24. June 2021 | 12:52 CET
CureVac, Cardiol Therapeutics, Bayer - Where we go from here
Biotechnology has an extraordinary impact on our lives. The perception and appreciation of the future industry of the 21st century has increased significantly in the past year. All thanks due to the race for vaccines against the coronavirus. Yet investing in a biotechnology startup requires patience and a willingness to take risks. The risk that an active ingredient will not work in the end, as the example of CureVac shows, is high. On the other hand, however, investors have the opportunity to multiply their invested capital in the event of successful approval.
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ISIN: CUREVAC N.V. O.N. | NL0015436031 , CARDIOL THERAPEUTICS | CA14161Y2006 , BAYER AG NA O.N. | DE000BAY0017
Significant blockbuster potential
Since March of last year, Corona has been the dominant topic in our daily lives. In contrast, other, more serious diseases took a back seat. For example, few people are probably aware that cardiovascular disease accounts for about 40% of all deaths in Western countries. Cardiol Therapeutics has set its sights precisely on this billion-dollar market. The Company is focusing on manufacturing pharmaceutical cannabidiol (CBD) products and developing innovative therapies for heart disease, including acute myocarditis and other causes of heart failure. The active ingredient CardiolRx, which can be administered orally as well as subcutaneously to patients, has already passed Phase 1 trials with no side effects. In addition, a significant reduction in existing inflammation and an improvement in endothelial dysfunction was observed.
Now, the critical Phase II/III trial involving 422 high-risk patients hospitalized in conjunction with Covid-19 is about to begin. A total of CAD 22 million was raised from the capital market in a capital increase to fund the cost-intensive research work. The placement was several times oversubscribed and shows the attention Cardiol Therapeutics already enjoys on the capital market. The issue price was CAD 3.60 per share. In addition, the Canadian Company recently filed for listing on the NASDAQ Capital Market.
The share is currently quoted at CAD 3.08. The analysts of GBC Research see Cardiol Therapeutics as a clear buy candidate and assigned a price target of CAD 15.77 in the study published yesterday, which would mean a fivefold increase of the share price. Thus, Cardiol Therapeutics is a leader in therapeutic trials with cannabidiol to exploit the great opportunities in inflammatory heart disease, they said. Experts project substantial cumulative profits of around CAD 3 billion over the next 10 years with an average margin of 85%.
Apples compared to oranges?
The drama is well known. For a long time, vaccine maker CureVac took its time researching its first-generation vaccine, CVnCov, to set itself apart from the faster competition from BioNTech, AstraZeneca and Moderna. The advantages in cooling, longer shelf life or fewer side effects were apparent. Then came the shock at the interim analysis, which showed an efficacy of only 47% against Covid-19 disease "of any severity." Although the Tübingen-based Company plans to continue testing and complete data analysis from the final study phase in the next 3 weeks, efficacy comparable to that of the competition would border on miraculous.
The longer lead time that CureVac needed to be compared to others is now falling on the Company's feet. According to its CEO, Franz-Werner Hass, the vaccine is unfairly criticized. No other vaccine has been tested on so many virus variants, 29 in all. The original virus, the wild type, on the other hand, hardly plays a role anymore. "The figures on the efficacy of the other vaccines would probably look different if their studies had been conducted at a later date."
From a technical perspective, the 40% downturn could be followed by a bottoming out at a low level. The sell-off to USD 47.12 was followed by a brief recovery move to USD 68.36 but was halted by further selling on high volume. Yesterday, the price was trading at USD 58.10, just above the support zone at USD 56.90. If this breaks, the USD 50 mark would be the target. Furthermore, if no positive corporate news hits the ticker in the next few weeks, we believe the all-time low of USD 43.0 marked last year, is also in danger.
Despite the setback, the pharmaceutical group Bayer intends to continue its cooperation with CureVac and support the Tübingen-based Company regarding logistics and distribution. In addition, the planned construction of a production facility for the CureVac vaccine in Wuppertal is also being pushed ahead. Production is scheduled to start at the end of the year. From 2022, 160 million vaccine doses per year are to be produced there.
By contrast, the Leverkusen-based Company received positive news from Asia. The Japanese Ministry of Health, Labor and Welfare approved the drug Verquvo for the treatment of patients with chronic heart failure. The drug was developed in collaboration with US pharmaceutical giant Merck & Co. Bayer Pharma CEO Stefan Oelrich expects peak annual sales of around EUR 1 billion for the drug, with revenues to be shared between the two partners.
Meanwhile, the glyphosate litigation continues to weigh on Bayer's share price. On Tuesday evening, a hearing was held in the appeal proceedings of one of the three glyphosate lawsuits that Bayer lost. In it, a judge sharply criticized the lawyer for Bayer's side for documents filed in connection with the hearing. As a result, the pharmaceutical giant's stock temporarily fell below the critical support level of EUR 50 but recovered in the course of trading.