10. May 2021 | 09:14 CET
CureVac, Cardiol, MorphoSys - Huge sensation in the fight against Corona!
The biotechnology sector gained tremendous attention since the start of the Corona pandemic. With vaccine makers such as BioNTech or Moderna, investors have achieved returns beyond 1000% since the end of 2019. Currently, drug research against Sars-CoV-2 is in full swing. More effective and safe drugs along with vaccination and testing strategies are critical to managing the pandemic. For investors, this meant a second chance at the next tenbagger.
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ISIN: NL0015436031 , CA14161Y2006 , DE0006632003
Blockbuster potential from Canada
The biotech sector is on the move as rarely before. In addition to disproportionate share price increases, there have been several takeovers worth billions in recent months. At the beginning of the year, GW Pharmaceuticals sold for USD 7 billion, and recently Roche paid USD 1.8 billion for GenMark Diagnostics. With a stock market value of EUR 57.35 million, the biotechnology Company Cardiol Therapeutics is roughly on the level held by vaccine manufacturers in mid-to-late 2019. At the same time, the multi-product Company from Canada is already a step ahead compared to the BioNTechs and Modernas of the time.
Cardiol's research is focused on producing pharmaceutical cannabidiol (CBD) products and the development of innovative therapies for heart disease, including acute myocarditis and other causes of heart failure. Approximately 40% of all deaths in Western countries are due to cardiovascular disease. Here, the active ingredient CardiolRx, which can be administered both orally and subcutaneously by the patient, has blockbuster potential. The Phase I study has already been completed without any side effects in the human body.
The study also showed, among other things, a significant reduction in inflammation and an improvement in endothelial dysfunction. Currently, Cardiol Therapeutics is recruiting 422 patients for a double-blind, placebo-controlled Phase II/III study. 211 patients will be treated with the drug CardiolRx and 211 patients will receive a placebo preparation. The time sequence of observation for each of the primary efficacy aspects will be observed over 28 days. Observations will include overall mortality in both groups, intensive care treatment and use of ventilators, if applicable, cardiac complications such as myocardial infarction, heart failure and stroke.
Pandemic as a door opener
The start of the study could help Cardiol Therapeutics make a breakthrough. CardiolRx's anti-inflammatory and cardioprotective properties are being investigated in COVID-19 patients with a high risk of severe cardiovascular complications. Given that possible cases of myocarditis have recently emerged in BioNTech vaccines, industry attention is likely to be increasingly focused on the study results. The capital increase carried out last week shows that the Canadians have slipped into the focus of international investors, as it was oversubscribed several times within a few hours. Due to the high demand, the Company increased the placement from CAD 15 million to CAD 22 million. The issue price was EUR 2.45 per share. Cardiol Therapeutics will use the additional proceeds for further research and clinical development programs and advance them faster. The share is currently trading at EUR 2.18, well below the issue price of the new shares. In addition to the new investors, the analysts at Leede-Jones-Gable are also more than euphoric and see a target price of CAD 12.50 based on the expected sales. From the current price level, this would mean an increase of more than 380%. We see Cardiol Therapeutics as an attractive long-term player in a multi-billion dollar market. However, one should not disregard the risk of investing in biotech companies that are in an early development stage.
Not much recovery after the shock
This week was not an easy one for vaccine developers. At the beginning of the week, the overall market was already under pressure due to statements by US Treasury Secretary Janet Yellen. Even more fatal, however, was the announcement by US President Joe Biden. The United States of America joins a group of states demanding that vaccine manufacturers waive their patents to boost vaccine production. The result was a rapid and extremely painful slide in the share price. As a result, the CureVac share price plummeted from EUR 110 to below EUR 75. Compared to industry peers such as BioNTech, who were able to iron out their losses largely, the Tuebingen-based Company remained at a low level. The share price could be boosted by the test results expected for the beginning of June and a possible application for approval of the vaccine. Speculatively, initial positions can be built up at the current level.
In the red
The biotech Company MorphoSys moved into the red in the first quarter of 2021. The operating loss was just under EUR 30 million after a profit of EUR 203 million in the previous year. However, at the time, there was a significant one-off payment under a collaboration and licensing agreement with Incyte. Sales also slumped 81% year-on-year to EUR 47.2 million. The net loss per share was EUR 1.27.
Nevertheless, the Martinsried-based Company confirms its forecast for the year. Group sales are expected to be between EUR 150 million and EUR 200 million. Operating expenses are expected to total between EUR 355 million and EUR 385 million, with 45 to 50% of expenditure going into research and development.