Check Up: Fundie says ‘buy the dip’ as biotech loses shine amid pandemic rebound

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Has investor fatigue started to creep into the biotech sector?

Despite being one of the darlings during the pandemic, stocks in the sector have recently been sold off as the world gradually emerges from lockdowns.

The pandemic had lifted stocks like Moderna (+300% in one year) to new heights, but recently investors’ interest in the sector has cooled off.

The Nasdaq Biotechnology Index has fallen by 8% over the past month, while the S&P Biotechnology Select Industry Index is down 5%.

In Australia, the S&P ASX 200 Health Care index (ASX:IHJ) is also down 4% in the last 30 days.

But BK Asset Management’s Boris Schlossberg reckons that investors need to stick with the biotech sector for the long run.

“Life sciences generally as a sector is going to be one of the key sectors of the 21st century,” Schlossberg told CNBC’s Trading Nation program.

“This is one of those types of sectors that you simply cannot ignore. It’s going to be a core holding for any investor,” he said.

“Whatever sell-offs we have, whatever dips we have in this sector are very much temporary. You’ve got to just buy the dip here all the way through.”

Best and worst performing ASX health stocks

Medical Developments (ASX:MVP) was the best performer for the month, after releasing its FY21 annual report which detailed a strong rebound of Penthrox sales in the first half. Gross revenue in FY21 was $25.7m, growing 9% from the prior year. Insiders have also been buying the company shares, which led to the stock price rising by over 30% during the month.

Investors have been buying Atomo Diagnostics (ASX:AT1) since its COVID-19 rapid antibody and antigen tests were added by the TGA to the ARTG (Australian Register of Therapeutic Goods). Around 50,000 antibody test units were sold in H2 FY21, with antigen test unit sales set to commence in Q4. The company also expects demand to step up very significantly in Q1 FY22.

Antisense (ASX:ANP) presented its ATL1102 proteomics data at the World Muscle Society 2021 Virtual Congress, held on 20-24 September. ANP’s ATL1102 drug has been shown to be effective in reducing multiple sclerosis (MS) lesions in a Phase IIa clinical trial, with the data also having been published in the medical journal, Neurology.

Shares in biotech Cellmid (ASX:CDY) lifted after it provided an outlook guidance for FY22. Cellmid says its store and salon sales are likely to continue to be affected in the first half of FY22 in Australia, but will improve in the second half. The company will also continue to monitor the situation in the US for a possible re-entry into the market.

Recently listed Lumos Diagnostics (ASX:LDX) is down 19% for the month, after withdrawing an announcement outlining an economic evaluation of its FebriDx respiratory disease test. The company said it was not intended to constitute a financial forecast of the potential market for FebriDx.

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