January 5th, 2023 | 06:35 CET
It is the year 2023 and COVID is back! BioNTech, Bayer, Defence Therapeutics, Morphosys - Which stocks stand up to the virus from China?
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"[...] At the end of 2022 or the beginning of 2023, we plan to start a Phase I study around each of our activities against breast cancer and skin cancer. [...]" Dr. Moutih Rafei, Director and VP of research and development, 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 and Bayer - Blockbusters in the pipeline
The EU has offered its help to China to contain the pandemic. The EU Commissioner for Health, Stella Kyriakides, has made a corresponding offer to the leadership in Beijing, but the Middle Kingdom has yet to respond. The EU department did not provide information on the number of vaccines offered or the manufacturers. Nevertheless, BioNTech will likely be back at the top of investors' minds regarding COVID-19. With the mRNA vaccine "Comirnaty", the Mainz-based company has generated around EUR 20 billion in net cash flow in 2021/22 and can now focus on the next blockbuster with full pockets. A clinical trial for a novel malaria vaccine was started shortly before Christmas. BioNTech's market capitalization of EUR 34 billion is 60% cash backed, with a promising pipeline.
Bayer is one of Germany's flagship cancer research companies. The pharma division is specifically committed to the development of precision oncology, as it benefits from major advances in the field of molecular diagnostics. Next-generation sequencing, for example, enables the detection of genome alterations that promote tumor growth and provides important information about how likely a patient is to respond to treatment. For Bayer, the pharmaceuticals and health sectors continue to be the earnings pearl in the Group. In the last nine months, it earned EUR 5.6 billion (EBITDA).
Full-year figures will be published on February 28. Bayer shares ended the 2022 stock market year with a maintained price of around EUR 48 and are now heading towards EUR 50 at the start of the year. With an estimated 2023 P/E ratio of 7.2 and a dividend yield of 4.5%, the stock still has plenty of room to run.
Defence Therapeutics - With ACCUM(TM) technology through the nose against lung cancer
The Canadian biotech specialist Defence Therapeutics (DTC) has developed a patented technology with its ACCUM(TM) platform, which gives great hope in current cancer research because the combination of mRNA technology with modern methods of delivery to affected cells is a real advance within recent research. Defence Therapeutics has now completed a preclinical study using the intranasal formulation of AccuTOX in animals with existing lung cancer. The study showed that administration of AccuTOX as a combination therapy with the immune checkpoint inhibitor anti-PD1 dramatically reduced the number of lung nodules compared to untreated or anti-PD1 treated control animals. This 50% reduction in cancer nodules in animals with existing lung tumors was achieved with a treatment schedule of only six doses administered over two weeks with the AccuTOX anti-PD1 combination.
"We are very excited about the versatile use of AccuTOX as a cancer therapy. Not only has the compound shown great potential in the treatment of solid tumors, but we now have data showing that it can be further adapted and administered via the intranasal route to treat lungs with metastatic tumors, offering new hope for lung cancer patients," said CEO Sebastien Plouffe.
Defence Therapeutics is also showing early success with its ACCUM(TM) technology in solid tumors. It will be interesting to see what other pipeline the Company can come up with in 2023. The share price has risen considerably in the last three months, but the market capitalization is still low at EUR 69 million. Technically, however, a significant bottoming took place in October, and the share price is now striving further upwards. Defence Therapeutics has blockbuster potential!
Morphosys - Despite new downgrades, the share price has turned
Morphosys presented a real disappointment in November. The Alzheimer's hopeful Gantenerumab could not meet expectations even on the second attempt. After the great trial success of Biogen with the product Lecanemab, the shock of the investors, in this case, was striking. The share collapsed by over 40% within 48 hours, from EUR 21 to EUR 13. However, according to statements made by CFO Sung Lee on the fringes of the Equity Forum in Frankfurt, Morphosys currently still has liquid assets of around EUR 1 billion. The current market capitalization is only EUR 463 million. In December, the stock also hit a 20-year low of EUR 11.85.
For the Munich-based company, everything now revolves around the two cancer drugs, Monjuvi and Pelabresib. And here, sales are also rather bumpy, with profits only mentioned from 2025 onwards. The mood is correspondingly poor and further analysts lowered their expectations. Most recently, there were three downgrades from Deutsche Bank, Goldman Sachs and JPMorgan, and the short ratio is still relatively high. None of this is an incentive to buy - but the mood for the share is so bad that, technically, it can only go up. Yesterday, the value rose again above EUR 14.20 with high turnover. Traders stay put as momentum increases and bet on a 100% turnaround in 2023! In any case, install a safety stop at EUR 11.80.
For most biotech stocks, the past year was no bed of roses. Accordingly, the recovery potentials are now good to assess. Whether COVID is a trigger again has yet to be discovered. What is certain is that the focus will continue to be on the century-long task of combating cancer. Bayer, BioNTech, Defence Therapeutics and Morphosys have significant research pipelines in this area and have recently made some progress.
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