October 31st, 2022 | 13:31 CET
Top biotech shares - Now on the up: Bayer, Cardiol Therapeutics, BioNTech, Pfizer
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"[...] Accum™ helps us target active ingredients precisely to the origin of infections or diseases. [...]" Sébastien Plouffe, CEO and Director, Defence Therapeutics
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Bayer - Major investment in cancer research
Bayer plans to make its pharmaceuticals division fit for the future again by investing around EUR 2 billion over the next three years. In the fight against cancer, Bayer took a major step forward at the end of 2021 with the acquisition of Vividion Therapeutics for a total of USD 1.5 billion. The new San Diego-based subsidiary conducts research in biopharmaceuticals and develops a so-called precision technology to use drugs in a targeted and precise manner against a tumor. Most recently, Vividion has entered into a collaboration with Tavros Therapeutics, a specialist in computational genomics technology designed to study tumors and reveal their weak points. In this way, targeted cancer treatment can be made possible. The contract runs through several stages of development and is worth a total of USD 482 million. These investments are directly attributable to Bayer's US business and are thus part of Joe Biden's "Cancer Moonshot" program.
Due to the significant charges in the "glyphosate" dispute, Bayer did not return to profitability until 2021, and 2022 will also be a year of growth. In September, the share price fell significantly below EUR 48, followed by a steep rise to currently EUR 52.80. On November 8, Q3 numbers will be reported, and the analyst consensus is EUR 1.13 quarterly profit. When looking at 2022 as a whole, sales of around EUR 50 billion should be achieved, which is just about the current market capitalization. With a P/E ratio of below 7, Bayer shares are historically cheap. Swiss bank UBS rates the stock as a "buy" with a price target of EUR 103.
Cardiol Therapeutics - With full cash into the next research round
Cardiol Therapeutics Inc (CRDL) is a biotechnology company specializing in the research and clinical development of innovative therapeutic methods for treating cardiovascular diseases. The stock has been listed in Germany since March 2020 and recently came under significant pressure in the sell-off of US biotech stocks. The share is now trading below cash levels, but what is the status in the area of therapy and drug development?
The ongoing LANCER trial, conducted to investigate the cardioprotective properties of CardiolRx in COVID-19 patients with a history of cardiovascular disease, is now being discontinued due to a steady decline in the number of eligible patients and a lower than expected event rate. CEO David Elsley commented, "Regardless of the discontinuation of the LANCER trial, we are strongly positioned financially to support our international collaborations with world-class researchers and clinicians who are at the forefront of developing important medicines to treat debilitating heart disease."
Now, the Company is prioritizing its Phase II clinical programs focused on developing CardiolRx for two heart diseases: acute inflammation of the heart muscle (myocarditis) and recurrent pericarditis. Included in this program is the advancement of its Phase II ARCHER study designed to evaluate CardiolRx in acute myocarditis. ARCHER has received regulatory approval in several countries, including Investigational New Drug (IND) approval from the US Food and Drug Administration (FDA). It is expected to launch with 100 patients in major cardiac centers in North and Latin America, Europe and Israel. Recurrent pericarditis is inflammation of the heart muscle (the membrane or sac surrounding the heart) that follows prior disease, such as a viral infection. Patients may have multiple recurrences, and symptoms include debilitating chest pain, shortness of breath, and fatigue, leading to physical limitations with decreased quality of life.
With the last capital increase in 2021, Cardiol raised a lot of capital, allowing the Company to continue its research quickly and finance new studies. With 63.56 million shares, the Company is currently valued at only CAD 50.8 million, and the last financial report showed a cash balance of CAD 70 million. The Company has no debt, so the calculated enterprise value is minus CAD 20 million. Such curiosities are rarely seen on the stock market. Presumably, there are short-sellers at work who will have to stock up at some point.
BioNTech and Pfizer - What else is in the pipeline besides COVID-19?
The Mainz-based biotech company BioNTech recently announced that it would start vaccine production in Rwanda, Africa, starting in 2023. In addition to fighting viral infections, there are likely tentative successes for an mRNA therapy against one of the deadliest tumor types, pancreatic cancer. The treatment, used after surgical removal of the tumor and in addition to chemotherapy, significantly reduced the recurrence rate in 8 of 16 patients within 18 months, BioNTech reported after initial testing.
Partner Pfizer plans to quadruple the price of the Corona vaccine to as much as USD 130 from the current USD 30 per dose when its contingency plan with the US government expires. So, should the winter return with high incidence numbers, the cash register should be ringing again nicely. However, BioNTech is already sitting on liquidity of almost EUR 20 billion and could use the opportunity to acquire some promising technologies, clever minds and patents. That would take the group away from COVID-19 and into other areas, such as cancer therapies or Alzheimer's disease.
BioNTech shares peaked at around USD 464 last August, and since then, the stock has lost 80% of its value at its peak. However, analysts are very bullish on BioNTech and Pfizer because of this unique position and have formulated a mid-range price target of USD 277, according to S&P Global Intelligence. One should therefore keep an eye on the BioNTech share because surprises from its own pipeline or concerning attractive M&A deals are already lurking in 2023. The report on the third quarter of 2022 is expected on November 7.
The biotech investment sector is highly volatile and strongly dependent on investor sentiment. Currently, the NASDAQ is supported by improved technology with upside momentum. In the sector, Bayer and BioNTech are low-valued standard stocks, while the speciality stock Cardiol Therapeutics is highly interesting from a speculative point of view.
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