Check up: Biotechs are sinking on pandemic fears

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Here’s our fortnightly wrap of all the news driving ASX health stocks.

Of the ASX’s 137-odd small cap health stocks, 112 saw their share prices fall, 17 improved and eight were flat.

Biotech companies have not been immune to the global market rout caused by the spread of COVID-19 around the world, with the decliners dropping by an average 17 per cent over the last two weeks.

The disease has caused markets and market managers to take drastic measures in the name of stability.

The US Federal Reserve Bank dropped interest rates by a whopping 0.5 basis points overnight, to a target range of 1 to 1.25 per cent, while the RBA in Australia took the local figure down to a record 0.5 per cent, as they seek to stave off an economic crisis caused by a pandemic.

ASX stocks are suffering from investors’ jitters.

But with negative rates in Australia becoming likely as the impact of bushfires, drought, and now COVID-19 combine to bring down 2020 GDP estimates, according to Capital Economics, stocks may be one of the winners as investors struggle for returns anywhere else, particularly the usually recession-proof biotechs.

As of this week even biotechs are at a standstill. Even a coronavirus portfolio of companies that have jumped on the disease bandwagon are down.

Little-known Eagle Health (ASX:EHH) and its new friend Zoono (ASX:ZNO) are the only real winners from COVID-19 this fortnight.

Exactly two weeks ago the pair announced a tie up that would see the former distribute the latter’s products into China.

A week ago Zoono said its hand sanitiser had been proven to be effective at killing coronavirus on surfaces.

And yesterday Eagle Health went into a trading halt pending news of “executing a material commercial production contract and expansion of its manufacturing facilities”.

They may also be joined in coronavirus success by TBG Diagnostics (ASX:TDL), which owns 47 per cent of a lab in China that has just been approved as a designated testing lab for COVID-19.

A day after telling the market this good news however, TBG also released its full year results.

The company swung from a $3.5m loss to a $1.3m profit.

The swing is mainly due to results from discontinued operations of $11.8m, versus a $1.7m loss in 2018, as the company received $6m early for assets that were sold in 2016, and an impairment over those assets was partially reversed.

TBG makes molecular diagnostics kits in the US, Taiwan and China and is very lightly traded — no trades in the company were placed at all on Wednesday.

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