- 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.