USD 600 billion market potential – Pfizer and Bayer are in the race, Vidac Pharma in the fast lane?

Vidac Pharma – Decisive milestone reached

Vidac Pharma is taking a different approach to oncology that differs significantly from traditional therapies. At its core is the disturbed metabolism that fuels the aggressive growth of cancer cells. Vidac Pharma has developed the active ingredient VDA-1102 to prevent the so-called Warburg effect by blocking a key enzyme. The aim is to stop tumor growth and strengthen the body's own immune defenses.

The Company recently announced a decisive milestone. In the EU, Vidac Pharma can begin clinical Phase 2B trials for the ointment Tuvatexib (VDA1102) against a particularly active, fast-growing precursor of skin cancer. In general, Vidac's study data on the research and development of therapies for advanced skin cancer show encouraging results. Everything indicates that tumor growth can be contained and regression can occur without damaging healthy cells.

The Company recently announced that major shareholders and executive directors intend to increase the free float of the stock by selling part of their shareholdings. This should enable more liquid trading. The net proceeds from these sales will be reinvested in the Company to accelerate the development of projects and clinical programs.

The novel mode of action and a differentiated pipeline have convinced research firm Sphene Capital of the Company's potential. The capital market experts have set a price target of EUR 4.20 per share. Based on the current price of around EUR 0.50, this represents enormous upside potential. Vidac's market capitalization is a moderate EUR 25 million. Progress in the Phase 2B* clinical trial for the Tuvatexib (VDA1102) ointment should provide positive momentum for the share price.

Pfizer – Strategically important acquisition

Following the significant decline in COVID business, the US pharmaceutical giant is focusing on oncology. Pfizer develops, manufactures, and markets approved cancer drugs. Well-known drugs that individually generate several billion USD in annual revenue include Ibrance, Xtandi, Padcev, and Adcetris.

The group is investing heavily in new therapies. The billion-dollar acquisition of specialist Seagen was strategically significant. With this move, the Company is laying the foundation to establish itself as a leading provider of antibody-drug conjugates (ADCs) in the long term.

ADCs are a modern form of cancer drug that specifically destroy cancer cells while sparing healthy tissue as much as possible. ADCs couple highly effective cell toxins to precise antibodies that target only tumor cells. The toxin is only released inside the cancer cell. In addition, ADCs are more effective in certain types of cancer and often have improved tolerability.

The Company is valued at around USD 140 billion. Moderate P/E ratios of 13 and 11 for the current and next fiscal year, respectively, and a dividend yield of around 7% appear attractive. However, market observers expect only low revenue and profit growth in the coming years. On average, analysts see limited upside potential of 15%.

Bayer – Focus on oncology

The Life Science division is active in the areas of health and nutrition. Bayer aims to be among the top 10 oncology companies in the world by 2030. Almost a third of all molecular agents in the Company's development pipeline are related to the fight against cancer. Bayer has doubled its oncology portfolio over the past five years. The focus is on innovative therapies that specifically target tumor cells, such as precision and immuno-oncology approaches.

The performance of the share, which is one of the best performers in the DAX this year, was marked by weak operating performance and the risks of the ongoing legal dispute over a weed killer that is alleged to be carcinogenic. With burgeoning hopes of a foreseeable end to the glyphosate case and the emerging successes of the group's strategic transformation, the shares have developed positively from a bottoming out in the EUR 19 range. The stock is currently trading at around EUR 35, giving it a market capitalization of EUR 35 billion. Most recently, analysts at Berenberg raised their price target to EUR 41.

Oncology is a large market with many different areas of application and approaches. Major players such as Pfizer and Bayer are investing heavily in research and development. In addition, acquisitions are commonplace in the industry. Vidac Pharma could attract a lot of attention thanks to the progress made in its Phase 2B clinical trial. Analysts are extremely bullish.