Check Up: Gloomy days for biotechs, but there were significant moves on the ASX this week
Health & Biotech
Health & Biotech
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In February 2021, the biotech market was trading at peak levels as the world grappled with the biggest and most deadly wave of the pandemic.
Fast forward one year, and everything has changed as biotech investors stare down a correction market that has crippled stock performances.
On the ASX, the XHJ Healthcare sector index is also down 12% this year.
One reason for the surge last year might be what experts call “tourist investors” – traders who seek out quick profits to take advantage of market conditions.
Although the selloff has been pretty much broad-based (for example giant Moderna (NASDAQ:MRNA) is down 40% this year), most of the biotech losses are concentrated in small and mid-tier companies.
Analysts say smaller biotechs are more impacted due to the rising rates cycle we are in, which tends to recalibrate valuations downwards for non-revenue stocks.
Gerry Fowler, fund manager of Edinburgh investment house Abdrn, told the AFR that time is up for these stocks.
“Tech and biotech have benefited the most from low inflation, low-interest rates and quantitative easing. We think this cycle is over for that type of company,” Fowler said.
Capital raising has also dwindled significantly this year. In 2021, there were 240 new listings on the ASX raising $13 billion in capital, but that frenzy is nowhere to be seen this year.
One common prediction in the industry is there will be a wave of big pharmas opportunistically swallowing smaller biotech companies as share prices fall.
To the ASX, here are the worst and best performing stocks this week.
Race Oncology (ASX:RAC) was one of the best performers this week, after releasing compelling pre-clinical kidney cancer results for its lead drug, Zantrene.
The study concluded that Zantrene on its own, and in combination with known drugs, can kill kidney cancer cells at clinically relevant concentrations.
Race says these results support advancing Zantrene into the clinic as a possible new treatment option for advanced kidney cancer patients.
LBT Innovations (ASX:LBT) has this week announced the first purchase order placed by Thermo Fisher for five APAS Independence instruments.
Under the terms, the instruments are expected to be shipped progressively over the next four months, with full order shipment expected no later than 31 July.
No figures were disclosed.
Mach7 Tech (ASX:M7T) has also received deals from two existing customers, Trinity Health and Penn State Milton S. Hershey Medical Center.
Trinity Health signed a $0.9m statement of work (SOW) contract, which will involve the first deployment of its imaging platform.
Penn State meanwhile signed a $1.5m contract renewal and licence expansions for the Mach7 Enterprise Imaging Platform.
The US FDA has agreed for EBR Systems (ASX:EBR) to include leadless (wireless) pacemakers as a co-implant in the pivotal SOLVE-CRT IDE clinical trial.
Pairing leadless pacemakers with the WiSE CRT System is expected to deliver better cardiac resynchronisation therapy (CRT) for eligible patients.
If approved for final labelling, the opportunity to pair leadless pacemakers could potentially expand EBR’s addressable market by US$400m in 2024.
AnteoTech’s (ASX:ADO) share price has plunged by 40% this week on no news, which led to an enquiry by the ASX.
In its response, ADO said it wasn’t aware of any material information that could affect the share price.
The company had earlier released an investor presentation where it discussed its patented nano-technology.