April 2nd, 2024 | 06:45 CEST
MorphoSys, Defence Therapeutics, Novo Nordisk - Biotech deals: Corporations on a shopping spree!
In 2023, the volume of business in the pharmaceutical industry, with mergers and acquisitions, reached USD 152 billion despite high interest rates. Experts predict that this momentum could continue as large pharmaceutical companies are facing a wave of patent expiries for their key products that will roll in between 2025 and 2030. Companies are therefore on the lookout for new active ingredients, often by acquiring or licensing developments from smaller biotech companies to compensate for potential revenue shortfalls. There have also been major takeovers in recent months. We take a look at takeover targets and buyers.
time to read: 4 minutes | Author: Armin Schulz
ISIN: MORPHOSYS AG O.N. | DE0006632003 , DEFENCE THERAPEUTICS INC | CA24463V1013 , NOVO NORDISK A/S | DK0062498333
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Author
Armin Schulz
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
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MorphoSys - Acquisition appears to be a mere formality
At the end of November 2023, the MorphoSys share marked its multi-year low at EUR 14.52. Subsequently, the share price began to climb. Since the takeover rumors picked up speed, the share has risen steadily towards the takeover price of EUR 68 offered by Novartis. The pharmaceutical giant Novartis initially received the green light for the acquisition from MorphoSys management. With the acquisition, Novartis aims to secure the potential of the cancer drug Pelabresib. The drug is considered a great hope in the treatment of myelofibrosis, a rare form of blood cancer with limited treatment options to date.
According to analyses, the decision in favour of the acquisition was made because MorphoSys has made good progress in the development of Pelabresib, and the drug is expected to enter the approval phase soon. The approvals from Germany and Austria were received quickly. On March 22, the Swiss received US antitrust clearance for the takeover. It now remains to be seen whether the acceptance rate of the shareholders is high enough, whereby a quota of 65% of MorphoSys's share capital is required for the deal. It can be assumed that the shareholders will also give their approval.
If, contrary to expectations, approval is not granted, the Company would have to evaluate other financing options to ensure the Company's future beyond 2026. The share has now even moved back into the MDAX, at least until the acquisition is completed. Management assumes that the takeover should be completed by mid-2024. The share is currently trading at EUR 67.20 and thus only just below the offered acquisition price. There is little profit potential here, but it demonstrates what acquisitions can do to the share price.
Defence Therapeutics - Great potential
DDefence Therapeutics, an emerging biotech company from Canada, stands out for its groundbreaking developments in the fight against cancer. In particular, its highly developed active ingredient AccuTOX®, which is about to enter clinical trials for FDA approval, could generate significant interest in the pharmaceutical industry. AccuTOX® utilizes the Company's proprietary Accum™ technology to make cancer treatments more targeted and effective by activating the immune system and selectively targeting cancer cells. These advanced approaches to cancer therapy have made the Company an attractive candidate for acquisition by large pharmaceutical companies, especially as the Accum™ platform offers a wide range of potential applications.
On March 26, the Company announced a significant advance in cancer immunotherapy with the successful further development of its ARM-002TM vaccine. In recent preclinical trials conducted in combination with the immune checkpoint inhibitor anti-PD-1, the vaccine showed highly positive results in treating melanoma. The innovative strategy could offer the possibility of curing certain types of cancer and establishing a long-lasting immunological memory that protects against future tumor recurrence. Given the encouraging results, the Company now plans to test the vaccine's efficacy in the treatment of "difficult-to-treat" ovarian and pancreatic cancers.
In preparation for further clinical trials, Defence Therapeutics is preparing an application to conduct a Phase I trial to evaluate the potential of ARM-002TM against a variety of solid tumors. Looking ahead, the solid tumor market is in a dynamic growth phase - it is estimated that it could reach over USD 900 billion by 2029. This underlines the enormous potential that Defence's innovative therapeutic options could offer and why the Company could come under the radar of large pharmaceutical companies. The share is currently trading at CAD 1.71, giving it a market capitalization of just CAD 77 million.
Novo Nordisk - Expansion approval in the US
Novo Nordisk acquires Cardior Pharmaceuticals from Germany for up to EUR 1.025 billion. With this move, the Danes are expanding their pipeline with cardiac drugs and are focusing on non-coding RNA therapy for the treatment of heart failure. Such acquisitions are made possible by semaglutide, the active ingredient in the successful products Wegovy and Ozempic. The Company recently received expansion approval for its weight management drug, Wegovy, in the US. The US Food and Drug Administration (FDA) approved the drug for adults who are overweight or obese without diabetes to reduce the risk of cardiovascular events such as heart attacks and strokes.
In addition to these products, the Company is pushing ahead with the development of other innovative diabetes treatments, such as the basal insulin icodec, which is expected to be approved for weekly administration under the brand name Awiqli. The recommendation from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency reinforces the Company's belief in an imminent final approval by the European Commission. Recent successes have made Novo Nordisk the most valuable listed company in Europe despite competition from the likes of Eli Lilly.
Revenue growth is being driven primarily by obesity treatment products. The Company is investing in the expansion of its production capacities in this area. The Company's positive dividend development reflects its dynamic corporate growth and is in line with the Company's increasing importance in the European market. However, the price/earnings ratio of over 47 is anything but favorable. Future successes are already priced in here. One share currently costs EUR 119.98.
The biotech sector is very volatile. A share can take off quickly if an active ingredient produces good study results. The better the results, the quicker large pharmaceutical giants jump on board because they need to fill their pipelines. Novo Nordisk recently expanded its portfolio with a German company that specializes in the treatment of heart failure. MorphoSys, the former German biotech star, is likely to be acquired by Novartis, which has catapulted the MorphoSys share price upwards. Defence Therapeutics has developed a scalable solution with its Accum™ platform. There is now also positive data on AccuTOX®, with which cancer treatment appears possible. This could attract potential buyers.
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