September 15th, 2022 | 13:35 CEST
Fighting Cancer: BioNTech, Defence Therapeutics, Valneva, MorphoSys - Which biotech stock is ahead in Biden's Moonshot?
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"[...] Accum™ helps us target active ingredients precisely to the origin of infections or diseases. [...]" Sébastien Plouffe, CEO and Director, Defence Therapeutics
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
BioNTech - Already seeing initial successes in the field of pancreatic cancer
The International Agency for Research on Cancer estimates that about 9.96 million people worldwide died from cancer in 2020. The number of new cancer cases in the same year was around 19.3 million, and the trend is rising. According to the forecast, this figure could increase to about 16.3 million per annum by 2040. With approximately 1.76 million deaths, lung cancer claimed the most lives worldwide, followed at a considerable distance by colorectal and gastric cancers, with around 881,000 and 783,000 deaths, respectively. Together with liver and breast cancer, these five cancers accounted for more than half of all cancer-related deaths worldwide.
The Mainz-based biotech company BioNTech reports tentative success for an mRNA therapy against one of the deadliest types of tumors, pancreatic cancer. The therapy, used after surgical removal of the tumor and in addition to chemotherapy, significantly reduced the recurrence rate in 8 of 16 patients within 18 months, BioNTech reports after initial testing. "With less than 5% of patients responding to current treatment options, pancreatic cancer is one of the cancers with the highest unmet medical need," says Özlem Türeci, co-founder and chief executive of BioNTech.
BioNTech shares peaked at around USD 464 last August, and since then, the stock has lost nearly 75% of its value at its peak. As another COVID fall approaches, vaccine sales could pick up again at the Mainz-based Company, but the low vaccine uptake speaks otherwise. However, given the current low valuation with a P/E of 8.5 for 2023, surprises could be lurking from another product side. One can use the current NASDAQ weakness for long-term repositioning.
Defence Therapeutics - Fast forward with the ACCUM™ platform
Canadian biotech specialist Defence Therapeutics (DTC) has developed the ACCUM™ platform, a patented technology that holds great hope in current cancer research. The resumption of Biden's "Cancer Moonshot" initiative therefore acts as an opportunity for new research for the Canadians. So far, the Company has also been able to make its mark within the industry in terms of the level of development.
The ACCUM™ technology creates opportunities to enable precise transport of antigens or ADCs in the intact form to target cells. There has been a recent breakthrough discovery: ACCUM™ variant "A1" converts mesenchymal stromal cells into potent antigen-presenting cells suitable for cancer vaccination. The immune system is a structured entity that works in tandem to activate specific immune cells that seek and destroy "non-self" antigens. Concerning cancer, the immune system relies on dendritic cells (DCs), a subset of potent endogenous APCs, to activate cytotoxic T lymphocytes (CTLs). The CTLs can then attack and eliminate virus-infected or cancerous cells. Unfortunately, however, most cancer cells can develop strategies to evade DC-triggered immunity, leading to the development of lethal tumors.
Although several strategies have been developed and tested by others to correct this anomaly, most of them failed due to limitations related to inefficient CTL priming. In order to overcome this problem, Defence Therapeutics applied a novel strategy of reprogramming the immunosuppressive MSCs to turn them into potent APCs. This discovery and application is not only unconventional but also has the potential to revolutionize the field of modern medicine by serving as novel therapeutic cancer vaccines and infectious disease vaccines.
Defence's preclinical studies in animals have recently shown that administration of the ARM vaccine, together with the anti-PD1 immune checkpoint, has a synergistic effect leading to a 100% survival of animals with pre-existing lymphoma. "This is another successful example of how versatile and efficient ACCUM™ technology is. By optimizing specific components of the Accum molecule, Defence can develop new entities with novel pharmacological properties that can be used in the development of new products for various cancer indications in the context of personalized medicine," said Mr Plouffe, CEO of Defence Therapeutics.
Defence is currently preparing to manufacture the ARM vaccine in a GLP clean room in Canada to conduct a Phase I study in melanoma patients. The goal is to begin this clinical trial in the second quarter of 2023. The DTC share is currently trading at EUR 1.34; in light of the high regard for Biden's "Cancer Moonshot," the next 12 months could turn into a celebration for shareholders.
Valneva or MorphoSys - Who will take off?
The French-Austrian vaccine manufacturer Valneva develops, produces and markets vaccines against infectious diseases. With its inactivated vaccine VLA2001, Valneva has a vaccine against the coronavirus, but so far, sales success has been limited. The Company has recently entered into a partnership with VBI Vaccines to market and distribute the hepatitis B vaccine PreHevbrio. Selected European countries are targeted, and the vaccine, which has already been approved in the EU and the United Kingdom, is expected to be available in these countries in early 2023. This may also put a stop to the current downward trend of the share. At EUR 8.4, the share is at the lower end of the trading range of EUR 7 to 16, but technically there is no incentive to buy at present.
The situation is better for the MorphoSys share. Although no veritable company news has been read for quite some time, there are significant short positions from Marshall Wace LLP (1.28%) and Qube Research & Technologies Limited (0.74%). Positive analyst comments evidently put hedge fund managers under pressure. Thus, last week, as if by magic, the stock rose 25% in a relatively weak market environment.
However, analysts remain skeptical. Of the six accompanying brokers, four do not expressly recommend buying. However, the Hamburg private bank Berenberg is offensive and sees a price target of EUR 65. The last quarterly figures could inspire only a few, but the pipeline is progressing well. The main focus is now on Alzheimer's research, and the blood cancer drug Monjuvi is also gaining significant traction. From a chart perspective, it will be positive if the share price can climb above EUR 21.70; new quarterly figures will not be available for another 2 months. Valneva and MorphoSys are interesting values for the watchlist.
The biotech sector has suffered the most from the NASDAQ correction. For all stocks, keeping a close eye on the pipeline is important because the third COVID winter will still deliver surprises. Looking at cancer research, BioNTech, MorphoSys and Defence Therapeutics seem interesting. With its promising ACCUM™ technology, the latter is valued at a low EUR 48 million.
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