Danish biotech companies had a tough time in 2022, with Kapital Partners’ Nordic Healthcare index falling by 48% due to greater risk aversion among investors, even though many of the companies developed according to plan. 2023 has started relatively well for Danish biotech and the stock-picking opportunities are now better than they have been for a long time. Here we look at all the companies and zoom in on three interesting small cap cases.
Price development of Danish biotech companies in 2023
3 stock-picking opportunities right now
Biotech companies are notorious for big ups and downs in share prices. In addition to the general large price movements for the whole sector in line with greater and lesser risk appetite, there are large price fluctuations at the stock level. Upswings typically occur when companies have positive research results and thus move closer to market launch, while downswings are often caused by either failed research or lack of capital. Particularly in the current stock market environment, where investors have pulled back on risky stocks, the ability to raise capital has become even more difficult and the risks in these stocks consequently greater. We take a closer look at 3 investment cases in which we see interesting upside potential in the short term, and which also have a reasonable cash position to continue their development.
1 . Targeted radiotherapy – What you see is what you treat
Curasight A/S has developed two products that can identify cancer cells (uTRACE) and target cancer cells with radiation (uTREAT) at the molecular level. The advantage of Curasight’s products is that they avoid irradiating healthy tissue, which is a major side effect of traditional radiotherapy. Curasight avoids this by using uTREAT, which binds to receptors found only in cancer cells and, with its “small radiation gun” (radionuclide therapy), emits radiation only directly at the cancer cells. This is of particular interest in the treatment of brain tumours, where radiation damage to healthy brain tissue can have significant negative effects. uTRACE has completed phase 2 studies, and planning for phase 3 studies in brain and prostate cancer is underway. uTREAT, on the other hand, is in pre-clinical development and . The largest potential exists for uTREAT, where the market for glioblastoma (brain cancer) in the US and EU is approximately EUR 5,100 million, while the market for uTRACE for the same indication is approximately EUR 200 million. At the end of Q3 2022, cash and cash equivalents amounted to MEUR 56 with a burn-rate of MEUR 7 from Q1-Q3 2022, so there is no immediate need for additional capital. Curasight has a market capitalisation of MDKK 249.
Price triggers: (1) H1 2023: Results of pre-clinical studies for uTREAT; (2) Information on planning of phase 3 studies for uTRACE and (3) Partnership with uTRACE and uTREAT.
Read more: The investment case of Curasight A/S
- Pain treatment for children
Cessatech A/S develops medicines for children with a focus on pain management. The company has developed a nasal analgesic spray (CT001), which is currently being tested in a phase 3 study. Unlike alternatives such as injections, CT001 makes it easier and faster for children to receive pain treatment. In an earlier phase 2 study involving 50 patients, the nasal spray proved safe and effective, with 94% saying they wanted the treatment again rather than alternatives. In November, the company raised approximately MDKK 15 in capital, which has provided the company with the capital to prepare for the application for approval of CT001 in the EU in 2024, should the phase 3 study achieve positive results. Cessatech A/S has a market capitalization of MDKK 22.
Price triggers: H1 2023: (1) Results of de facto phase 3 study (0205); (2) initiation of non-clinical simulation studies.
- Visualization of liver lesions
Ascelia Pharma A/S is developing (Orphan Drug) cancer treatments. The company has two drug candidates, of which Orviglance is in a Phase 3 study with expected topline results in mid-2023. Orviglance is used in MRI scans of the liver, where it is designed to improve visualization of liver lesions (liver metastases) in patients with impaired kidney function. The advantage of Orviglance is that it is the only product without gadolinium, which can cause serious side effects in patients with impaired kidney function. The market for Orviglance is estimated at SEK 5,200-6,200 million annually. Ascelia Pharma has a market capitalisation of SEK 486 million. Ascelia Pharma also has approximately SEK 180 million in cash, which extends to Q4 2023.
Overview of Danish biotech companies
There are also interesting stock-picking opportunities among the other Danish biotech companies. Below is an overview of the Danish and Danish-led biotech companies – grouped by the stage of development of their pipeline. The list includes both Danish and Danish-led biotech companies. Larger companies such as Bavarian Nordic A/S and Genmab A/S are not included.
Companies with products on the market
Y-mAbs Therapeutics is in the commercial phase. The company is primarily engaged in the development and marketing of novel antibody-based therapeutics for the treatment of cancer. The company’s pipeline includes Naxitamab, Omburtamab, GD2-GD3 vaccine and others. The company is headquartered in New York, but is managed by Danes. The company has a market capitalisation of USD 210M.
CS Medica A/S specialises in the development of products containing non-euforising medical cannabis (CBD), with a focus on the treatment of autoimmune diseases such as psoriasis and osteoarthritis, as well as hair loss and stress-related problems. The company is research-based and is the only one on the market with products under the European MDD certification. Sales are global and the products are sold primarily under the own brand CANNASEN. In 202, the company had a turnover of DKK 11M and a market value of DKK 40M.
Phase 3 (final study before possible market launch)
Ascelia Pharma AB focuses on the development of new oncological (cancer) treatments. The company identifies, acquires and develops differentiated, undervalued and high-risk candidates for investigational medicines with a view to making them available to cancer patients. The company’s pipeline includes Orviglance and Oncoral. Orviglance is a medical imaging drug candidate for use in magnetic resonance imaging (MRI) of the liver for the detection and localisation of liver metastases in patients with impaired renal function who have completed Phase 2 clinical trials. The company has a market capitalisation of DKK 486 million.
Cessatech A/S specialises in the research and development of nasal analgesic sprays, which are further used for the treatment of acute pain conditions in children. In addition to the main business, related complementary services and products are offered. The business operates globally with the largest presence in the Nordic market. The company has a market capitalisation of DKK 23 billion.
IO Biotech Inc is developing immunomodulatory cancer therapies based on the T-win technology platform. IO Biotech’s lead product candidate, IO102-IO103, is designed to target the immunosuppressive mechanisms mediated by key immunosuppressive proteins such as IDO and PD-L1. The company is a spin-off of the National Cancer for Center Immune Therapy at Herlev University Hospital in Denmark, and includes Novo Seeds as a founding investor. The company has a market capitalisation of USD 78 million.
Phase 2 (efficacy studies)
Curasight A/S has developed two products that can identify cancer cells (uTRACE) and target cancer cells with radiation (uTREAT). The advantage of Curasight’s products is that they avoid irradiating healthy tissue, which is a major side effect of traditional radiotherapy. Curasight avoids this by binding uTREAT to receptors found only in cancer cells, thereby emitting radiation only against cancer cells. uTRACE has completed phase 2 studies and phase 3 studies in brain, prostate and other cancers are planned. uTREAT, on the other hand, is in preclinical development. The largest potential exists for uTREAT, where the market for glioblastoma (brain cancer) in the US and EU is approximately EUR 5100 million, while the market for uTRACE for the same indication is approximately EUR 200 million. At the end of Q3 2022, cash on hand stood at 56 MDKK with a burn-rate of 7 MDKK from Q1-Q3 2022. The company has a market capitalisation of 249 MDKK.
ExpreS2ion Biotech Holding AB is a research and development-based company with a patented platform in biotechnological protein production. The company has its own development pipeline of vaccine candidates in COVID-19, breast cancer, influenza, and malaria. In addition, the company has revenues from the sale of manufacturing services and platform licenses. The company has a market capitalisation of SEK 466 million.
Evaxion Biotech A/S specializes in the development of AI-driven immunotherapies to improve the lives of patients with cancer and infectious diseases. The company decodes the human immune system to discover and develop immunotherapies to treat cancer and infectious diseases. Based on AI immunology core technology, Evaxion is developing a number of product candidates. In addition, Evaxion is developing a portfolio of vaccines to prevent bacterial and viral infections. The company has a market capitalisation of USD 41 million.
Fluoguide A/S focus is the development of products that improve surgical precision. The products bind to cancer cells, which then light up and are intended to be used to precisely remove harmful tumours in the patient’s tissue. FluoGuide’s most advanced product targets three serious cancer indications; brain, lung and head and neck cancer. The company has a market capitalisation of SEK 705 million.
Initiator Pharma A/S develops drug candidates used in the treatment of erectile dysfunction in men. The company currently has drugs on the market for patients who do not respond to PDE5i drugs. Initiator Pharma was created via a spin-off from Saniona. The company has a market capitalisation of SEK 323 million.
Pila Pharma conducts clinical trials against type 2 diabetes. The target product is a tablet taken orally in the early stages of diabetes to restore the body’s insulin production and thereby reduce the patient’s blood sugar level. Pila Pharma’s product candidate is XEN-D0501, a new type of oral anti-diabetic agent for the treatment of type 2 diabetes. Pila Pharma AB has conducted two phase 2a clinical trials (PP-CT01 and PP-CT02), both of which showed that XEN-D0501 is well tolerated by people with type 2 diabetes. In addition, the product is expected to have fewer undesirable side effects than alternative therapies. The company has a market capitalisation of SEK 48 million.
Saniona AB develops and researches pharmaceutical products against nervous and autoimmune diseases. The company has an extensive portfolio of drugs under development in clinical and pre-clinical stages. In addition, it collaborates with other research-based companies on the development of new products such as Pfizer Inc, Atlas Venture and Janssen Pharmaceuticals Inc. It is worth mentioning that Saniona’s lead candidate (Tesomet) is in phase 2 but has been put on temporary hold due to lack of funding. Therefore, the focus is on SAN711 for neuropathic pain, which is moving towards phase 2 trials. The company has a market capitalisation of SEK 193 million.
Scandion Oncology A/S is active in biotechnology. The company develops drugs for the treatment of cancer containing drug-resistant cell clones. The company’s drug candidate, SCO-101, has been used in preclinical studies in various standard cancer treatments. The company has a market capitalisation of SEK 120 million.
Vicore Pharma Holding AB is a pharmaceutical company. The company researches and develops molecules with agnostic action, in the industry called Renin-Angiotensin System (RAS), which affect fluid and salt balance in the body. Vicore Pharma normally enters into licensing agreements with other pharmaceutical partners in the industry and has business activities on a global basis. The company has a market capitalisation of SEK 1375 million.
Phase 1 (safety studies)
Biosergen AB is a biopharmaceutical company that was listed on Nasdaq First North Sweden in June 2021. The company develops innovative antifungal drugs based on the latest biopharmaceutical research and development from laboratory facilities in Norway and several other locations around the world. The company is developing BSG005, a potential antifungal drug that has demonstrated significant safety data and potency advantages over competing antifungal agents. BSG005, which is in clinical phase I (the first of three phases of development towards the market), could potentially reach the market as early as 2026/27.
Read more: The investment case of Biosergen AB
Price development of the Danish biotech stocks the past year
Price development of Kapital Partner Healthcare Index the since the start of 2020
