MoneyTalks: Tony Locantro’s 3 contrarian biotech picks in a time of market volatility
MoneyTalks is Stockhead’s regular drill down into what stocks investors are looking at right now. We’ll tap our extensive list of experts to hear what’s hot, their top picks, and what they’re looking out for.
Today we hear from Alto Capital investment manager Tony Locantro.
“I still think biotech stocks are going to provide the best bargains over the next few weeks with tax loss selling.
“The Australian biotech sector has suffered from the Nasdaq sell-off – Nasdaq biotech stocks have been poleaxed; investors are throwing them out with no regard to fundamentals at all.
“There have been some delays to clinical trials and drug manufacturing due to COVID but any major tax loss selling we are going to pounce on it because we know the stocks people are underwater on.
“This creates a good opportunity for investors because all the fundamentals are still in place – the companies have built strong assets and there have been a lot of medical advances made against the backdrop of a weak Nasdaq, which has flowed through to the sector.
“A lot of the hot stocks such as lithium and anything ending in ‘ium’ have just massively overshot to the upside and unloved stocks have just been totally overlooked.”
In terms of valuation and sentiment, Locantro sees good value in the following three biotech stocks, which he says is a bit of a contrarian play.
Contrarian investing involves buying and selling in an opposite direction to the general market sentiment.
Locantro’s first pick is Nyrada, a US biotechnology company focusing on innovative molecule drugs in non-oncology fields.
“They have had a delay with the manufacturing of the cholesterol inhibitor due to the Shanghai lockdowns and are working towards a healthy volunteer study in the second half of the year.
“The drug in an engineered mice study showed very good signs and a great reduction in LDL cholesterol.
“It also performed well up against Lipitor – the world’s most popular statin.
“They are developing a drug for concussion and traumatic brain injury which is at a very early stage in collaboration with the Walter Reed Military Institute of Research in the US.
“The stock at 17 to 18 cents looks good value.”
This was a 60c IPO that now finds itself struggling at around 19c, Locantro says.
“It has been absolutely hammered and I’d expect more selling pressure on it.
“They are innovating radiopharmaceutical therapies – they are going to start multiple clinical trials in the US and Australia in areas such as lung and prostate cancer.
“It is in very early stages, but the company has made solid progress.”
CHM have built an asset portfolio in Car-T cancer therapy with a focus on glioblastoma.
“They are ramping up dosing trials and are trying to expedite them and are also building an asset pipeline.
“The company recently raised money at 17c with an option and are now finding themselves at 12c, under pressure from tax loss selling and general biotech weakness.
“Both radiopharm and CHM are associated with executive chairman Paul Hopper, who has had successful biotech career with the takeover of cancer company Viralytics.”
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.