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May 10th, 2022 | 12:38 CEST

Biotech stocks: Defence Therapeutics, BioNTech, BASF - Advantage through platform technology

  • Biotechnology
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Large corporations such as BASF were previously considered safe portfolio investments. But the war in Ukraine is throwing a spanner in the works. Force majeure, such as war, can cause deals to fall through without the responsibility of the companies involved. How should investors react now? Which portfolio strategy can keep up with the high volatility of the markets? Newcomers like BioNTech face oversupply and have to accept shortages. A focus on emerging markets seems to be the solution for their growth strategy. But there are subtle differences in the vaccines business, as Defence Therapeutics proves.

time to read: 6 minutes | Author: Juliane Zielonka

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


    Defence Therapeutics - One step ahead of the competition through platform technology

    Human papillomavirus (HPV) is transmitted from person to person. Almost everyone becomes infected with it at some point in their lives. The often undetected infection can lead to possible cancer. Approximately 7,850 women and men are affected by HPV-related tumors each year in Germany. In women, these viruses can trigger cervical cancer. This means that for every 1,000 women, 3 develop this type of cancer and can die from it. In the meantime, an HPV vaccination has become established, especially for younger women. The vaccine is injected by syringe. But the supposed safety is deceptive because the vaccines, together with the body's own immunization, do not protect against all infectious HPV viruses. There is still a risk of infection. The primary reason for transmission is, metaphorically speaking, the most beautiful pastime in the world. And who would want to do without it. So the vaccine needs to be constantly developed to protect against novel HPV virus strains. Based on 2019, the global HPV vaccine market is estimated at USD 3.80 billion. The growth forecast through 2027 is an estimated USD 12.69 billion with a CAGR of 16.3%.

    One Company with strong positioning in this space is Defence Therapeutics. The Canadian biotech company specializes in developing vaccines against infectious diseases such as HPV. Therapeutic methods to combat cancer are also part of its portfolio. Unlike its big pharma competitors, Defence Therapeutics relies on platform technology from the outset to complete relevant clinical tests and studies much faster than traditional pharmaceutical and biotech companies. That gives them a significant head start in the development phase and enables them to scale more quickly than companies that have not yet taken the transformative step towards digitization. The increasing number of clinical trials also proves that new forms of therapy are urgently needed for patients. Innovative biopharmaceuticals are key to this. Biotech companies can treat specific diseases much more precisely than traditional pharmaceutical companies, thanks to their advanced knowledge of human DNA. The industry is achieving an annual growth rate of 15 to 20%. More than 700 biotech companies are now listed on international stock markets. Defence Therapeutics is an opportunity for investors who would like to delve deeper into particular topics and contribute to using their investment to help numerous people protect themselves against cancer or push targeted treatments that only treat the disease and not the entire organism.

    BioNTech - Sales decline expected in the fall

    Health Minister Karl Lauterbach is warning Germans of a tough pandemic in the fall. For him, COVID-19 is far from over. While other countries are already loosening up, and South Africa, for example, has made masks mandatory only indoors, Lauterbach continues to back diligent vaccination coverage and boosters for the population.

    German biotech company BioNTech reported first-quarter sales of EUR 6.4 billion, more than triple the figure for the same period last year. Also, more than the average analyst estimate of EUR 4.6 billion. The cooperation with the US company Pfizer is paying off. Pfizer and BioNTech signed orders for around 2.4 billion doses for 2022 by the end of April. By the end of the year, the two will supply more than 2 billion vaccine doses to low- and middle-income countries. Whether Germany will again see an increase in vaccinations remains questionable. For one thing, this would mean citizens would get their fourth dose. The more vaccine boosters are given, the more susceptible the body's immune system is to attack. In contrast to the one-time HPV vaccination, permanently putting the human organism into a new-immunization status makes a difference. Even if a current health minister sees it differently, investors should keep an eye on the global distribution of vaccines.

    Covid often hits the poorest of the poor, who live together in close quarters, and may not have the hygienic standards such as running water or sanitation. But a pandemic can only be solved globally. While countries like Germany have to dispose of the first pallets of unused BioNTech vaccines as citizens tire of the constant scare scenarios in media, in third world countries, the vaccine is just being established. And BioNTech has other issues in the pipeline, so investors should keep their eyes on the big picture when it comes to the stock and their investment.

    BASF - Investing in the future to safeguard production

    In business circles, a 'force majeure' describes an uncontrollable event such as wars, labor strikes or natural disasters. Force majeure also means for joint ventures that neither party is liable. They are not to blame if a 'force majeure' makes it difficult or impossible to conduct regular business.

    BASF is currently experiencing this in plastics production in emerging markets. The Ludwigshafen-based Company explains the force majeure to the broader value chain with polyether polyols and PUR systems in the EMEA region. Polyurethanes - abbreviated PUR - are remarkably versatile plastics, as polymers such as polyesters, polyethers, polybutadienes, polycaprolactones and many other polymers can be linked together by the polyurethane reaction. BASF is unable to take orders or fulfill orders for May or June. The 50:50 joint venture BASF Dow HPPO Production in Antwerp is affected, and production is coming to a standstill.

    In general, investors at BASF are very hesitant, which is mainly explained by the unclear situation with gas supplies. Due to the Russia-Ukraine conflict, supply is on the line. But what may not work on this continent can lead to growth in the United States. BASF's California Research Alliance is activating 100 research projects to address key sustainability issues, continuing to build an innovative future. Research projects in the areas of new functional materials, catalysis, chemical synthesis, engineering processes, life sciences, formulations and digitalization have resulted in more than 30 patent applications and nearly 70 peer-reviewed articles. To continue this successful research approach, BASF and the University of California, Berkeley (UC Berkeley) have signed another five-year agreement. Business as usual is faltering, which makes it all the more important to invest in research and development so that the Group can achieve the digital turnaround in the coming years.

    Investors should look calmly at the share price movements. After all, such a large company may be 'too big to fail'. It takes time to get a historic company on track for the future, and a war in particular, as a force majeure, may be a catalyst for bad business for some companies. A BASF share may be a sensible addition to one's portfolio right now.

    Large corporations like BASF face the challenge of digitizing their structures and maintaining production at previous joint ventures. BASF is currently experiencing what force majeure means for listed companies, and so are its shareholders. New innovative paths are leading to new business areas, with a particular focus on sustainability. High one-time demand does not justify stock market success. Investors in BioNTech are becoming aware of this. An oversupply of the vaccine in some countries leads to a decline in sales. A strategy for emerging markets is needed here to expand the business further. The vaccine must also be adapted to the new Corona variants. Defence Therapeutics is also undertaking this adaptation. Unlike the Covid vaccine, an HPV vaccine is administered only once. The Company relies on platform technology to save valuable time in research. In this way, investors benefit from an agile company, which implements the real patient benefit in its corporate vision and thus generates real added value with lean structures.

    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

    Juliane Zielonka

    Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.

    About the author

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