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October 5th, 2023 | 07:10 CEST

Buy biotech stocks now? BioNTech, Morphosys and Cardiol Therapeutics in check

  • Biotechnology
  • Pharma
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In times of high interest rates, the wheat is separated from the chaff, even in the biotech sector. After all, young research-based companies, in particular, have a high demand for capital. But at the moment, all companies are being lumped together. This opens up clear buying opportunities because some have full coffers. BioNTech belongs to this group. Thanks to the COVID-19 vaccine, research is fully financed. The same goes for Cardiol Therapeutics. The share of the Canadians is one of the summer's high flyers, and the recent price setback offers an entry opportunity. The analysts' price target is over 300% above the current level. And what do analysts say about the German biotech veteran Morphosys? Goldman Sachs has tripled its price target.

time to read: 4 minutes | Author: Fabian Lorenz

Table of contents:

    Cardiol Therapeutics: Full cash register and 300% potential

    In the stock market, the following has been true in recent days: if you are not making money right now, you get sold off. This sweeping approach can offer opportunities if one takes a closer look. Take Cardiol Therapeutics, for example: The Canadians are focused on research into diseases of the cardiovascular system. They had about CAD 45 million available for this at the end of the 2023 half-year, enough to fund their research until 2026. In addition to successful research, the financial cushion is a key driver of the stock's strong performance in the current year. In the meantime, the share price had more than doubled to EUR 1.08. The current setback to just over EUR 0.70 is a buying opportunity, given the analysts' price target.

    Thus, the experts of First Berlin have confirmed their buy recommendation for the share of Cardiol Therapeutics after the publication of the half-year figures. The price target is EUR 3.30 and thus more than 300% above the current level. In the analysts' view, Cardiol is on track with the development of its CardiolRx™ for the treatment of recurrent pericarditis (RP) - an inflammation of the pericardium - and acute myocarditis (AM) - an inflammation of the heart muscle. In RP, patient recruitment is currently underway in the US. Analysts expect a positive surprise before the end of the year. Provided the efficacy results for the first 50% of patients are positive, Cardiol management is expected to meet with the FDA as early as the fourth quarter of 2023, which is now underway. At that point, the Company hopes to convince the FDA to allow it to begin the Phase III trial immediately. This would be a milestone for the Company and could put Cardiol shares in a new league.

    For acute myocarditis, regular newsflow can be expected in 2024. Therefore, the analysts consider Cardiol Therapeutics to be "significantly undervalued". Those who want to get their own picture of the management and the research pipeline should register for the 8th iif digital investor conference. On October 10, 2023, Cardiol will present live, as will well-known German companies K+S, 3U Holdings and Deutsche Rohstoff. Click here to register for free.

    BioNTech: Analysts Negatively Surprised by Q2

    Among the biotech companies with full coffers is, of course, Germany's BioNTech. The Mainz-based company had more than EUR 14 billion in cash at the end of the first half. Nevertheless, the share price performance in the current year is significantly weaker than that of Cardiol Therapeutics. Yet BioNTech sees itself on a good path. "We are moving our oncology pipeline into more advanced stages of development, have started a pivotal Phase III trial and are preparing further studies with regulatory potential in the coming months," said CEO Ugur Sahin. "At the same time, we are expanding our infectious disease vaccine pipeline to meet global health needs and are developing a COVID-19 monovalent vaccine adapted from Omicron XBB.1.5, which is expected to be available for the upcoming fall-winter season, subject to regulatory approvals."

    Analysts, however, see little upside potential at this time. Jefferies recommends holding the stock. The price target is USD 111. They say it is unlikely that a major COVID-19 wave will occur in the fall. This suggests that the revenue potential for BioNTech is limited. Deutsche Bank had previously confirmed its "Hold" rating for BioNTech shares. The price target is USD 120. The loss of EUR 190 million in the second quarter has negatively surprised analysts.

    Morphosys: Target price tripled, but...

    At Morphosys, Goldman Sachs is at least less negative. The analysts have upgraded the shares of the German biotech veteran from "Sell" to "Neutral". The price target was almost tripled: from EUR 12.50 to EUR 33.50. The reason for the upgrade: Better prospects for the upcoming data on the compound pelabresib for the treatment of myelofibrosis and its sales potential.

    While investors and analysts are still waiting for the new data on pelabresib, Morphosys has published news on another compound. For example, tulmimetostat for the treatment of uterine cancer has received Fast Track status from the FDA. This status is granted to facilitate and expedite the development and testing of compounds that could potentially treat serious conditions or address unmet medical needs. Tulmimetostat is expected to improve upon first-generation EZH2 inhibitors by providing greater efficacy, longer target residence time and longer half-life to enhance anti-tumor activity.

    Dr. Tim Demuth, CRO of Morphosys, commented, "The preliminary results from our Phase I/II study with tulmimetostat are very promising. We will generate further data from this study across tumor types that will inform our future development plans for tulmimetostat, both as a monotherapy and in combination with other treatments." Tulmimetostat is the third Morphosys clinical program to receive Fast Track designation from the FDA. Pelabresib, a BET inhibitor, received Fast Track designation in 2018 for myelofibrosis and tafasitamab, a CD19-targeting immunotherapy, received this designation in 2014 for relapsed or refractory diffuse large B-cell lymphoma.

    Uncertain times are exciting times. They always present investors with opportunities. High interest rates can create problems for unprofitable companies, but they do not have to. In particular, Cardiol Therapeutics and BioNTech have sufficient funds to consistently advance their research. At the same time, Cardiol is the undiscovered gem and is convincing with relative strength in the current year. Morphosys is, at least from a chart point of view, much more seriously affected.

    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

    Fabian Lorenz

    For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.

    About the author

    Related comments:

    Commented by Fabian Lorenz on November 30th, 2023 | 07:10 CET

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