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February 14th, 2023 | 15:49 CET

Takeover fever around biotechs - Bayer's reaction, purchase candidates BioNxt and Morphosys?

  • Biotechnology
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Something is happening in the biotech sector: several global players are looking for potential acquisition targets. Above all, pharmaceutical companies focusing on the US are seeing their chances of survival dwindle in light of the Inflation Reduction Act. If drug prices are to fall, new products must be developed or costs cut elsewhere. We take a look at the industry and do a takeover check.

time to read: 3 minutes | Author: Nico Popp
ISIN: BAYER AG NA O.N. | DE000BAY0017 , BioNxt Solutions Inc. | CA0909741062 , MORPHOSYS AG O.N. | DE0006632003

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    David Elsley, CEO, Cardiol Therapeutics Inc.
    "[...] As a company dedicated to developing treatments for rare heart diseases, we see this as an opportune moment to contribute to the fight against heart disease and make meaningful strides in improving heart health worldwide. [...]" David Elsley, CEO, Cardiol Therapeutics Inc.

    Full interview


    Bayer: Stronger focus on drugs?

    During JP Morgan's healthcare conference in January, three major companies announced acquisitions in the biotech sector. Pharmaceutical companies AstraZeneca, Ipsen and Chiesi each completed billion-dollar acquisitions. Industry insiders have noticed the fact that biotechs have become the focus of buyers too. "We continue to expect a biotech bull market in 2023, which could evolve into a wave of acquisitions as credit conditions improve," said John Newman, an analyst at Canaccord Genuity. Experts at EY also expect a turnaround after a weak biotech year in 2022. Bayer Group could also set out to buy complementary technology.

    It was only recently announced that American Bill Anderson will become Bayer's new CEO. The manager, who has already worked at Genentech, Roche and Biogen, has brought 25 new drugs to market in his career - including a full 15 blockbusters. As the research portal speculates in a recently published outline of Anderson's personnel, the pharmaceuticals division at Bayer could once again become the focus of attention in the future. The loser, on the other hand, could be the agricultural business. In order to implement such a transformation, new products with prospects are likely to play a significant role. It would be no surprise if Bayer already had some promising projects on its radar.

    BioNxt: Active ingredient patch as an insider tip?

    One company that could fit very well into the grid of pharmaceutical companies due to its orientation and size is BioNxt. The Canadians are specialists in innovative drug delivery systems, provide tests for oral health and offer a psychedelics division. BioNxt strikes a chord in the first business segment in particular. Even if the term "innovative dosage forms" sounds a bit cumbersome, the business is catchy in the truest sense of the word: When active ingredients are no longer administered orally, for example, but through patches, this can bring several advantages. From better tolerability to savings because fewer active ingredients are needed, many advantages are conceivable. BioNxt is currently working on medical patches for the Parkinson's drug rotigotine. Last fall, the Company presented convincing studies in which the patches developed 100% by BioNxt were able to compete with an existing drug.

    Most recently, BioNxt unveiled a commercialization plan around its patch project, which includes a pilot human clinical trial in the second quarter. The Company also plans to develop capacity for commercial manufacturing of its proprietary patches. The Company emphasizes that BioNxt's platform approach may benefit other projects around drug patches. Market researchers at Research and Markets estimate that the total market for active ingredient patches will reach USD 6.5 billion in 2020. According to Kuick Research, this market volume could grow to USD 20 billion by 2028. On the market, the development of BioNxt has yet to take off. Since the diagnostics business also appears to have good prospects in the short term, savvy investors can take a closer look at the Company.

    Morphosys: The big breakthrough has so far failed to materialize

    The fact that it is sometimes not at all advantageous for a company to advance numerous projects at the same time is shown by the performance of Morphosys - over the course of a year, the share price has fallen by almost 29%. The Company has an impressively full research pipeline covering cancer, rheumatism and Alzheimer's disease. In addition, Morphosys is considered the market leader in the field of therapeutic antibodies. Although there are repeated rumors of interest from large pharmaceutical companies, and the Company is working with partners such as Incyte on active ingredients such as tafasitamab, the big breakthrough has yet to be achieved. High costs are weighing on the figures, and Morphosys has not yet been able to achieve a breakthrough with an active ingredient. Thanks also to its high cash reserves, Morphosys could move into the focus of larger companies - but this requires convincing clinical results.

    The biotech industry is in turmoil - big pharma companies are looking for tomorrow's revenue generators. While Morphosys offers a broad portfolio, companies like BioNxt focus on solutions in niches, such as drug patches. BioNxt's offering can also complement the portfolio of established pharmaceutical companies and create synergies when transferred to their broad product range. It can be worthwhile to stay on the ball, especially with small companies in the biotech sector.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Nico Popp

    At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

    About the author

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    Since the onset of the COVID-19 pandemic, there has been little movement in the biotech sector. However, after a challenging year in 2023, the sector was at least able to start the new year on a solid footing. The surprising takeover of MorphoSys recently got hearts beating again, as Novartis put a whopping EUR 2.7 billion on the table for the cancer specialist from Munich. Only months before, MorphoSys had been traded on the stock exchange at just EUR 700 million. The special market situation in this case was also characterized by the high short ratio, which led to an exorbitant rise in the share price of almost 400% in the final phase. Speculative investors are now keeping a wary eye on potential takeover candidates as the sector is once again attracting considerable attention. We are taking a closer look and searching for the next pearl.