ASX Health Winners March: A rebound? Aussie biotech sector is on the radar of Asian investors

• ASX Health Index rebounded in March, up 1pc, but still trails ASX200
• There are signs the healthcare space is coming back to life after a difficult 2023
• 6 ASX healthcare companies fronted fundies in Singapore

The S&P/ASX 200 Health Care [XHJ] rebounded in March, finishing just over 1% higher. However, it still trailed the broader ASX200 index, which rose by 3% in March.

It was a tough year in 2023 for the healthcare space, but there are signs now that things are beginning to pick up.

Aussie biotech companies are now starting to raise money and investor interest at a faster rate since the peak of the pandemic market boom.

Earlier this month, six Australian ASX listed biotech company CEOs fronted Asian-based funds and family offices in Singapore to pitch their investment case and win new investors.

The six companies were:

Recce Pharmaceuticals (ASX:RCE)
Arovella Therapeutics (ASX: ALA)
PharmAust (ASX:PAA)
BCAL Diagnostics (ASX:BDX)
Prescient Therapeutics (ASX:PTX)
Neurotech International (ASX:NTI)

The surge in interest among Asian investors marked a sharp turnaround after a two-year deal drought that forced many biotechs to cut jobs and shelve projects to save costs.

“There’s been a noticeable improvement in sentiment among investors in Asia,” said Omar Taheri, a former Sydney-based Macquarie investment banker now based in Singapore.

Taheri said interest from Asian based funds and family offices had been encouraged by a rebound in Australian biotech stock prices.

He said expectations the US Fed Reserve will soon start cutting interest rates, and a boom in M&A in the US biotech sector, were also driving interest.

A key barometer of the biotech sector, the US SPDR S&P Biotech ETF, is up 40% since its record low of October 2023.

Big interest in Aussie biotechs

Taheri says the most notable shift is an increase in “opportunistic” deals from companies whose fundraising was not linked to encouraging drug trial data or other scientific milestones.

“In two years of challenging markets, most companies were relying on catalysts to raise capital. Now broader investor interest has created a window for opportunistic issuance,” he said.

“There’s a good backlog of biotechs who didn’t raise funds over the past year or so who are sharpening their pencils again and Asian-based investors are very interested in Australian companies,” Taheri said.

Taheri also said Asian-based investors were more comfortable investing in Australia’s biotech sector thanks to the robust science and innovation of its universities and entrepreneurs.

Biotechs are particularly reliant on equity markets, because they often need large amounts of capital to fund drug development before they generate enough revenue to repay debt.

Here are the ASX Biotech Winners for March 2024

Osteopore (ASX:OSX)

Osteopore’s stock price spiked 400% in one day after announcing that it has received clearance from two regulators, namely Singapore’s Health Sciences Authority (HSA) and Vietnam’s Department of Medical Equipment and Construction (DMEC), for its aXOpore product, which is essentially a porous lattice that is used around existing bones, which mimics the natural bone microstructure to promote new bone growth.

However… this massive spike comes on the tail of a recent huge fall in share price for Osteopore, after the company went to market seeking $3,000,000 through a placement priced at a massive 94.42% discount to last closing price.

That came about through a number of factors, including an ill-timed 15:1 consolidation.

Mesoblast (ASX:MSB)

Mesoblast jumped 50% after announcing that US FDA has informed the company that following additional consideration, the available clinical data from its Phase 3 study MSB-GVHD001 appears sufficient to support its submission.

Mesoblast has previously submitted to the FDA a proposed Biologics License Application (BLA) for remestemcel-L for treatment of pediatric patients with steroid-refractory acute graft versus host disease (SR-aGVHD).

Mesoblast now intends to file the resubmission during the next quarter, seeking to address all remaining product characterisation issues.

Race Oncology (ASX:RAC)

Race Oncology has been issued a Certificate of Analysis (CoA) for its first current Good Manufacturing Practice (cGMP) batch of proprietary bisantrene formulation RC220.

The certificate of analysis was issued by Ardena for first cGMP batch of bisantrene formulation RC220.

This confirmed that RC220 meets all cGMP specifications required for a human IV drug product.

The company says this was a major milestone in the progress of RC220 for use in human clinical trials.

Immuron (ASX:IMC)

Immuron jumped after announcing interim topline results confirming the efficacy of Travelan in preventing diarrhoea following a bout of enterotoxigenic Escherichia coli (ETEC).

The study on 60 patients show that a single daily dose of Travelan is 36.4% effective in the prevention of moderate to severe diarrhoea induced by ETEC, when compared to the placebo group in the study.

Around 66.7% protective efficacy against ETEC-induced severe diarrhoea was also observed in the patients taking Travelan, compared to the placebo group (secondary endpoint).

Invion (ASX:IVX)

Invion rose after saying that its topically applied INV043 in combination with an immune checkpoint inhibitor (ICI) resulted in ~80% of subjects being tumour-free.

The study was conducted at the Peter MaCallum Cancer Centre using immune competent anal squamous cell carcinoma (ASCC) in vivo models.

The results support previous findings by Hudson Institute using intratumorally administered INV043 in combination with ICIs on another cancer type (triple negative breast cancer).

And here are the ASX Biotech Losers for March 2024