MorphoSys facing a takeover? Exciting autumn ahead for BioNTech and XPhyto

XPhyto with the gold standard - PCR test in just 20 to 25 minutes

For Big Pharma, XPhyto Therapeutics might be worth a look. The Canadians are focused on developing next-generation drug formulations, diagnostics and new active pharmaceutical ingredients. After a slide of around 85% this year, the stock is trading at EUR 0.42, where it seems to have found a bottom. The current source of hope at XPhyto is an innovative pain patch. It can be applied just before injections. The rotigotine patch is based on the TDS platform technology developed by XPhyto's German subsidiary Vektor Pharma. Together with a strong sales partner, a huge market could be developed. According to Kuick Research, the global market for transdermal skin patches is expected to grow to about USD 20 billion by 2028. That would correspond to a threefold increase over the USD 6.5 billion in industry sales in 2020 (source: Research and Markets). Given the potential, XPhyto's market capitalization of around CAD 40 million should not deter a major player.

Overall, XPhyto is actively researching in the areas of transdermal and orally dissolvable drug formulations. Already ready for the market is the gold standard among PCR corona tests. The advantage: XPhyto's COVID-ID test delivers results after only 20 to 25 minutes. That is because prior RNA extraction is not required as part of sample preparation. XPhyto thus closes the gap between inaccurate antigen tests and conventional PCR solutions whose testing takes up to 24 hours. So far, the Company has not been able to report significant sales success in this area, but perhaps there will be a second chance in the fall. So not only are voices increasing worldwide warning of a new COVID-19 wave in the fall, but initial action is being taken: TUI-Cruises, for example, are reintroducing mandatory masks, and the US has ordered a vaccine from Novavax. A strong sales partner could also give XPhyto a helping hand in this area.

BioNTech - Booster for the share in the fall?

BioNTech could also benefit from a new Corona wave in the fall. The new German biotech star is currently working on a COVID-19 vaccine adapted to the Omicron variant, which is now in the regulatory review process. In recent weeks, the share has performed well. Within three weeks, it went up from EUR 116 to EUR 164. The share was thus also unimpressed by the lawsuit filed by German competitor CureVac. CureVac has filed a lawsuit with the Düsseldorf Regional Court for patent infringement. The lawsuit concerns the mRNA technology and thus BioNTech's Corona vaccine Comirnaty. From CureVac's point of view, BioNTech has infringed several patents, for example, in the production of mRNA molecules. CureVac is therefore demanding appropriate compensation for an infringement of intellectual property rights. BioNTech rejected the accusations. The stock exchange seems to see it similarly.

MorphoSys: Possible takeover by Incyte a win-win situation?

And so back to the takeover carousel. MorphoSys is now also on this. The reason is an analyst study by RBC. The report speculates about a takeover by Incyte. The US company had a turnover of almost USD 3 billion last year and is thus significantly larger than MorphoSys. RBC believes that valuations in the biotech sector are currently attractive, including MorphoSys. The two companies are already partners. In mid-June, MorphoSys, Incyte and US giant Pfizer announced a collaboration on a clinical trial to further develop the MorphoSys product, Monjuvi. The trial will investigate whether the immunotherapeutic combination of Pfizer's novel TTI-622 fusion protein and Monjuvi (in combination with lenalidomide) can be used in patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) who are not eligible for autologous stem cell transplantation (ASCT). Monjuvi, in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL), received FDA approval in 2020. An acquisition could make sense for both sides: Incyte would significantly increase its pipeline. MorphoSys has so far made no progress in commercializing its pipeline, and the share price is trading at a 5-year low of just under EUR 22. Most recently, JPMorgan had rated the MorphoSys share as "Neutral", with a price target of EUR 34.

The biotech sector is gaining momentum. The possible acquisition of MorphoSys by Incyte could be a win-win situation for both sides if the price is right. The acquisition of XPhyto could also make sense for a pharmaceutical company with strong sales. BioNTech shares have performed well in recent weeks and could benefit further from a booster program for the autumn wave.