GermanyGermany

EU-biotech – coping with avoidance

04.11.2010

These days, front-page biotech-related headlines are as rare as reports of a sector-driven rally. Supranational threats and crises, on the other hand, are practically everyday events. For instance, it would have been groundbreaking news that would have sharpened investor perception if some of the CFOs of those biotech companies with sufficient cash levels had wisely optimized their returns by partial investments in gold throughout 2010. Unfortunately, they did not.
Instead, markets in 2010 have been affected by high volatility and a general lack of appetite for risk. This is reflected in a continuous trend – on a global scale, money is being taken out of dedicated healthcare funds. In total, US $ 1.7 bn has been pulled from funds this year so far, after 2009 had already seen an outflow of US $ 2.1 bn. It is therefore not surprising that in these difficult market conditions, US biotech stocks clearly outperformed Europe yet again, supported by good M&A business and favorable pipeline and marketed drug news.
While both US indices (AMEX Biotech and Nasdaq Bio­tech) were up 24 % and 10 % respectively in the first ten months of 2010, the WestLB EU Bio­tech Index (comprising the 20 largest European firms by capitalisation) managed a return of just 2 %. Indeed, investing in all 122 listed bio­tech companies equally would have delivered a combined loss of 5 %. Furthermore, as roughly a third of the industry as a whole gained in absolute terms – while former portfolio darlings like Actelion, Qiagen and Intercell were down – overall sentiment was weak amongst sector specialist and general investors, especially in Europe. With a current lack of incentives, it was difficult to convince deeper-pocketed generalists to play biotech as a great beta story. Therefore, the key question remains; will they be returning any­time soon?
We think they will. To lure back investment, the industry needs a string of meaningful product deals and takeovers. This is not unlikely, as roughly 50 compounds have shown proof-of-concept and are waiting to be signed. Moreover, we regard half of the top 30 firms with market-caps above EUR 250 m as potentially attractive targets.
Both are crucial. For general investors, a product deal means validation by an insider, while successful takeovers are not only a welcome exit strategy but also the best way to enhance intrinsic value. We think the current bid for Movetis by Shire is a good example, where the offer price represented a 75 % premium to closing price and was 55 % above the IPO value. We may also see renewed interest in the sector now that some profitable biotech stocks can be classified as value stocks in comparison to “big cap” pharma, given that these offer higher growth prospects at a reasonable price.

GermanyGermany

07.03.2012

The first of February marked a milestone for Leverkusen-based Bio­frontera AG in more ways than one. It was the first day that Ameluz, the firm’s first approved product, could be sold in German pharmacies. It was also the date...

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07.03.2012

Darmstadt – German pharmaceutical and chemical company Merck KGaA has set a downbeat tone for 2012. CEO Karl-Ludwig Kley said the recently launched cost-cutting programme and tough economic conditions will weigh on profits this...

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05.03.2012

Mainz/Leuna – Two biotech concepts were amongst the winners of the recent third round of the Excellence Cluster initiative, which is funded by the German Ministry for Research. In Mainz the champagne corks popped especially loud...

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05.03.2012

German Merck KGaA has closed a licencing agreement with US-based Threshold Pharmaceuticals Inc. The cooperation centres around the hypoxia­-activated drug TH-302, which is currently being studied in a global Phase III study....

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29.02.2012

Munich – Looking back with satisfaction and bent on a prize for good behaviour, German biopharmaceutical company Wilex AG reported yesterday on the fiscal year 2011 and outlined the shores in sight. The 2011 total revenue was...

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17.02.2012

Brussels – European cartilage researchers intensify their cooperation. The 'gristle network' comprises scientists from Belgium, France, Germany and Luxembourg. Its members plan to meet regularly to exchange views and information...

27.01.2012

Thousand Oaks/Munich - Bling bling for blinatumomab. It is a compliment for the European life sciences scene and sad news at the same time. Amgen Inc., the world's largest biotechnology company, agreed to buy Micromet Inc., an...

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20.01.2012

Martinsried - SHELTER is responsible for the fact that the stocks of 4SC behaved like a rodeo horse on Thursday. The shares rose in several stages up to 63%, only to settle at a mere 43% rise at the end of the day. SHELTER is a...

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17.01.2012

Ludwigshafen – BASF Plant Science GmbH, the agrochemistry and biotech arm of the world-largest chemistry company, thinks that it has outstayed its welcome in Europe. Over the next two years, most of the green biotechnology...

GermanyGermany

10.01.2012

Munich - It is the accolade for Micromet. The German company, which is listed on the U.S. stock exchange, announced today that it has entered into a Cooperative Research and Development Agreement (CRADA) with the renowned US...

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