June 22nd, 2021 | 12:36 CEST
MorphoSys, Defence Therapeutics, Formycon - Biotechnology shares with great potential
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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 - Investors hesitant - the share is a potential doubler
Munich-based MorphoSys, which is engaged in discovering, developing, and marketing innovative antibody therapies for cancer and autoimmune diseases, has had difficulty with investors since the takeover bid for US biopharmaceutical Company Constellation Pharmaceuticals was announced on June 2. The USD 1.7 billion offer initially triggered a significant drop in the share price of almost 17%, after disappointing sales figures for its blood cancer drug Monjuvi, which had just been launched in the US in March, had already severely depressed the share price.
After several positive assessments by equity analysts and industry experts, the share price recovered slightly. They pointed out that MorphoSys was taking over an extremely promising product pipeline with the developments of the Americans, some of which had a very congruent spectrum. The associated entry into epigenetics also offers the potential to accelerate the Company's developments. Constellation's most advanced product to date is Pelabresib, a compound for myelofibrosis, a rare form of bone marrow cancer, which experts expect to generate peak annual sales of USD 1.7 billion. However, the drug will not complete its Phase 3 clinical trial until the end of 2022. Nevertheless, experts are certain that the MorphoSys share is currently valued too favorably. On average, the price target is EUR 110, which means that analysts believe the share has the potential to almost double. Investors with staying power should take advantage of the current share price weakness to buy.
Defence Therapeutics - Innovative antibody therapy promises success in cancer, vaccinations also possible in the long term
Defence Therapeutics is a Canadian biotechnology company driving the next generation of vaccines and ADC preparations (ADC = Antibody Drug Conjugates, i.e. the antibody-drug combination in the "piggyback" process) on its proprietary Accum platform. This process is similar to the mRNA process used by BioNTech in their Covid-19 vaccine Comirnaty and is considered extremely promising in cancer therapy. One of the reasons for this is the targeted and precise drug delivery to tumor cells without harming healthy tissue.
One anti-cancer vaccine candidate developed by Defence Therapeutics based on its technology is AccuVAC-D001. In a preclinical study, a cure success of more than 70% was achieved in already established solid tumors in animal experiments on mice suffering from cancer. Another active ingredient in the fight against breast cancer is Accum-T-DM1. The further development of the blockbuster drug T-DM1 (ado-trastuzumab, Kadcyla®), which has been approved since 2013 in patients with metastatic HER2-positive breast cancer, is designed to enable more precise intracellular drug delivery using Defence Therapeutics' Accum™ technology. To this end, the Company recently announced a collaboration with the HUS Comprehensive Cancer Center in Helsinki, Finland. The Cancer Center is the largest and most versatile cancer treatment center in Finland with international expertise. Initially, in vitro trials will be used to identify an optimal Accum-T-DM1 candidate for further in vivo trials in animals suffering from breast and gastric cancer.
In the long term, the Company expects that Accum's technology will significantly shorten the current 14x three-week treatment time with T-DM1 in breast cancer patients while improving efficacy. For us, Defence Therapeutics, which is currently valued by the stock market at around CAD 270 million, is one of the most exciting new stories in the market. Risk-averse investors can buy the stock in Canada, Frankfurt or Stuttgart.
Formycon - When will the sideways movement end?
German biosimilar pioneer Formycon had caused an impressive share price rally after announcing the development of a Covid-19 drug candidate at the beginning of the year. However, since peaking at EUR 79.80 in early February 2021, the stock has lost about a quarter of its value again. It seems to have been trapped in a sideways movement around EUR 60 since then. Investors had underestimated the long development cycles in the production of biosimilars. Formycon increased its 2020 operating loss from EUR 2.3 million to EUR 5.7 million instead of lush profits. However, the Company had thus largely met its own expectations. From this point of view, the management cannot be blamed.
On the contrary, the Covid-19 compound FYB207, which is currently in development, has even proven to be particularly effective against the B.1.1.7 mutation of the SARS-CoV-2 virus, which is considered highly contagious.
The push for the as-yet-unpublished and unpartnered biosimilar candidate FY206 is both necessary and appropriate. A biosimilar manufacturer will always need to invest a significant portion of its budget in research and development in the long term. The important thing is that the Company can handle these investments on its own. And Formycon, which according to its information, currently has around EUR 49 million in liquid funds, is doing quite well in this regard. For us, Formycon remains an anchor stock in the portfolio that will develop positively in the long term. The analysts' verdict is similar, with an average target price of EUR 71.
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