Varta, Cardiol Therapeutics, Evotec - ATTENTION: Something is happening here!

Varta - Porsche to the rescue?

Varta has been in crisis for some time. The Ellwangen-based company recently reported that it was revising its revenue forecast for 2024 due to weak business developments. The expectations are now between EUR 820 and 870 million and thus significantly below the previously expected EUR 900 million. The market for energy storage systems was particularly weak in the second quarter. Prices here slumped by around 20%. Varta is currently struggling with a sharp deterioration in the market environment and internal difficulties. Delays in launching new products, such as the high-voltage storage system VARTA.wall, are also affecting revenue development.

A possible rescue could come from Porsche. The Stuttgart-based company is interested in acquiring a majority stake in the Varta subsidiary V4Drive Battery GmbH, which produces large-format lithium-ion cells. A non-binding letter of intent has already been signed. Even if Porsche's investment initially benefits the subsidiary, it could give Varta stability in the medium term. However, some uncertainties remain, such as the ongoing due diligence process and the approval of the major Varta shareholders. The latter would thus be giving up a piece of Varta's crown jewels, as there were high hopes for the V4Drive battery.

On the other hand, the shareholders do not have much choice left. The restructuring measures are taking longer, and the Company is burdened by high debts. Further development is critical in the battery business if the Company does not want to fall behind. However, significant investments are out of the question at the moment. Many things are coming together for Varta at the moment: a sluggish economy, increased costs in Germany, a hacker attack, and much more. An investment by Porsche seems like winning the lottery. The news sent the share price soaring to its current level of EUR 11.34. Nevertheless, investors should not bet on a major turnaround.

Cardiol Therapeutics - Successful Phase II study

Cardiol Therapeutics specializes in the development of therapies for inflammatory and fibrotic heart diseases, especially for rare diseases such as recurrent pericarditis and acute myocarditis. The Company's lead candidate, CardiolRx™, is an oral formulation specifically designed to target these conditions. CardiolRx™ offers the benefit of relieving inflammation without significant adverse side effects often associated with traditional treatments such as NSAIDs, colchicine, and corticosteroids. This unique formulation has received Orphan Drug Designation from the FDA for pericarditis and is also showing promise for acute myocarditis.

Cardiol Therapeutics’ Phase II MAvERIC-Pilot study, which investigated the efficacy and safety of CardiolRx™ in recurrent pericarditis, shows promising results. In 27 patients in the US, eight weeks of treatment showed a significant reduction in pericarditis pain and normalization of C-reactive protein (CRP), an inflammatory marker, in 80% of patients. These results suggest that CardiolRx™ could be an effective treatment option for patients who have not responded adequately to previous therapies. The high success rates could improve the quality of life of those affected and set new standards in treatment.

Cardiol Therapeutics is also developing a subcutaneous formulation specifically for heart failure, called CRD-38. This method aims to reduce dosing frequency while maintaining therapeutic efficacy. Previous pre-clinical studies have shown this delivery method to be effective in the treatment of heart failure. The Company’s recent positive news has attracted the attention of analysts. Both Canaccord Genuity and ROTH MKM have issued "Buy" recommendations for the shares. The price targets for the NASDAQ-listed company are between USD 8.00 and USD 10.00. This means that the shares, which are currently trading at USD 1.87, still have substantial upside potential.

Evotec - Takeover rumors and management change

Evotec has undergone a significant change in management. Following Werner Lanthaler's resignation and Mario Polywka's retirement, Christian Wojczewski takes over the role of CEO. Wojczewski, a PhD chemist with extensive experience in the healthcare industry, brings with him valuable expertise gained at Linde Healthcare and Mediq. His primary task will be to regain investors' trust. The Company also appears to be exposed to potential takeover attempts, as the share price has fallen significantly since the beginning of the year.

To guard against a possible hostile takeover, Wojczewski has commissioned Bank of America to develop a defence concept. Although no concrete offer has yet been made, private equity companies are said to have already shown interest. In addition to the challenges in the management environment, there are also positive developments at Evotec. The partnership with Bristol Myers Squibb in the field of neurology has reached an important milestone. A neurodegeneration program has entered advanced preclinical development, resulting in a research payment of USD 20 million. The partnership has been in place since 2016 and aims to develop disease-modifying treatments for neurodegenerative diseases.

There were also positive signals from the Tubulis investment. Tubulis has received Fast Track approval from the FDA for the antibody-drug conjugate candidate TUB-040 in platinum-resistant ovarian cancer. The US Department of Defense selected the subsidiary Just-Evotec Biologics for the Manufacturing Optimization Program to optimise the development and manufacturing of mAb antibodies to improve responsiveness in crisis situations. Operationally, things are progressing, but whether this will be reflected in the numbers will be revealed to investors on August 14 when the second-quarter figures are presented. The share has recently moved significantly away from the lows of EUR 7.215 and is currently trading at EUR 9.75.

In summary, exciting developments are currently taking place on the stock markets for Varta, Cardiol Therapeutics, and Evotec, which entail both opportunities and risks. Risks for small shareholders exist above all at Varta, even if the potential involvement of Porsche in the subsidiary V4Drive Battery GmbH could provide short-term relief. Cardiol Therapeutics has made remarkable progress in the development of innovative cardiac therapies with CardiolRx™, which shows promising results in the treatment of pericarditis and thus offers a significant opportunity for long-term growth. Evotec is facing important changes and possible takeover rumors while continuing to deliver operational success through strategic partnerships and new developmental milestones in neurology and oncology.