Pfizer, Cardiol Therapeutics, Bayer - Pharma facing turnaround despite drug shortages?

Pfizer - High dividend yield

Pfizer benefited from government orders during the COVID-19 pandemic, but now that the pandemic has been officially declared over, sales should return to normal levels. For this, the stock has recently been punished significantly. The Company has invested in the future with the high profits and has made several acquisitions. The largest deal was the acquisition of Seagen for USD 43 billion, which strengthened the oncology pipeline. Industry experts believe the price may have been too high.

At the end of June, investors had to cope with the fact that one of the biggest hopefuls in the pipeline would not come to market. The drug lotiglipron, which was supposed to help against obesity, has too strong side effects, so the development was stopped. Another drug to become successful in the weight loss area is called danuglipron, which is being further researched. Even if the upcoming quarterly figures are again expected to be significantly weaker than the previous year, other areas will grow. In addition, up to 19 new drugs are expected to be launched in the 2nd half.

While the healthcare sector has lost around 3% this year, Pfizer has lost almost 30%. This indicates a significant growth potential for the stock. This is especially true as the Group is currently returning a lot to shareholders with a share buyback program and a dividend yield of around 4.5%. In July, there was a buy recommendation from HSBC with a price target of USD 50. Currently, the share is available for USD 35.86. Whether declining sales and profits are fully priced in remains to be seen.

Cardiol Therapeutics - Pioneering work in cardiac medicine

Cardiol Therapeutics is a company that specializes in anti-inflammatory therapies for heart disease. This field is growing due to an ageing population, too little exercise and often unhealthier eating habits. Their lead product is CardiolRx, a promising oral drug candidate being tested in Phase II trials for recurrent pericarditis (recurrent inflammation of the pericardium) and acute myocarditis (inflammation of the heart muscle). CardiolRx showed promising results in preclinical studies, including reduced inflammation and fibrosis in the heart muscle.

The study for recurrent pericarditis and the ARCHER study evaluating the safety and efficacy of CardiolRx in acute myocarditis are actively enrolling patients. The ARCHER study is being conducted at multiple sites worldwide and will enroll 100 patients. The 1st patient for this study was registered on January 17. In addition, Cardiol Therapeutics is working to develop a subcutaneous formulation called CRD-38 to treat heart failure. Preliminary studies show that CRD-38 has cardioprotective properties and exhibits anti-fibrotic activity. Here, the next step is the Phase I clinical trial. Financially, there are no problems as the Company has no debt and sufficient capital (CAD 49.5 million in cash at the end of Q1) to achieve key milestones by 2026.

Among the goals set for the next 12 to 24 months are the completion of the Phase II recurrent pericarditis study, enrollment of 100 patients in the ARCHER acute myocarditis study, and advancement of CRD-38. The Company has a strong scientific foundation, experienced executives, and extensive intellectual property. Like almost all biotech companies, the shares were hit by a sell-off and was trading partially below cash. Less than 2 years ago, one share cost USD 3.96 on the NASDAQ; currently, it can be had for USD 0.784.

Bayer - Will there be a split?

The rumor mill is bubbling. After former CEO Werner Baumann handed over the office to Bill Anderson, the speculations are increasing that the crisis-ridden Crop Science division could be spun off. This would, in turn, help the Pharmaceuticals division, and the good work there would not be further burdened by glyphosate litigation. Without this baggage, some experts rate the value of Bayer's blockbuster Xarelto higher than the Group's current valuation. From this point of view, a separation could be advantageous for shareholders.

In order to become faster and more effective in the pharmaceutical field, the Group has developed a new research strategy. The focus is on cardiovascular diseases, neurology, rare diseases and oncology. Here, the aim is to generate innovations based on the latest scientific approaches and the incorporation of artificial intelligence. At the end of June, Aflibercept reported positive trial numbers. 83% of patients with diabetic macular edema achieved sustained improvement in vision. In the 2nd half of the year, there should be data from the PULSAR study, in which the drug is used in wet age-related macular degeneration.

It will be interesting to see what happens next for the Leverkusen-based company. If a split occurs, the share will likely face a revaluation. At the beginning of July, the share tested the low from December at EUR 48.325 and bounced back from there. Currently, one share costs EUR 50.90. In July, there were 3 analyst ratings. JPMorgan recommended Hold with a price target of EUR 55.00. Jeffries, on the other hand, recommended the share as a buy with a target of EUR 68.00. Bernstein has the most positive view of the stock and assigned the highest price target of EUR 89.00.

Many pharmaceutical and biotech companies have gone under in recent months. However, there are signs of a bottom. Pfizer is suffering from the upwardly spiraling figures of the Corona years. However, profits were not just distributed to shareholders but invested in the future. Cardiol Therapeutics has focused on relieving heart problems. Here, Phase II studies are underway, which could further boost the stock. At Bayer, the Monsanto acquisition is still having an impact. The new CEO could provide fresh impetus, also concerning a possible split.