12. October 2021 | 12:32 CET
Defence Therapeutics, BioNTech, Valneva - When will things pick up again?
Biotechnology companies can experience a significant, sometimes even exponential, increase in value virtually overnight with a new, successful active ingredient. BioNTech is a prime example of this. But not every research effort leads to success, and CureVac shareholders can tell you a thing or two about that. Canada's Defence Therapeutics and Valneva have innovative research pipelines. Where should investors consider investing now?
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ISIN: DEFENCE THERAPEUTICS INC | CA24463V1013 , BIONTECH SE SPON. ADRS 1 | US09075V1026 , VALNEVA SE EO -_15 | FR0004056851
Defence Therapeutics - Further significant progress
Biotechnology Company Defence Therapeutics focuses on therapeutic methods to fight cancer and the development of vaccines against infectious diseases. The Canadians are pursuing an innovative approach based on the proprietary Accum platform. ADC (Antibody Drug Conjugates) preparations are currently being used to develop the next generation of vaccines. This approach is particularly promising for cancer therapy, as it could shorten treatment duration and reduce side effects while increasing efficacy.
The Company has made significant progress in recent months. The developed vaccine, AccuVAC-PT001, showed serum cross-reactivity with the spike protein of several SARS-CoV2 variants in laboratory tests in isolated vaccinated animals. In addition, it showed the highest efficacy with the Delta variant. To strategically optimize clinical trials, the biotechnology Company recently brought on board Biopharma Excellence, a subsidiary of Pharmalex GmbH, a global pharmaceutical consulting firm.
Recently, the Canadians announced completing all necessary steps to prepare for a pre-IND meeting to initiate a Phase I melanoma trial using the Company's dendritic cell (DC)-based cancer vaccine candidate, AccuVAC-D002. According to a Fortune Business Insights report, the skin cancer treatment market is expected to reach approximately USD 15 billion by 2027. If Defence Therapeutics' innovative approach becomes established, the stock has room to run. The market capitalization is currently at CAD 223 million.
BioNTech - Bottoming out?
BioNTech has written an impressive success story in recent months. Alongside the US Company Moderna, the Company has established itself as one of the world's two leading Corona vaccine manufacturers based on so-called mRNA (messenger RNA, ribonucleic acid). In this approach, only a messenger molecule is administered instead of a molecular active ingredient. The messenger challenges the body's immune system to build up an effective defense.
The share price sprinted to a good USD 450 and is currently trading just below the USD 250 mark. The Company is thus valued at around USD 60 billion. Based on average analyst estimates for this and the next fiscal year, the stock is extremely moderately valued with a P/E ratio of about 6 in each case. In our opinion, it is only a matter of time before the share price rises significantly again. The story is intact, and the pandemic will continue to accompany us for some time to come, making regular booster shots necessary. Thus, the current price weakness offers an excellent risk-reward ratio.
Valneva - Theory and practice
In contrast to Moderna and BioNTech, the French-based Company takes an entirely different approach to develop a corona vaccine. Valneva resorts to the method of so-called dead viruses, which has been established for many years. This vaccination method has long been used successfully against hepatitis B, polio, tetanus and diphtheria. The final studies are currently underway, and Valneva expects to receive emergency approval for the vaccine this year. A few weeks ago, the share price came under significant pressure because the British government unexpectedly canceled a previously placed major order. In perspective, the approach with dead viruses has a legitimate chance of success.
Furthermore, vaccination critics who reject the Corona vaccine due to a lack of long-term experience could perhaps be swayed to change their minds in this way. The Company is currently valued at EUR 1.3 billion. Analysts believe in its success and forecast black figures for the next fiscal year, which would give the stock a single-digit P/E ratio at the current price level of around EUR 12.
The biotech stocks presented offer a favorable risk-reward ratio. Whether it is the high flyer BioNTech, whose shares are currently correcting, the turnaround stock Valneva or the innovative Defence Therapeutics is ultimately a matter of taste. If the Canadians make further progress, this should be reflected positively in the share price.