European assets ahead despite virus panic
Every year, it’s the same: in January, investors are scratching their heads, searching to find investment ideas that could ensure the greatest return/performance. Given the current valuation, can 2020 deliver windfall surprises for European names?
Predicting on the first of January which way financial markets will go is never easy, and the feeling that prevailed at the return of a famous HC Conference in January was “wait-and-see” or “wait-and-sell.” The usual frenzy in the corridors and the lobby of the hotel had subsided to a strange feeling of calm.
Generally rich in M&A announcements, the month had been quiet, and many investors saw the US presidential election as one of the potential threats for 2020. The jolt finally came from China, where, ironically, it was a very simple infectious agent (genome, capsid, and envelope) that caused the indices to fall, also taking away most of the European biotechs. Yet, in this tsunami, Acceleron’s performance (up 76.9% since 01/01) following Reblozyl’s US approval ahead of schedule and the announcement of positive Phase II data in PAH reminds us that this industry has unique and specific characteristics. Any clinical, regulatory, and/or commercial success/action is on the rise.
In a bear market, corrections inevitably create great buying opportunities. So, what can we expect for the European biotech sector in 2020, and can some of them be big winners? First, among our four locomotives (market cap >€3bn), Galapagos, Genmab, and Morphosys are all waiting for an approval in the US. On this regulatory front, Pharmamar, Cassiopea, and DBV also hope to attain the holy grail with the FDA. EMA will also play a crucial role with MAA currently under review for Advicenne, Orchard Therapeutics, and Hansa Biopharma. On the clinical front, Argenx’s Phase III results in myasthenia gravis will be scrutinised, as will those of several NASH players (Genfit, Poxel, Inventiva) or Erytech’s Phase III data in pancreatic cancer and Zealand Pharma with dasiglucagon for congenital hyperinsulinism.
The ability of the European sector to convince US and generalists’ investors to return and, thus, enable us to compete with US peers will rely on the outcome of these events. Then, it will be always be time to see if a virus is panicking the markets, because that is another story.
Certest
Consilium