Morphosys with 50% risk? BioNTech and Defence Therapeutics share with positive news

Defence Therapeutics: Billion-dollar market in focus

Defence Therapeutics shareholders can look forward to an exciting 2024. Just before Christmas, the biotech company focusing on immuno-oncology received approval from the US Food and Drug Administration (FDA) to conduct a Phase I clinical trial of its new drug AccuTOX®. This is an injectable anti-cancer molecule for the treatment of solid tumors and a further development of the original Accum™ molecule. According to Data Bridge Market Research, the market for the treatment of solid tumors was worth around USD 210 billion in 2021. By 2029, significant double-digit growth is forecasted, and the volume will shoot up to over USD 900 billion.

In preclinical tests with T-cell lymphoma, melanoma or breast cancer, AccuTOX® has already demonstrated limited tumor growth and complete responses in 70% of treatments. Sébastien Plouffe, President and CEO of Defence Therapeutics, stated: "We are very proud and excited and look forward to the start of the Phase I trial. This trial aims to test one of our lead compounds and most promising therapeutic candidates for the treatment of solid tumors for the benefit of cancer patients. Defence is now entering the clinical phase."

BioNTech: Positive news at the end of the year

BioNTech has had several positive announcements in the past few days alone. Firstly, the Federal Patent Court ruled in BioNTech's favor in the patent dispute with CureVac. However, CureVac has announced an appeal, and the ruling only concerns one of eight property rights. The news, therefore, had little impact on the share.

More important are the operational reports from the leading German biotech company. As with Defence Therapeutics, there is also positive news from the FDA. The US Food and Drug Administration has granted breakthrough therapy status to BioNTech's active ingredient BNT323/DB-1303 for the treatment of advanced endometrial cancer in patients who have progressed during or after treatment with immune checkpoint inhibitors. BNT323/DB-1303 is a next-generation antibody-drug conjugate that targets a cell surface protein in various tumor types. The FDA's decision is based on encouraging initial data from a Phase I/II study in patients with advanced uterine cancer.

Prof. Özlem Türeci, CMO and co-founder of BioNTech: "The Breakthrough Therapy designation for BNT323/DB-1303 demonstrates the potential of our ADC candidate to address the current challenges in the treatment of patients with advanced HER2-expressing endometrial cancer who have progressed on multiple lines of systemic therapy. Survival rates for these patients remain low, and the medical need for new and more effective treatments remains high." Endometrial or uterine cancer is the second most common gynecologic cancer worldwide, with over 400,000 cases per year - and unfortunately, the trend is rising. While localized early-stage disease can be cured by surgery, the five-year survival rate for patients with advanced, metastatic or recurrent disease is only 18.45%.

A few days before the FDA announcement, BioNTech had reported on the inauguration of a new site in Rwanda. It took place on the occasion of the construction of the first production unit called BioNTainer. The facility is part of BioNTech's effort to build an extensive vaccine ecosystem in Africa. In addition to the production of vaccines, research and development, clinical trials and the training of specialists will also take place locally in the future.

A few days before the FDA announcement, BioNTech had reported on the inauguration of a new site in Rwanda. It took place on the occasion of the construction of the first production unit called BioNTainer. The facility is part of BioNTech's effort to build an extensive vaccine ecosystem in Africa. In addition to the production of vaccines, research and development, clinical trials and the training of specialists will also take place locally in the future.

Morphosys: Could the share price halve?

Morphosys shares have been a highlight in the biotech sector this year. The shares of the German biotech veteran have more than doubled in the current year and are trading at over EUR 32. Only in November was there a slump from around EUR 31 to EUR 16. However, this setback was recovered within a few weeks. The reason for the temporary slump in the share price was preliminary study data on the promising drug pelabresib.

The entire Phase III trial of the active substance against myelofibrosis was published recently. Myelofibrosis is characterized by an enlarged spleen, anaemia, bone marrow fibrosis and disease-related symptoms. Morphosys announced that all features were improved with the combination of pelabresib and ruxolitinib compared to placebo plus ruxolitinib, the standard of care for myelofibrosis. Significant improvements in both key secondary endpoints were observed with the pelabresib combination in intermediate-risk patients, who make up over 90% of the MANIFEST-2 population. Two days after the results, Morphosys announced a 10% capital increase. This was successfully implemented and raised around EUR 100 million for the Company.

However, analysts remain skeptical. Goldman Sachs even considers it possible that the share price will almost halve. Their target price is EUR 17.50. The valuation has been adjusted in line with the higher number of shares and the expected losses in the coming years. Deutsche Bank's price target of EUR 25 is also slightly higher than the current share price. At least it is positive that Morphosys should be fully financed for the coming years thanks to the successful capital increase.

With a market capitalization of around CAD 100 million, Defence Therapeutics is the smallest of the companies discussed. After consistently working on the exciting pipeline in 2023, the share price should rise again with a sustained positive news flow. In addition, the Company is a takeover candidate. This does not apply to BioNTech due to its shareholder structure. Instead, BioNTech, with its well-filled treasury, is often active as an acquirer itself. Morphosys, on the other hand, is always good for a surprise - both positive and negative.