A ten-year analysis of a leading ASX biotech index shows returns far greater than the ASX200, writes David Langsam of Biotech Daily
The Biotech Daily Top 40 Index (BDI-40) climbed 79.6 per cent in the ten years to June 30, 2017 — compared to the ASX200 which was down 8.8 per cent over the same period.
Despite falling out of favour with investors recently, cancer drug developer Sirtex (ASX:SRX) has been the index’s best performer over the decade, up 394 per cent from a market cap of $190 million to $938 million.
BDI-40’s second biggest gainer, women’s health and drug delivery play Starpharma (ASX:SPL), is up 327 per cent from $63 million to $269 million over the period.
By comparison, the three big cap biotechs of Cochlear, CSL and Resmed (which are not included in the BDI-40) grew a combined 270.4 per cent in market cap over the decade.
The BDI-40 companies are chosen from about 140 ASX-listed life sciences companies covering drug development, devices and diagnostics, as well as electronic health and imaging companies.
Inclusion criteria are:
- The quality and innovation of the science and technology, with a preference for Australian inventions
- Benefit for human health (thereby excluding agriculture and veterinary)
- Board and management
- Market capitalisation
Data over the full 11-year life of the index shows the significance of specific time points, with the BDI-40 up 166.6 per cent, the ASX200 up 12.8 per cent and the three Big Caps up 400.1 per cent.
The conclusion is inescapable.
The benchmark index of the top 200 ASX-listed companies, selected by market capitalisation alone, is lacklustre, while the BDI-40 is up significantly (and the Big Caps are little short of a Magic Pudding).
Of the 40 companies comprising the BDI-40 at June 30, 2007, 14 remain. (Six have been successfully acquired, nine demoted and 11 departed, delisted or otherwise extinct.)
Here are the 14 BDI-40 companies that have survived 10 years:
| Company | Code | % Change | Mkt Cap ($m) Jun '07 | Mkt Cap ($m) Jun '17 |
|---|---|---|---|---|
| Sirtex | SRX | 3.9368 | 190 | 938 |
| Starpharma | SPL | 3.2698 | 63 | 269 |
| Mesoblast | MSB | 3.0826 | 218 | 890 |
| Living Cell | LCT | 2.3158 | 19 | 63 |
| Factor Therapeutics (ex-Tissue) | FTT | 2 | 15 | 45 |
| Opthea (ex-Circadian) | OPT | 1.8846 | 52 | 150 |
| Bionomics | BNO | 1.7183 | 71 | 193 |
| Neuren | NEU | 1.3922 | 51 | 122 |
| Clinuvel | CUV | 0.1978 | 278 | 333 |
| pSivida | PVA | -0.0106 | 94 | 93 |
| Benitec | BLT | -0.2121 | 33 | 26 |
| Prana | PBT | -0.4906 | 53 | 27 |
| Acrux | ACR | -0.8356 | 219 | 36 |
| Pharmaxis | PXS | -0.8637 | 587 | 80 |
The few that have fallen over the 10 years (but remain in the BDI-40) were led by Pharmaxis tumbling 86 per cent from $587 million to $80 million, Acrux (down 84%) and Prana (down 49%).
Over the past 12 months, 20 of the BDI-40 companies were up, 19 fell and one unchanged.
Osprey was the most improved from a low base, recovering 202.9 per cent from $34 million to $103 million, followed by Mesoblast (+117.1%), LBT (+111.7%), Opthea (+102.7%) and Benitec (+85.7%).
The 12-month falls were led by Acrux losing a further 70 per cent from $120 million to $36 million, Atcor (-68%), Prana (-49.1%), Sirtex (-35.9%) and Psivida (-33.1%).
Here is the full BDI-40 index showing market cap growth over the past 12 months:
| Company | Code | % Change | Mkt Cap ($m) Jul '16 | Mkt Cap ($m) Jul '17 |
|---|---|---|---|---|
| Admedus | AHZ | 0.0625 | 64 | 68 |
| Airxpanders | AXP | -0.1507 | 219 | 186 |
| Bionomics | BNO | 0.4088 | 137 | 193 |
| Clinuvel | CUV | 0.6404 | 203 | 333 |
| Compumedics | CMP | 0.8361 | 61 | 112 |
| Ellex | ELX | 0.1835 | 109 | 129 |
| Impedimed | IPD | -0.1983 | 353 | 283 |
| Medical Developments | MVP | -0.1751 | 354 | 292 |
| Mesoblast | MSB | 1.1707 | 410 | 890 |
| Nanosonics | NAN | 0.1667 | 648 | 756 |
| Neuren | NEU | 0.2979 | 94 | 122 |
| Opthea | OPT | 1.0270 | 74 | 150 |
| Pharmaxis | PXS | -0.0123 | 81 | 80 |
| Polynovo | PNV | -0.2436 | 156 | 118 |
| Prima | PRR | -0.3176 | 85 | 58 |
| Pro Medicus | PME | 0.1328 | 482 | 546 |
| pSivida | PVA | -0.3309 | 139 | 93 |
| Reva | RVA | -0.2149 | 470 | 369 |
| Sirtex | SRX | -0.3593 | 1464 | 938 |
| Viralytics | VLA | -0.0085 | 235 | 233 |
| Acrux | ACR | -0.7 | 120 | 36 |
| Actinogen | ACW | -0.1364 | 44 | 38 |
| Atcor | ACG | -0.6800 | 25 | 8 |
| Avita | AVH | 0 | 49 | 49 |
| Benitec | BLT | 0.8571 | 14 | 26 |
| Cellmid | CDY | -0.1290 | 31 | 27 |
| Cyclopharm | CYC | -0.0345 | 58 | 56 |
| Dimerix | DXB | 0.8 | 10 | 18 |
| Factor Therapeutics | FTT | 0.8 | 25 | 45 |
| Genetic Signatures | GSS | 0.0811 | 37 | 40 |
| ITL Ltd | ITD | 2.3333 | 15 | 50 |
| LBT Innovations | LBT | 1.1176 | 17 | 36 |
| Living Cell | LCT | 0.7027 | 37 | 63 |
| Oncosil | OSL | -0.2656 | 64 | 47 |
| Orthocell | OCC | 0.4211 | 19 | 27 |
| Osprey | OSP | 2.0294 | 34 | 103 |
| Prana | PBT | -0.4906 | 53 | 27 |
| Starpharma | SPL | 0.1350 | 237 | 269 |
| Universal Biosensors | UBI | 0.3036 | 56 | 73 |
| Uscom | UCM | -0.2222 | 27 | 21 |
Outside the BDI-40, the most notable improvements for the year were Optiscan from a low base of $4 million, up 825 per cent to $37 million, followed by Phylogica (+250%), GI Dynamics (+209.1%), Cynata (+139.1%), Medlab Clinical (+127%) and Imugene (+121.4%).
The dual-listed Unilife has all but disappeared, down 93 per cent for the year to June 30, followed by Innate, down 82.1 per cent for the year and 91.6 per cent for the month.
Adherium was down 69 per cent for the year, followed by Biotron (-57.9%), Anteo (-57.1%), Genetic Technologies (-48.5%), IDT (-46.9%) and OBJ (-44.4%).
David Langsam is the editor of Biotech Daily, which manages the BDI-40. David owns shares in Acrux, Admedus, Benitec, Mesoblast, Nanosonics, Optiscan and Volpara.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.