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Danish pole position among best Nordic life science stocks in H1

Dansk pole position

Danish pole position among best Nordic life science stocks in H1

8 July, 2024

The first six months of 2024 have passed and it is time to swap the ergonomically designed office chair for a sunbed At BioStock, it is also time for a half-year review to see which life science stocks have fared best so far this year. How have investors placed their bets going into H2?

Inflation and interest rates continue to dominate the overall sentiment in the life sciences sector, and there is still some way to go before we get back the good old times that prevailed until the peak in 2021. From all appearances, we will probably have to wait a while before we see a major upward adjustment in the sector, but we at least see bit of a levelling trend, where more and more stocks are trading in positive territory relative to the start of the year – and there is some strong price action to report.

Gubra winner on the obesity hype

Danish biotech company Gubra is at the top so far this year with the share surging over 400 per cent. The company’s CRO business is doing well, but most people are probably keeping their eyes on the drug development part. The reason for this is all the projects in obesity, some of which are run in-house and others in collaboration with Boehringer Ingelheim.

On the one hand, the share price has been helped by analysts gradually raising their estimates for how large the obesity market will be. On the other hand, data from competing Zealand Pharma has ignited hopes for Gubra’s amylin analogue Gubamy, which is currently in phase I.

Zealand has also had a strong 2024 on the stock market after several promising data readouts in the obesity area. The company recently announced a big capital raise of DKK 7 billion in a private placement for the continued development work.

The valuations surge

The expectations of companies operating in the obesity area are clearly high, and we see valuations reflecting this in several places. In the case of Gubra, the market capitalization at the time of writing is just over DKK 9 billion. A pretty juicy valuation for a company that last year had sales totaling DKK 205 million and where the development pipeline has not reached beyond phase I.

A sign that the valuation may have gone a bit too far came recently when the company’s CEO Henrik Blou sold shares worth just over DKK 30 million. The official explanation for the sale was that it was made to be able to pay taxes.

Generational change in Pila Pharma

Obesity is also the theme for the next company on the list of this year’s runners, Malmö-based Pila Pharma, whose share price has risen by more than 200 per cent in 2024. The company’s TRPV1 inhibitor XEN-D0501 is currently being prepared for phase IIa studies in obese patients suffering from type II diabetes.

In the company’s recent news, we note the generational change in mid-April, when founder and major shareholder Dorte X. Gram handed over the CEO position to her son, Gustav H. Gram. In connection with that, she herself took over as chairman of the board.

New CEO and business model lifts Acarix

Next on the list of the first half of the year’s strongest stocks is Acarix, which has climbed 182 per cent. In February, the company brought in Aamir Mahmood as the new CEO and shortly thereafter a new business model was launched for the CADScor system on the US market. During the year, Acarix has carried out two directed share issues totaling approximately SEK 55 million to support that work.

Phase III results provide rocket fuel

Another stock that has risen sharply is Ascelia Pharma, which has developed the contrast agent Orviglance for use in MRI scans of the liver. Interest in the company increased during the year ahead of results from the phase III study Sparkle. Topline was positive and now all eyes are on the next steps in the process, market approval and launch.

Ascelia estimates that a new drug application could be submitted to the FDA in the middle of next year, potentially leading to approval in 2026. In parallel with this, discussions are ongoing with potential commercial partners.

In other words, excitement is on the rise and the stock has advanced by about 180 per cent so far this year.

Expectations of agreement in Hamlet

We have also seen good development in Hamlet BioPharma, whose share has climbed more than 160 per cent. At the beginning of the year, the company secured almost SEK 47 million to mainly drive the development of Alpha1H towards phase III studies. The fast-track designated drug candidate is designed for the treatment of bladder cancer. In addition to preparing for the study, much focus will be on securing a partnership agreement.

Hopes for continued shift in trend

As we mentioned earlier, there is more and more evidence pointing towards a trend shift in life science. But before we see a major turnaround in the stock market for the sector as a whole, investors continue to cherry pick, which the aforementioned companies are good examples of.

It is clear that obesity continues to attract a lot of interest in the wake of Novo Nordisk’s success. We can also see investors preferring late-stage projects, with potentially game-changing milestones around the corner.

BioStock will continue to keep a close eye on the trends in the sector and will probalbe have reason to return to these topics going forward.

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