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May 31st, 2022 | 12:03 CEST

Watch out: BioNTech, NervGen, MorphoSys, Valneva: Biotech shares in check!

  • Biotechnology
  • biopharma
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The initial sell-off in biotech stocks seems to have been digested. With last week's NASDAQ turn, spring air is now moving through the stock markets again. That is because many investors realize that, in the face of a multitude of new diseases, a major research effort is needed to protect humanity from the burgeoning dangers. Financing via the stock market was correspondingly easy for the biotech giants during the last pandemic because investors sensed big profits in the event of success. This picture is likely to repeat itself in the next movement. Where are the current opportunities in the biopharma sector?

time to read: 4 minutes | Author: André Will-Laudien
ISIN: BIONTECH SE SPON. ADRS 1 | US09075V1026 , NERVGEN PHARMA CORP | CA64082X2032 , MORPHOSYS AG O.N. | DE0006632003 , VALNEVA SE EO -_15 | FR0004056851

Table of contents:

    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


    BioNTech and Valneva - The vaccine has had its day as a unique selling point

    After successfully containing the Corona pandemic, vaccine manufacturers must now turn to new topics in order to present their investors with a catchy growth story. After all, Corona has lost its scare with the latest Omicron variant. Vaccination rates will also no longer move significantly upward because people have now learned to deal with the virus. As a result, the opportunities for the ex-stock market darlings present themselves in a new light.

    Although BioNTech's share price has plunged 60% from the top, the stock now appears quite favorable, with a 2022 P/E ratio of 5. Investors believe that the Mainz-based company is capable of much more than many other protagonists. Together with the US giant Pfizer, they developed the vaccine Comirnaty and earned splendidly from it in the first quarter. At EUR 6.4 billion, the biotech company generated almost three times as much revenue as in the same period last year. Net income increased from EUR 1.1 billion to EUR 3.7 billion, but there are doubts for the coming quarters, as government orders have probably been largely priced in.

    In the case of Valneva, the situation is a little more difficult to assess, as this is a classic latecomer with strong competition. Although the European Medicines Agency (EMA) has now accepted the marketing authorization application for the corona vaccine VLA2001, a new EU supply order has not yet been issued. There is also a second promising product against chikungunya, a viral disease transmitted by mosquitoes. To date, there are no effective treatments or preventive vaccines against this disease, according to Valneva. That could put it in pole position in this area.

    Still, both BioNTech and Valneva are battered from a chart perspective. When the correction in the sector is over, we prefer the standard stock BioNTech for a new investment. At present, only speculators are likely to be interested in Valneva.

    NervGen Pharma - Research on the human nervous system

    The Canadian company, NervGen Pharma Corp. from Vancouver, concentrates on the human nervous system. The main areas of application are seen in the indications of Alzheimer's disease, multiple sclerosis and other spinal cord injuries, and the widespread disease of stroke. For the development and establishment of the Company, one looks back to the outstanding work of Dr Jerry Silver. He developed technologies in the 1990s that are now on the verge of therapeutic breakthroughs.

    Recently, the regulatory authorities approved an increase in the loading dose in the current Phase 1 trial of the compound NVG-291, a good sign because such a risk increase is only possible if initial positive evidence can already be provided. NervGen's approach sounds groundbreaking because the therapeutic approach is based on a molecule that restarts the natural healing process, even though the body's own substances promote scarring. In the positive case, the renewal process in the nerve tissue starts at the old scarring, which previously represented the endpoint of healing.

    A Phase II trial for multiple sclerosis (MS) is expected to start in the first half of 2023. In a recent interview, Chairman Bill Radvak described observations in animal studies where stem cells also penetrate damaged nerve areas during strokes and promote healing. Now, this sounds like a good thing. The listing on NASDAQ should be implemented before the end of 2022; currently, NervGen is tradable on the TSX and in Frankfurt. Trading is still thin, but turnover is likely to increase sharply with the US listing.

    MorphoSys - This could turn into a rally

    German biotech MorphoSys has had a long losing streak. From the top, the share lost a full 90% to EUR 16.50 - then a strong countermovement set in. In the last two weeks, courageous investors were able to take a 25% increase, but now the question is, what will happen next? The fact remains that MorphoSys is a share with a strong short ratio, which at its peak had developed to 15% of the outstanding capital. Currently, this is gradually decreasing again because hedge funds do not like to be caught on the wrong foot.

    Fundamentally, the cost burdens due to the acquisition of Constellation Pharma remain high for the time being, increasing from EUR 33.3 million to EUR 65.0 million in the first quarter. Sales fell analogously from EUR 47.2 million to EUR 41.5 million. However, in the previous year, there was a milestone payment from Glaxo of EUR 16 million. All in all, MorphoSys posted a loss of EUR 122.7 million at the beginning of the year, and cash and cash equivalents declined from EUR 976.9 million to EUR 846.9 million. When calculated with a sharp pencil, the share is currently still trading at EUR 180 million below cash. The recent AGM for 2021 went well, with all proposed items being approved by shareholders.

    The overall technical picture has now improved significantly. The plus of the last few days brings the share closer to an important chart hurdle. This critical turning point is just under EUR 21. Yesterday's close was one tick above this line, so the next few days promise to be highly exciting. Stay on the lookout. In the event of a confirmed breakout, things will move very quickly. Put a few pieces aside at the current price.

    Biotech stocks have experienced a major sell-off. Now it is time to find the pearls because a downward movement would not last forever. For BioNTech and MorphoSys, the positive signs are increasing. NervGen, with its pipeline, is an excellent opportunity to profit from ongoing future topics, so pay close attention to the news flow in the coming weeks.

    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") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price developments. In this respect, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.
    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    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 also 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

    André Will-Laudien

    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.

    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.