• A study explores the correlation between higher rates and biotech stock prices
  • And also High Cap vs Low Cap biotechs in a rising rate cycle
  • We look at the best performing ASX biotechs over the past two weeks

The Fed and RBA raised interest rates last week to tackle inflation, and both have promised to unleash more hikes this year.

With rates moving higher, what could investors expect from biotech stocks?

Theoretically, higher rates are bad for tech stocks – and that includes biotech.

The reason is simple cashflow discounting – when higher rates are used to discount cashflows, the present value (or today’s stock price) will be lower.

This is especially pronounced in growth stocks where revenues don’t yet exist, which means cash flows have to be discounted from further out in the future.

That’s the theory but in practice, that negative correlation doesn’t quite exist.

According to a study from Bank of America analyst Ying Huang, there is no such negative correlation between higher rates and biotech stock prices. In other words, higher rates do not necessarily translate to deflated biotech prices.

However, the study did find that larger capped biotechs are less sensitive to rate changes than smaller capped ones.

The moral? Investing into large cap biotechs is perhaps the better way to invest in the sector heading into a higher rate cycle.

So what does it mean for small cap biotechs? Do they have a place in this current cycle?

Some experts argue that smaller biotechs could in fact be a good hedge in an inflationary environment.

This is because junior biotechs mostly rely on debt to survive, and outstanding debt is worth less in the future when inflation chips away at the value of a dollar.

This is turn, makes the debt holder more valuable….theoretically speaking.

Significant  ASX healthcare movements

CODE COMPANY PRICE 1 WEEK RETURN % 1 MONTH RETURN % 1 YEAR RETURN % MARKET CAP
PNV Polynovo Limited 1.07 17% -3% -61% $711,314,647.30
OVN Oventus Medical Ltd 0.021 17% -49% -84% $4,834,530.70
HXL Hexima 0.335 15% 10% 116% $53,512,481.59
OPT Opthea Limited 1.165 13% 17% -16% $373,055,636.80
AVE Avecho Biotech Ltd 0.019 12% -5% 6% $33,080,625.47
BIT Biotron Limited 0.092 10% 19% 64% $65,981,675.02
PTX Prescient Ltd 0.14 8% 0% 61% $94,299,764.73
PCK Painchek Ltd 0.039 5% -7% -39% $44,140,387.16
LDX Lumos Diagnostics 0.31 5% -3% 0% $46,740,863.18
IMM Immutep Ltd 0.345 5% -4% -23% $294,521,537.10
CHM Chimeric Therapeutic 0.115 5% -23% -56% $35,075,244.84
PAA Pharmaust Limited 0.095 4% 3% 1% $28,522,114.47
GLH Global Health Ltd 0.25 4% -17% -57% $14,162,441.75
CAJ Capitol Health 0.335 3% -3% -7% $333,509,603.84
IRX Inhalerx Limited 0.094 1% -22% -15% $15,835,893.96
GSS Genetic Signatures 1.25 1% -3% 4% $179,116,870.00
ALT Analytica Limited 0.001 0% -50% -67% $4,613,801.13
RGS Regeneus Ltd 0.052 0% -13% -48% $15,934,719.53
SCU Stemcell United Ltd 0.014 0% 0% -22% $14,696,980.89
ICS ICSGlobal Limited 0.575313 0% 0% 4% $6,054,604.94
FFC Farmaforce Ltd 0.035 0% 0% -56% $4,573,834.30
TRU Truscreen 0.061 0% -12% -24% $21,771,975.18
BNO Bionomics Limited 0.062 0% -13% -73% $83,907,746.13
MXC Mgc Pharmaceuticals 0.023 0% -2% -62% $62,544,642.39
NTI Neurotech Intl 0.05 0% -14% -15% $37,675,752.80
SDI SDI Limited 0.8 0% -7% -6% $95,686,751.65
OSX Osteopore Limited 0.185 0% -5% -63% $21,694,624.03
PAR Paradigm Bio. 1.17 0% 2% -48% $266,287,080.15
BPH BPH Energy Ltd 0.037 0% 0% -53% $24,603,085.29
PAL Palla Pharma Ltd 0.295 0% 0% -31% $47,764,383.09
OSP Osprey Med Inc 0.2 0% -38% -88% $5,131,708.40
PIQ Proteomics Int Lab 1.005 0% -13% 1% $106,234,404.38
NEU Neuren Pharmaceut. 3.78 -1% -4% 182% $466,073,001.20
LBT LBT Innovations 0.086 -1% 8% 9% $28,471,237.42
ICR Intelicare Holdings 0.082 -1% -9% -67% $7,083,181.65
ACR Acrux Limited 0.075 -1% -17% -48% $21,332,775.08
HGV Hygrovest Limited 0.06 -2% -3% -40% $13,797,239.10
NXS Next Science Limited 0.87 -2% 5% -51% $178,793,835.65
RAP Resapp Health Ltd 0.1125 -2% 25% 139% $98,807,663.86
BDX Bcaldiagnostics 0.097 -3% -22% 0% $12,813,186.87
CDX Cardiex Limited 0.3375 -4% -11% -50% $37,384,258.00
ARX Aroa Biosurgery 0.81 -4% 5% -28% $274,179,366.40
IDT IDT Australia Ltd 0.135 -4% -18% -58% $33,743,051.58
OIL Optiscan Imaging 0.13 -4% -10% -70% $86,685,984.28
DXB Dimerix Ltd 0.13 -4% -26% -49% $40,109,208.25
IHL Incannex Healthcare 0.365 -4% -22% 16% $473,230,858.77
RCE Recce Pharmaceutical 0.835 -4% -12% -27% $143,993,723.78
ATX Amplia Therapeutics 0.11 -4% -27% -56% $22,293,210.12
DOC Doctor Care Anywhere 0.22 -4% -19% -76% $49,988,424.20
EZZ EZZ Life Science 0.3525 -5% -6% -41% $4,785,000.00
NC6 Nanollose Limited 0.0875 -5% -17% -8% $13,027,557.20
1ST 1St Group Ltd 0.0095 -5% -5% -54% $4,987,384.27
ZNO Zoono Group Ltd 0.19 -5% -21% -73% $29,954,106.90
IIQ Inoviq Ltd 0.56 -5% -30% -79% $51,990,566.63
CYP Cynata Therapeutics 0.365 -5% -13% -40% $52,295,956.81
AMT Allegra Orthopaedics 0.18 -5% 0% -40% $18,802,656.54
MVF Monash IVF Group Ltd 1.17 -5% -3% 37% $459,769,111.20
ATH Alterity Therap Ltd 0.017 -6% -11% -39% $43,323,742.40
1AD Adalta Limited 0.063 -6% -13% -51% $19,793,639.00
OSL Oncosil Medical 0.052 -6% 22% -42% $43,617,164.70
RAC Race Oncology Ltd 1.955 -6% -24% -43% $307,075,580.35
AC8 Auscann Grp Hlgs Ltd 0.061 -6% -14% -49% $26,432,826.60
BXN Bioxyne Ltd 0.015 -6% -17% -35% $9,602,180.97
RHY Rhythm Biosciences 1.2 -6% -27% 24% $254,756,623.24
IBX Imagion Biosys Ltd 0.044 -6% -23% -42% $48,212,396.96
RAD Radiopharm 0.21 -7% -2% 0% $23,718,632.20
RAD Radiopharm 0.21 -7% -2% 0% $23,718,632.20
PYC PYC Therapeutics 0.082 -7% -14% -47% $257,655,014.34
CYC Cyclopharm Limited 1.375 -7% -15% -53% $129,324,129.86
AGH Althea Group 0.13 -7% -30% -70% $42,596,265.83
PXS Pharmaxis Ltd 0.09 -7% -3% 7% $49,403,084.67
PBP Probiotec Limited 2.22 -8% -2% 8% $184,604,131.62
S66 Star Combo 0.18 -8% -12% -28% $24,210,536.58
TLX Telix Pharmaceutical 3.91 -8% -11% -5% $1,202,144,790.00
BOT Botanix Pharma Ltd 0.071 -8% -15% -10% $68,119,945.18
MEM Memphasys Ltd 0.058 -8% -21% -3% $45,946,343.55
ALA Arovella Therapeutic 0.034 -8% -17% -6% $24,114,068.14
M7T Mach7 Tech Limited 0.565 -8% -21% -48% $127,771,935.68
KZA Kazia Therapeutics 0.775 -8% -32% -44% $107,113,972.80
IMU Imugene Limited 0.165 -8% -28% -37% $965,051,625.12
CPH Creso Pharma Ltd 0.053 -9% -24% -73% $66,110,917.60
IPD Impedimed Limited 0.105 -9% -13% -16% $186,677,372.18
PAB Patrys Limited 0.021 -9% -9% -4% $45,253,994.65
ANP Antisense Therapeut. 0.105 -9% -9% -40% $66,879,397.80
4DX 4Dmedical Limited 0.615 -9% -13% -53% $125,373,457.80
VHT Volpara Health Tech 0.755 -9% -16% -40% $186,431,959.94
AHC Austco Healthcare 0.1 -9% -20% 2% $28,708,566.90
EXL Elixinol Wellness 0.04 -9% -34% -74% $12,650,622.84
AT1 Atomo Diagnostics 0.1 -9% -17% -51% $57,089,099.10
TSN The Sust Nutri Grp 0.145 -9% -6% -71% $17,487,925.83
VBS Vectus Biosystems 1.16 -9% -17% 23% $41,002,903.96
DVL Dorsavi Ltd 0.018 -10% -14% -38% $6,015,981.85
OCC Orthocell Limited 0.355 -10% -16% -35% $64,066,571.73
HCT Holista CollTech Ltd 0.035 -10% 3% -29% $9,637,218.05
NSB Neuroscientific 0.215 -10% -26% -12% $31,563,761.46
MDC Medlab Clinical Ltd 0.094 -10% 8% -48% $30,795,810.39
NYR Nyrada Inc. 0.17 -11% -8% -44% $26,521,479.00
SHG Singular Health 0.165 -11% -21% -48% $10,446,251.04
TRP Tissue Repair 0.285 -11% -21% 0% $13,098,499.40
ADR Adherium Ltd 0.008 -11% -20% -53% $19,874,259.83
TD1 Tali Digital Limited 0.008 -11% -33% -80% $9,798,333.33
IVX Invion Ltd 0.0115 -12% -23% 15% $76,998,163.73
PGC Paragon Care Limited 0.34 -12% -12% 42% $225,493,894.85
CU6 Clarity Pharma 0.44 -12% -25% 0% $79,138,077.04
MVP Medical Developments 3.05 -12% -19% -45% $214,628,221.57
MEB Medibio Limited 0.0035 -13% -13% -56% $8,389,465.43
GTG Genetic Technologies 0.0035 -13% -13% -56% $27,701,895.43
CBL Control Bionics 0.27 -13% -23% -58% $12,582,726.50
IMC Immuron Limited 0.1 -13% -9% -41% $22,324,237.91
MX1 Micro-X Limited 0.165 -13% -28% -49% $76,139,953.89
ONE Oneview Healthcare 0.225 -13% 7% -37% $111,488,143.15
ILA Island Pharma 0.175 -15% -10% -55% $7,568,107.40
EYE Nova EYE Medical Ltd 0.23 -15% -19% -30% $31,294,065.07
VLS Vita Life Sciences.. 1.78 -15% -24% 75% $96,976,141.90
NOX Noxopharm Limited 0.25 -15% -22% -56% $75,981,867.00
ADO Anteotech Ltd 0.093 -15% -15% -72% $184,839,806.59
CGS Cogstate Ltd 1.74 -16% -23% 93% $304,202,921.49
ZLD Zelira Therapeutics 1.28 -16% -62% -87% $12,354,479.64
AN1 Anagenics Limited 0.037 -16% -21% -46% $8,177,788.21
CMP Compumedics Limited 0.205 -16% -27% -52% $38,090,033.82
SOM SomnoMed Limited 1.5 -17% -23% -32% $128,276,938.25
CAN Cann Group Ltd 0.3 -17% -14% -37% $104,737,057.50
LCT Living Cell Tech. 0.005 -17% -33% -60% $5,141,818.62
AHK Ark Mines Limited 0.33 -18% -18% 871% $10,992,333.99
ALC Alcidion Group Ltd 0.14 -18% -30% -62% $190,210,357.95
PSQ Pacific Smiles Grp 1.81 -18% -14% -34% $296,822,404.68
MDR Medadvisor Limited 0.185 -18% -30% -36% $70,432,924.72
EPN Epsilon Healthcare 0.027 -18% -36% -84% $6,008,850.20
RNO Rhinomed Ltd 0.175 -19% -14% 22% $49,581,867.83
UBI Universal Biosensors 0.47 -19% -42% -30% $92,595,622.08
ACW Actinogen Medical 0.065 -20% -31% 20% $113,897,204.29
CTE Cryosite Limited 0.555 -21% 16% 59% $27,089,307.47
VTI Vision Tech Inc 0.39 -22% -35% -72% $9,612,224.00
RHT Resonance Health 0.092 -23% -26% -52% $48,389,458.01
RSH Respiri Limited 0.038 -24% -43% -60% $30,399,853.84
BWX BWX Limited 1.355 -26% -34% -71% $226,755,622.31
JTL Jayex Technology Ltd 0.009 -31% -31% -75% $2,492,285.39
ONT 1300 Smiles Limited 0 -100% -100% -100% $168,827,114.70

 

PolyNovo (ASX:PNV)

Polynovo was the best performing health stock this week.

There was no major news but the company did say it still has not secured a candidate to replace CEO Paul Brennan, who resigned in November.

PolyNovo said there are several candidates being considered, but it won’t make any decisions by Q1 2022.

This is consistent with what the company already said previously.

Oventus Medical (ASX:OVN)

The sleep apnoea and snoring specialist reported a solid Q3, with new leads increasing by 63% over prior quarter.

In total, 6,100 new leads were generated in the quarter.

Revenue was $233k, down from the record December quarter as expected, but above the two previous quarters.

Cash receipts meanwhile were $195k.

Opthea (ASX:OPT)

The retinal diseases company presented its clinical data results at the Association for Research in Vision and Ophthalmology (ARVO) 2022 Annual Meeting last week.

Titled “Efficacy and Safety of OPT-302 in combination with Ranibizumab for Polypoidal Choroidal Vasculopathy”, Opthea shared its findings to demonstrate the far-reaching potential of OPT-302.

OPT-302 is Opthea’s lead asset that treats retinal diseases such as wet age-related macular degeneration and diabetic macular oedema.

The same clinical data were presented earlier in February at the 19th annual Angiogenesis, Exudation, and Degeneration 2022 Conference.

Biotron (ASX:BIT)

In a significant step forward, new data shows that Biotron’s lead drug BIT225 protects from severe disease, even when there is an established infection.

Mice that commenced treatment with BIT225 after infection with SARS-CoV-2 had similar levels of protection against severe disease as mice commencing treatment with BIT225 prior to infection.

Biotron says the results are important as they provide key information that will assist in determining the dosing regimen for BIT225 in planned human clinical studies.

Prescient Therapeutics (ASX:PTX)

The clinical stage oncology company announced that its Phase 1b clinical study of PTX-200 and cytarabine will progress into the next dosing stage.

The combination therapy treats patients with relapsed and refractory acute myeloid leukemia (AML).

The study will expand the cohort at 45 mg/m2 PTX-200, following another complete remission and no dose limiting toxicities at this dose level.

Approximately 158,000 patients globally suffer from AML, a cancer of the bone marrow that prevents formation of normal blood cells.

This latest data, together with data from the previous Phase 1 monotherapy study of PTX-200 in acute leukemias, has guided Prescient to expand enrolment at this dose level to another three patients.

Immutep (ASX:IMM)

The immuno-oncology company reported that new biomarker and exploratory analysis data from its Phase IIb AIPAC trial was presented at ESMO’s Breast Cancer Congress in a poster presentation.

The AIPAC trial evaluated efti in combination with paclitaxel chemotherapy, compared to placebo plus paclitaxel, in 227 patients with HER2-negative/HR positive metastatic breast cancer.

Final results were reported in November 2021 in a late breaking abstract at SITC (Society for Immunotherapy of Cancer), showing encouraging efficacy.