June 18th, 2021 | 15:10 CEST
MorphoSys, Biogen, Sierra Growth - What is next?
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The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
MorphoSys - Slow but steady price recovery
One of the "stock market winners" of the last few days is the biopharmaceutical Company MorphoSys. The Germans, dedicated to discovering, developing, and marketing innovative antibody therapies against cancer and autoimmune diseases, had already announced on June 2 the planned acquisition of Cambridge, US-based Constellation Pharmaceuticals. The announcement initially led to a drop in the share price of almost 15% due to the immense purchase price. However, the stock has since slowly recovered. Now the cash offer to acquire the remaining shares has been made: the Munich-based Company is prepared to pay the shareholders of Constellation Pharmaceuticals USD 34 per share, or a total of around USD 1.7 billion. The offer is valid until July 14. The offer is subject to additional conditions, such as the tender of at least a majority of the shares, the observance of a waiting period, and other customary restrictions.
MorphoSys expects to complete the merger in the third quarter. With the acquisition of Constellation, the Martinsried-based Company hopes to fill its product pipeline with promising candidates. However, the Company is also entering new territory with the field of epigenetics, which has not previously been part of its research approach. Constellation's most advanced product to date is Pelabresib, an active ingredient against myelofibrosis, a rare form of bone marrow cancer. The experts at JPMorgan believe the drug has expected peak annual sales of USD 1.7 billion. However, the drug will not complete Phase 3 clinical trials until late 2022. While the experts at JPMorgan, who see only a 50% probability of success for Pelabresib and criticize delays in the launch of the blood cancer drug Monjuvi in the US, have downgraded the MorphoSys share to neutral. Their colleagues at Berenberg Bank take a much more positive view of the acquisition with a price target of EUR 140. The stock is a clear buy for the Hanseatic bankers. Courageous investors can take advantage of the current share price weakness of MorphoSys.
Sierra Growth - Exciting Micro Cap
There are different types of investors: some are long-term oriented and primarily overweight stocks that currently appear undervalued. Others focus mainly on blue chips and dividend stocks. And still others like the thrill and like to invest in companies that promise high profits in a short time. If you are currently looking for a stock from the last group, you should look at the junior exploration Company Sierra Growth Inc. Based in the Canadian province of British Columbia, the Company specializes in the exploration of gold, silver, copper and molybdenum projects in their absolute early stages. The Company has focused on two regions: the US state of Nevada and the Andean country of Peru. In Peru, the Company, until recently, held exploration rights to two properties near the capital Lima, Silviera and Española.
However, the rights for Silviera were sold to the Peruvian CIEMSA group for USD 1 million last October. Given the looming election victory of the Marxist-Leninist presidential candidate Pedro Castillo, who has already announced a massive tax increase for foreign mining companies, this was undoubtedly a good move. At any rate, the focus is currently on the Nevada region. Here, the Company is currently exploring three projects: Glitra/Sat, Mildred/B&C Springs and Betty East, all of which are located on the Walker Lane trend, which is historically known to be high-grade. The collection of 1,805 soil geochemical samples at 50m to 100m intervals was completed in late May. Results are expected by the end of June/early July at the latest. Therefore, this is the ideal time for fortune seekers to get in on the action. Should the soil samples imply significant mineral deposits, this can positively influence the Company's share price within a very short time. The stock is also traded in Frankfurt and is currently valued at around CAD 8 million.
Biogen - Protests and failures on the Alzheimer's front could end share price rally
Since the beginning of June, the Biogen share has shown a brilliant price rally; the price increase amounted to almost 60%. What happened? Despite a clear vote last November by an advisory panel to the US Food and Drug Administration (FDA) that Biogen's new Alzheimer's therapy, called "Aduhelm," was not proven effective, by a vote of 10 to 0 with one abstention, the FDA now granted approval. Although three advisory panel members subsequently resigned in protest against the decision, this first approval of a therapy in more than 18 years nevertheless boosted the market's share price fantasies. It is quite possible that this is now over.
On Wednesday, the Company had to concede that a second drug candidate against Alzheimer's, Gosuranemab, based on an anti-tau antibody, had not shown the required statistical efficacy in Phase 2 clinical trials. The Company announced that it would discontinue further research on the drug. Although Biogen currently has another drug candidate against Alzheimer's disease in a Phase 3 trial, there is now a distinct possibility that investors will first try to take profits from the share price rally. Although analysts' median price target is still just above the current price, the majority of them recommend "hold."
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