March 16th, 2023 | 11:51 CET
Takeover speculation at Defence Therapeutics! What are BioNTech, Morphosys, and Evotec doing?
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"[...] The transaction offers benefits to all parties: Shareholders now have three promising projects in their portfolio. [...]" Bradley Rourke, President, CEO and Director, Scottie Resources Corp.
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
Defence Therapeutics: Will the cooperation with Orano be followed by a takeover?
The share of Defence Therapeutics has more than doubled since October 2022. The consolidation of recent weeks could now be over. The reason - a cooperation with the French group Orano. The group had sales of more than EUR 4.5 billion in 2021. The subsidiary Orano Med is focused on nuclear medicine and will, in future, use Defence Therapeutics' patented Accum™ technology as a radionuclide-antibody conjugate in cancer research. It is to deliver a radioactive emitter near the nucleus of tumour cells instead of a drug. The more reliably this is done, the greater the chance that the radioactive beams will damage and, in the best case, destroy the cancer cell's nucleus.
The experts at researchanalyst.com are enthusiastic about the partnership. Defence Therapeutics again underlines the versatility of its technology: based on Accum™, the Company is already researching therapeutic vaccines against cancer, infections with the HP virus and the chemotherapeutic AccuTOX. The versatility of its proprietary technology and the numerous possibilities for its use make Defence Therapeutics a kind of biotech multitool. The market potential of the current six projects amounts to a three-digit billion sum.
In the analysts' view, the cooperation with Orano should lead to further attention within the pharmaceutical industry and turn Defence Therapeutics into a takeover candidate. The prospect of several billion-dollar products at the same time for a price in the low three-digit millions is likely to be tempting for many pharmaceutical companies, most of which are sitting on high cash reserves. The share, therefore, has further upside potential. (Click here for the complete study)
BioNTech: Is the breakout on the way?
It is undisputed that BioNTech has a promising product pipeline. It includes 19 product candidates in 24 ongoing clinical trials. Nevertheless, the share seems to have run out of steam. Since mid-December alone, the stock has lost 30% - and around 70% from its all-time high. The share is now trading dangerously close to the lower end of the sideways channel formed at the beginning of 2022. Operationally, there has been little to report recently. At least there is progress in the development of vaccine production in Africa. The first special containers arrived in Rwanda this week.
The six containers will be placed in a special economic zone in the Rwandan capital of Kigali and will form a modular production unit. Production will start in 2024 at the earliest. So this news is not a trigger for the share. Perhaps there will be one on March 27. Then the Mainz-based company will report on 2022 and hopefully also give an update on the development pipeline. After all, BioNTech has announced new data from up to 10 clinical trials for 2023. Only positive research results can currently ensure a rising share price. Analysts continue to be cautious. Most recently, UBS confirmed its "Neutral" rating with a price target of USD 168.
Morphosys and Evotec: The fallen German biotech stars
And what are Morphosys and Evotec doing? The two former German biotech stars have fallen deep. After publishing sales figures for the compound Monjuvi, Morphosys was rated "Underweight" by JPMorgan. The price target is EUR 11. Based on the sales figures in the US in February, analysts expect Monjuvi to achieve only the lower end of sales expectations in the current year. The change in the management board reported yesterday also did not provide any positive impetus for the share. Morphosys communicated that Lucinda Crabtree would succeed outgoing CFO Sung Lee by the third quarter. Crabtree previously served at Autolus Therapeutics. The stock lost more than 5% yesterday and is now trading below EUR 14, which is not far from the 52-week low of EUR 12.05.
The Evotec share also trended weaker yesterday, losing more than 3%. It is currently trading just above EUR 17 and has lost more than half of its value since December 2021. The market capitalization remains at a proud EUR 3 billion. Most recently, Deutsche Bank renewed its "hold" rating with a price target of EUR 21. According to the analysts, Evotec increased revenues by about 25% in 2022. Adjusted EBITDA is even expected to increase by almost 50%. Evotec will publish preliminary figures for fiscal year 2022 on March 28. One of Evotec's investments made headlines this year - namely Exscientia. The UK-based company develops drugs based on an AI-powered platform. In the context of the hype around ChatGPT, the stock had doubled in January and February and shot up to EUR 10. It is currently trading at around EUR 6. Evotec and Exscientia are working on an immuno-oncology compound within a joint venture. Besides Evotec, the Bill and Melinda Gates Foundation is also a shareholder.
German biotech companies are currently having a hard time. BioNTech can presumably only initiate the turnaround of the share with convincing study results. And even then, investors will likely need a lot of staying power. Defence Therapeutics can go faster. The latest collaboration has given the share price a boost. There is no urgent need to buy Morphosys and Evotec.
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