Searching for high-tech pharmaceutical products: steady and boring or a roller coaster ride?

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I own shares in the Danish vaccine company Bavarian Nordic. Talk about a bore—the share price has been stuck between 180 and 200 kroner for months on end! Last year, the majority of shareholders refused to sell to a consortium even after a slightly sweetened bid. This was a disappointment for me, as I would have gladly taken a nice quick profit on my investment…

But here we are, and there are worse places to be, as I believe it is a good company. The stock value is quite significantly below analysts’ target prices (the average is around 273 kroner). BAVA is acting extremely wisely by buying back its own shares from the market at what is essentially a discount price.

The company’s core business is stable. It has a good reputation among government entities (extensive EU cooperation as well as, for example, new orders this year from the US and Canada). In crisis situations, the company has the potential to ramp up its vaccine production significantly.

BAVA has also invested in travel vaccines, which has proven to be a good focus area, at least for now. Its Vimkunya vaccine, the company’s answer to the chikungunya virus spread by certain mosquitoes, is likely to face growing demand as the climate warms (manufacturing cooperation agreements in Brazil and India).

In hindsight, one might regret that BAVA abandoned its Ebola vaccine project. But as an investment tip, it’s worth mentioning that if a serious mpox epidemic were to break out somewhere in the world, it should reflect upward in BAVA’s share price.

Regarding risks associated with the company, I would see at least the following:

  1. Competitors, especially companies on the mRNA platform, developing competing products for BAVA’s vaccines.

  2. A weak pipeline. The company experienced a couple of expensive failures in its vaccine development work in the recent past, as a result of which BAVA became quite cautious and conservative in this field. I would guess that the company will succeed over the next ten years, but what about after ten years?

I believe the time will come when the price is at least 300 kroner per share. On top of that, there are the unlikely crisis scenarios, as a result of which the demand for Bavarian Nordic’s vaccines would suddenly spike, causing the share price to skyrocket.

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1138

As I understand it, the company just put some pretty solid data on the table:

This is the largest biotech holding in my portfolio and the best case I’ve seen in my 20 years of messing around with investments (famous last words before some black swan event tanks it -90%).

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Historical control used as a comparison. I should probably look into the data to the extent it’s been shared… so were there 41 patients studied in this? I wonder how well these selected patients actually compare to this “history”?
Up 6% in pre-market on only 38k volume about twenty minutes after the PR; the reaction doesn’t exactly seem like fireworks? (But good that it’s up regardless!)

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Yeah, a bit low in absolute terms, but relative to a thousand annual cases, it’s a pretty good amount.
In cases like this, a historical control is probably the only sensible way to implement it?

They also have that canine data in the background (:dog_face:). I dug up one recent small single-arm study with a small population + canine data that was approved earlier this year :grinning_face:

P.S. Oh yeah, 5 more ended up dropping out of that 41.

IMO that patient profile is quite specific (recurrent, fully resected, pulmonary metastatic osteosarcoma) and the patients are young. There were also some subgroup analyses that confirmed comparability.

I believe these will really hit home only once the PRV, BLA approvals, and the veterinary medicine spinoff progress. Of course, I’ll take the gains already now. :grinning_face:

P.S. The company recently published some good articles justifying the case from different perspectives: OS Therapies Announces the Publication of Four Articles on OST-HER2 and Osteosarcoma in Drug Discovery World :: OS Therapies, Inc. (OSTX)

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I would have expected to see terms like “propensity matched” or similar regarding this comparator data. The FDA and others will immediately ask how well-balanced the groups were to begin with. Uniqure, for instance, got caught in the FDA’s crosshairs despite using a propensity-matched control, although that was a completely different disease, perhaps for good reason.

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Yeah, I don’t know if “pooled historical control” was just intended to be a legally safe and airtight umbrella term.

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I have a relatively small position in this and Biofrontera. Both are worth a try.

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Is anyone following the established players in Medtech? Many have been sliding down all year for reasons I don’t quite understand. Medtronic is already looking cheap. After all, these are very defensive companies with stable market positions.

I should dig deeper into their product portfolios to see if there are any potential breakthrough products hidden in the pipeline.

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I have no insight into these, but please do share any realizations if you have the time to dig into them at some point!

By the way, did you happen to look at Abivax? Does yesterday’s 44% price collapse due to cancer cases in the trial seem like an overreaction, similar to your previous excellent tip, Erasca (which I unfortunately didn’t quite catch at the just over $9 price, and then didn’t bother chasing)?
The company apparently viewed it as the incidence of cancer being consistent with normal prevalence in a population of that age…

Any idea why the XBI has collapsed almost 7% in 2 days? Is it just related to the news from Iran, oil, and inflation/interest rate risk?

Thoughts on Nektar’s price? Yesterday it was $58, which is -47% from the peak just over a month ago. Apparently, a share issue was also done back then at over ninety? Will this also bounce back 50% soon as a recoil? Has information leaked about competitors, for example, that could explain the market’s lack of enthusiasm for this stock? Or is the market just digesting the shares from the offering?

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Not really the established ones (boooring), but growth companies extensively. Medtech valuations have come down hard this year across all size categories and geographies. The risk-off sentiment seemed to start around the same time as the “AI disrupts SaaS” narrative. I don’t have an exhaustive explanation, but here are a few suggestions:

  • Tariffs likely erode the margins of large companies, as manufacturing is primarily OUS (Outside United States). And of course, it negatively affects small/mid-sized ones too, though their primary drivers are elsewhere.
  • US political uncertainty. A catastrophe for many companies if, for example, prices were to drop significantly.
  • Capital is heavily rotating into AI.
  • An inflationary environment isn’t particularly delicious for the sector. Costs rise immediately, while revenues might follow sometime later if/when the payer adjusts reimbursements.

Despite some headwinds, I see the situation as clearly net-positive. In my opinion, valuations have dropped much more than the risks have increased, at least in the companies I follow.

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Even Martin Shkreli has already commented on Abivax. These kinds of situations have certainly been buying opportunities lately; there’s a long list of examples. Those couple of cases can likely be chalked up to coincidence. Of course, it is a bit bothersome that they occurred with the higher dose. But on the other hand, there are similar warnings for JAK inhibitors as well. And the efficacy figures were really strong. Now the stock already seems to be recovering…

In Nektar, I’m following the anchored VWAP from the decisive Phase 2 results news. Actually, I use the same tactic for many stocks where I’m building a position; it worked quite well with Nebius. There needs to be a day with a large price movement and volume driven by some catalytic news in the background. It’s amazing how that VWAP acts like a magnet. Last time, I didn’t believe it would drift there and made my first purchases already at 42 dollars.

I don’t have a specific view on XBI, it’s a strange drop indeed. At least I haven’t noticed any major news. I’m sure some narrative can be found if you dig around the web, but it feels like the narrative always follows the price and not the other way around…

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Thanks for the answers!
Abivax indeed seems to be recovering reasonably well. However, perhaps there are slightly more lingering doubts here than with Erasca, where the hype surrounding the competitor also helps build buying enthusiasm, so maybe it won’t shoot upward quite as cheerfully? I’ll have to keep an eye on it.

I’ll be watching with interest to see if it goes toward 50 dollars or slightly below, where the VWAP seems to be. It’s certainly a volatile stock.
Would you (or others) have a recommendation for a good free website/app where I could get VWAP visible? I haven’t practiced technical analysis at all, but I could start learning the basics.

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Yahoo Finance seems to have it

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I tried Infront and TradingView myself, but I liked TC2000 the most; being non-browser-based makes it very fast, with a fully customizable UI and really extensive, customizable scanner features and watchlists. The TA (Technical Analysis) features might not be as good, but for me, these basic moving averages, volume profile, and VWAP are enough. $49.90/month :grinning_face_with_smiling_eyes:

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Thanks! I checked Yahoo Finance before asking and didn’t find it right away, I’ll have to look more carefully. Or maybe it’s worth paying a bit for a tool that actually works…:thinking:

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Abivax has recovered impressively by 50% in two days - didn’t end up getting in, as I was already wondering at a 12% correction whether it was too late to start chasing the rally :laughing:

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