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A Bird’s Eye View On The Biotechnology Sector

  • June 04, 2019 11:55 PM AEST
  • Team Kalkine
A Bird’s Eye View On The Biotechnology Sector

Simply put, biotechnology is a technology that is fundamentally based on the biology of living organisms and uses biological processes to develop new products and solutions for the better healthcare of the patients and the society as a whole. Simplest biological processes have been known to mankind since ages like making of curd, bread etc.

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But the modern biotechnology space is striving to attain important goals related to the humankind like fighting with rare diseases, reducing the disease infected death rate, creating more advanced products and solutions in the medical space etc.

Australia’s top end research facilities, with well-talented scientists, have made Australia a lucrative destination for these companies. According to EIU’s rigorous international benchmarking, Australia is well placed for the competitiveness of its biotechnology, which has helped to attract more than 470 biotechnology companies.

Biotechnology as an industry is a part of a much larger healthcare sector, which also includes medical cannabis-based firms, medical technology firms, pharmaceutical companies etc. These companies work simultaneously to improve the entire healthcare of society.

As far as the overall healthcare is concerned, it’s been an ever-increasing sector growth since the last 10 years. The sector has constantly been growing due to the technological innovations and better availability of these services to the mass population, which was not as easy as today, compared to the previous 10 years.

If we go through the last 10 years of the S&P/ASX 200 Health care index, a quick glance would confirm the uptrend that has been sustaining for the previous 10 years. S&P/ASX 200 health care sector index includes those companies which are recognised as members of the GICS® health care sector and sub-industries. As there is no specific biotechnology index listed, we will take a look at the broader healthcare market, including biotechnology.

Weekly chart of S&P/ASX 200 Health Care Sector index (Source: Thomson Reuters)

As observed in the chart above, the index has been in a bull run from a decade. We have definitely witnessed some corrections during the rally, but every correction was being bought heavily by the market participants in the expectation of the potential returns.

One thing to be noticed is that the sector index never broke its long term trendline support in the entire 10 years.

A 40-week simple moving average (purple) has been plotted on the index to gauge the trend. A moving average is one of the best indicators to follow a trend as it is a lagging indicator; therefore, it follows the entire trend. After a close look at the moving average, it is clear that the stock price started to move in an accelerated trend after 2018 as seen by the diverging distance between the moving average and its trendline.

Currently, the index is comfortably trading above its trendline, and due to consistent innovations and upgradation, the healthcare market doesn’t seem to be depressed for the coming years.

There are many ASX listed biotechnology companies in Australia. Let us have a technical look at some of the prominent companies.

  1. Paradigm Biopharmaceuticals Ltd (ASX: PAR) is in the business of biotechnology and is looking to treat the medical conditions of the patients suffering from inflammation related ailments. The lead product of the company is injectable PPS, which helps to regenerate the tissues and has anti-inflammatory properties.

On 4th June 2019, the company released its results for the randomised, double-blinded placebo-controlled, multicentre clinical trial in participants with chronic Ross River virus (RRV) induced arthralgia, which was treated with injectable pentosan polysulfate sodium (iPPS).

Some of the highlights are

  • Primary endpoint met in Paradigm’s Phase 2a trial.
  • The secondary endpoints demonstrated injectable pentosan polysulfate sodium (iPPS) decreased RRV disease symptoms when compared to placebo.
  • Current treatments for RRV are pain relief and anti-inflammatories.
  • The clinical data of RRV would support discussions regarding tropical disease programs with the US Department of Defense and pharmaceutical companies.

On the technical chart, the stock price is trending up since 2018, respecting its trendline support. As seen on the weekly chart, the stock had touched its trendline 3 times, increasing the credibility of the trendline. The trend is positive until it breaks below it trendline support.

Weekly chart of Paradigm Biopharmaceuticals (Source: Thomson Reuters)

The company has a market capitalisation of A$278.7 million, and the stock had touched a 52-week high and low of A$2.149 and A$0.532 respectively. The stock is up by 1.7% and closed the trading session at A$1.475 as on 4th June 2019. The last one-year return of the stock is 169.9%, and the YTD return stands at 46.2%.

  1. Telix Pharmaceuticals Limited (ASX: TLX) is an ASX listed biotechnology company and is focused on developing therapeutic products. Based in Melbourne, Australia, it has international operations in Brussels, Kyoto and Indianapolis.

On 4th June 2019, the company released the Jefferies Healthcare Conference business presentation. Some of the highlights of the presentation are;

  • The company’s current pipeline is a multibillion-dollar opportunity.
  • As of the current reporting, more than 100 sites around the world use TLX591-CDx routinely or in clinical trials
  • Small molecule-based approaches such as PSMA-617 (Endocyte/Novartis) are able to hit endogenous PSMA expression, depicting TLX591 does not cause additional side-effects.
  • The company has established an extensive supply chain and production network with ongoing discussions for partners for MENA, Asia and LATAM

This week, the stock price had touched its highest level of A$1.145 and currently trading around its all-time high levels. The trend seems to be positive, with the stock price trading in uncharted territory.

Weekly chart of Telix Pharmaceuticals (Source: Thomson Reuters)

The company has a market capitalisation of A$226.01 million, and the stock had touched a 52-week high and low of A$1.145 and A$0.54 respectively. The stock is up by 4.8% and closed the trading session at A$1.085 as on 4th June 2019. The last one-year return of the stock is 52.2%, and the YTD return stands at 59.2%.

  1. OncoSil Medical Ltd (ASX: OSL) is also a biotech company, focusing on radiation to treat cancer patients. The company’s lead product is OncoSil™, which is a radioactive isotope and implanted directly into the patient’s s pancreatic tumours.

On 4th June 2019, the company released overall survival data to be positive, which was released for its PanCo study at the American Society of Clinical Oncology (ASCO) Annual Meeting 2019 in Chicago. Some of the highlights of the study are;

  • 42 patients were selected in the per protocol (implanted) population.
  • The median overall survival is of 16 months in the per protocol population.
  • Total of 10 patients underwent surgical resection, at a 23.8% resection rate.
  • A total of 39 out of 42 patients had evaluable PET scan assessments at Baseline and Week 12
  • A total of 11 out of 38 patients demonstrated a decrease in CA19-9 of less than 90%.

On the daily chart, the stock is trading at quite low levels, owing to a recent gap down in the week ended 25th March 2019. Although the stock is trying to recover from the bottom, still the uptrend may be difficult due to many resistance levels (marked by red lines).

Weekly chart of OncoSil Medical (Source: Thomson Reuters)

The company has a market capitalisation of A$39.73 million, and the stock had touched a 52-week high and low of A$0.255 and A$0.021 respectively. The stock is up by 3.1% and closed the trading session at A$0.065 as on 4th June 2019. The last one-year return of the stock is a negative 65%, and the YTD return stands at negative 64%.

Apart from the Australian players, let's have a look at some of the prominent companies from the global standpoint.

  1. Amgen Inc.

Applied Molecular Genetics (AMGen) is a biotechnology company based in California, USA. The company has a wide range of products catering to the USA and other countries, with highly qualified patient Safety experts.

The company takes its safety standards very seriously and have team members spread around the world, including Local Safety Officers (LSOs).

  1. NovaBiotics

The company Is a well-established clinical-stage biotechnology company focused on developing anti-infectives for medically unmet diseases.

Lynovex NM001 is a differentiated therapy used for the treatment of CF-associated lung disease and can also be used alongside the existing standard of care CF therapy. It also has some antibacterial candidates in the pipeline; NP339 and NP432. This company is privately held and is based out of Aberdeen.

  1. Pfizer

The company operates as a biopharmaceutical company on a global scale and based in New York, USA. In 2015, the company had agreed to buy a full stake in botox maker Allergan for a massive price of $160 billion in the largest-ever acquisition deal in the health care sector. As of 30th April 2019, the company had a total of massive 97 developments in the pipeline.


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