaches. BioNTech remains a good standard stock. Novavax and Valneva are interesting but very speculative. XPhyto can continue to grow with its TDS platform technology; the turnaround is already within reach here.

    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

    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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