ASX Biotech September Winners: Healthcare down 5pc, but experts say it’s still best sector in a recession

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• Expert says Australia is not capitalising on its biotech research
• Morningstar says biotech still best sector to hold during a recession
• We look at ASX biotech winners in September

The MD of one of Australia’s global biotech funds says Australia’s unsophisticated approach to capitalising on research will leave it unable to capitalise on an upturn in biotech markets.

Returning from one of his regular trips to the US, Charles Williams, the managing director of specialist life sciences fund, HB Biotechnology, remains convinced that the Australian biotech ecosystem is less sophisticated than the US and Europe – and is likely to remain this way.

He also thinks a biotech boom appears to be on the horizon, but Australia may not be fully geared up to capitalise on this potential growth.

While Australia does not lack talent and is home to some of the most productive biomedical research facilities in the world, one significant hurdle is the comparatively limited funding and lack of depth in quality management available for biotech startups and research initiatives in Australia.

This means that our best biotech companies are usually being sold to Big Pharma of the world at a very early stage of their development.

Williams believes that despite having one of the world’s top five biotechnology research centres on Australian lands, the country still fails to compete with the US and Europe when it comes to commercialisation.

He advised investors, however, that biotech offers a more desirable investment opportunity with better returns as we approach choppy waters with recession potentially being around the corner.

“Investment in biotech in Australia still needs to improve per global comparison,” he said.

“But there is great benefit in looking at biotech as a significant investment sector rather than simply as an area of research.”

Biotech still best sector in a recession – Morningstar

Meanwhile, the S&P/ASX 200 Health Care [XHJ] index was down -5.5% in September.

In the US, the benchmark NASDAQ Biotechnology Index was also down -4.81% as traders weighed the prospects of a “higher for longer” strategy by the US Fed Reserve.

According to Morningstar analyst, Amy Arnott, healthcare and consumer staples will always be one of the most resilient performers during periods of economic weakness.

“Consumers can’t easily cut back on prescription drugs, medical devices, or household basics like canned goods and paper towels even if they’re feeling the effects of a weaker economy,” she said.

But does the prospect of a looming recession mean you should overhaul your portfolio?

“No. In fact, making wholesale shifts in portfolio holdings is usually a bad idea,” Arnott said, adding that being mentally prepared for a recession can actually help investors survive a tough period ahead.

“Studying how the market has historically performed can help you set expectations for how your holdings might react if and when the economy weakens,” she said.

ASX Biotech Winners in September

Biotron (ASX:BIT) 

Biotron shares spiked in the last week of September, and the company was promptly issued a speeding ticket by the ASX.

This follows a Tuesday message to shareholders from CEO Michelle Miller, who talked about the near-term outlook for BIT as it nears the final stage of three Phase 2 clinical trials for HIV‐1 and COVID‐19.

Biotron is developing a batch of new anti-viral therapies which potentially have broad applications.

Neurotech (ASX:NTI)

Neurotech announced the completion of patient recruitment in the company’s Phase 1/2 clinical trial investigating the use of NTI164 in female Rett Syndrome patients.

The NTIRTT1 clinical trial will examine the effects of daily oral treatment of NTI164 in 14 Rett Syndrome patients, following on from the company’s successful presentation at the 2023 International Rett Syndrome Scientific Meeting in Tennessee.

As a result of the rapid recruitment into this study, Neurotech anticipates results of the trial in early Q1 2024, which will provides Neurotech an accelerated clinical result in this rare neurological disorder where safe and effective therapies are of paramount importance.

Arovella Therapeutics (ASX:ALA)

ALA announced that David Simmonds, non-executive director, will retire from the board of directors at the 2023 Annual General Meeting, expected to be held on 10 November.

Simmonds was appointed to the board in March 2019.

ALA has upcoming milestones, including a still-in-progress due diligence to obtain a licence for a technology owned by the University of North Carolina.

ALA is also in preliminary early stage negotiations to enter into an intellectual property licence agreement with a prospective licensor, Sparx Therapeutics.

The company’s lead asset is ALA-101, a potential treatment for B cell lymphomas and leukaemias.

Proteomics (ASX:PIQ)

PIQ surged after announcing a major milestone in the commercialisation of its predictive test for diabetic kidney disease, PromarkerD, with the US Centers for Medicare & Medicaid Services (CMS) setting a national reimbursement price for the test in the US.

The CMS has listed and assigned a reimbursement payment rate of US$390.75 for PromarkerD in the US.

This rate is set for all patients accessing government-funded healthcare in the US – Medicare covers those over the age of 65, while Medicaid covers eligible low-income Americans.

It will be delivered through Sonic Healthcare USA, and is expected to become final after a 30-day period of public comment, with effective date of 1 January 2024.

Genetic Technologies (ASX:GTG)

GTG says that its expanded geneType Multi-Risk Test is now available to order in Australia.

The three new diseases – pancreatic cancer, melanoma, and atrial fibrillation – were approved for sale in Australia by the National Association of Testing Authority (NATA).

Separately, GTG announced that a Medical Research Future Fund (MRFF) grant has been awarded to a group of renowned national and international research and charity organisations.

The grant will provide funding for the CASSOWARY Trial – a trial aimed to investigate how funding for genomics-based cancer screening can be utilised in the future.

GTG also announced a partnership with the Gold Coast Private Hospital (GCPH), a member of Healthscope, to establish a Precision Medicine Clinic at the hospital.

ASX Biotech Losers in September

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