A look at the performance of the pharmaceutical and biotech sector over the month of July as well as a closer look at the front runners in the search for a Covid-19 vaccine.  

Sector Overview

The Independent Investment Research (IIR) Pharma & Biotech Index rose 1.2% over the month of July, paring back some of the previous months decline. The smaller end of the index drove the increase with the top 10 stocks in the index falling 5.5% for the month. At 31 July 2020, the top 10 stocks accounted for 58.4% of the index. The index slightly outperformed the broader market (ASX All Ordinaries Accumulation Index), which increased 0.95% for the month. The Covid-19 pandemic continued to influence stocks with those companies whose operations were positively impacted by the pandemic, such as VIP Gloves, or companies whose compounds were being evaluated for their antiviral activity saw significant movements.

Victoria imposed Stage 3 restrictions in July as a result of increased confirmed Covid-19 cases and as of 2 August will be moving to Stage 4 restrictions due to concerns regarding community transmission. The restrictions have seen the cancellation of non-essential elective surgery to free up capacity for the treatment of patients with Covid-19, which will again impact those companies servicing this sector. However, the restrictions are limited to Victoria at this stage and is therefore not as catastrophic for companies as the national lockdown was earlier in the year.

IIR Pharma & Biotech Index*


*The IIR Pharma & Biotech Index is a market capitalisation weighted index and currently includes 139 stocks across the Pharmaceutical, Biotech, Health Care Suppliers, Health Care and Equipment, Health Care Technology and Life Sciences GICs sectors. The index excludes the five largest companies in these sectors being ANN, COH, CSL, FPH and RMD.

Front Runners in the Search for a Covid-19 Vaccine

The search for a Covid-19 vaccine has progressed at warp speed. A process that normally takes 10+ years has been accelerated with organisations heading into the final stage of human clinical trials after just a matter of months. There are still a number of hurdles to overcome before we can celebrate a breakthrough but optimism is increasing amongst the medical community and markets.

The WHO has stated that the goal in relation to the search for a vaccine is to test as many vaccine candidates as possible. Ideally there would be multiple vaccine candidates that are proven safe and effective which would make the roll out of vaccines across the globe an easier prospect. However, given the current climate a single safe and effective vaccine would be a significant achievement.

According to the WHO’s draft landscape of vaccine candidates, as at 31 July there were 26 vaccine candidates in clinical evaluation and 139 in preclinical evaluation. Five of the 26 candidates in clinical evaluation have progressed to Phase III clinical trials and are considered front runners from a development perspective. The vaccine candidates leading the race are:

  • Oxford University/AstraZeneca - Oxford University has partnered with AstraZeneca for the development and large-scale manufacture and potential distribution of the vaccine candidate currently being trialled by the university. Oxford University are using a Non-replicating Viral Vector platform to develop a ChADOx1-S vaccine. Under the partnership agreement, vaccine access will be provided to the UK as early as possible if the vaccine candidate is successful and AstraZeneca will work with global partners on the international distribution of the vaccine, particularly working to make it available and accessible for low and medium income countries. Both partners have agreed to operate on a not-for-profit basis for the duration of the pandemic, with only the costs of production and distribution covered. The Phase II/III trials will be conducted as part of a global program with the vaccine candidate currently being trialled in the UK, South Africa and Brazil and expected to commence in the US in August. Serum Institute of India is also seeking approval to trial the vaccine in India. The Phase II/III trial comes after over 1,000 people were administered with the vaccine candidate across the UK in a Phase I/II trial, in which no severe adverse safety events were encountered and the vaccine was said to have produced a promising immune response.
  • Moderna/NIAID - Moderna in partnership with NIAID is developing its LNP Encapsulated mRNA vaccine candidate which entered a Phase III study in late July and seeks to recruit up to 30,000 participants. The progression to the final phase of clinical trials comes after published data from the early stage trial showed that the participants who received the vaccine made more neutralising antibodies than have been seen in most patients who have recovered from Covid-19. A second injection was required before the vaccine candidate produced a dramatic immune response. Moderna has stated it’s on track to deliver at least 500 million doses per year beginning in 2021 with the potential to manufacture up to 1 billion doses a year. The company has signed an agreement with Spain’s Laboratorios Farmaceuticos Rovi SA to scale up manufacturing and production of the vaccine to supply markets outside the US in the event approval is gained.
  • Sinovac Biotech - The private Chinese company Sinovac Biotech is testing an inactivated vaccine called CoronaVac. In June the company announced the Phase I/II trials on 743 participants found no severe adverse effects and produced an immune response. A Phase III trial in Brazil commenced in July in partnership with Instituto Butantan, a Brazilian vaccine producer. The trial is seeking to enrol 8,870 participants.
  • Wuhan Institute of Biological Products/Sinopharm - Sionpharm launched Phase III trials in the United Arab Emirates in July with 15,000 participants scheduled to be involved in the trial and two vaccine strains. The Chairman of Sinopharm was reported as saying that the company believes the vaccine could be ready for use by the end of the year. Production facilities have been built to ensure capacity for large-scale production in the event the vaccine proves successful.
  • BioNTech/Fosun Pharma/Pfizer - BioNTech, a NASDAQ-listed biotechnology company focused on developing novel cancer therapies, and Pfizer have partnered to develop, manufacture and distribute BioNTech’s lead vaccine candidate, BNT162b2. The late-stage global study will include up to 30,000 participants aged between 18 and 85. The study is expected to be active at ~120 clinical investigation sites around the world including the US, Argentina, Brazil and Germany. If the trial is successful, BioNTech and Pfizer will seek Emergency Use Authorisation or some form of regulatory approval in October 2020. If authorisation or approval is obtained, the companies aim to supply up to 100 million doses by the end of the year and ~1.3 billion doses by the end of 2021. The companies have signed supply agreements with the US, UK and Japan in the event the vaccine obtains approval.

While a Phase III clinical trial is yet to commence, CanSino Biological Inc. and Beijing Institute of Biotechnology are expected to launch a Phase III trial of their vaccine candidate after participants in early stage trials experienced no severe adverse effects and produced an immune response. In an attempt to accelerate the development process, the vaccine candidate was approved for use in the Chinese military in June 2020 for a period of one year. The vaccine is currently limited to military use and can not be used more broadly in the community without the approval of the Logistics Support Department.

The landscape is developing quickly. A number of the front runners believe they will have sufficient data before the end of the year to determine whether the respective candidate vaccines will be safe for broad based community use. The world is waiting with anticipation for the outcome of these trials as the virus continues to spread at an increasing rate putting significant strain on healthcare systems and the global economy.

Company News

There was a flurry of news from companies during the month of July. Below we look at stocks that made notable announcements during the month that were received well by the market. These include Genetic Technologies Limited (ASX: GTG), Anteotech Ltd (ASX: ADO), Reece Pharmaceuticals Limited (ASX: RCE), Immuron Limited (ASX: IMC), VIP Gloves Limited (ASX: VIP), Osprey Medical Inc (ASX: OSP), Aroa Biosurgery Limited (ASX: ARX), DorsaVi Ltd (ASX: DVL), and Memphasys Limited (ASX: MEM).

Genetic Technologies Limited (ASX: GTG)

GTG went into a trading halt on 16 July 2020, after its shares jumped over 100% on the day to $0.0115. The price rise followed the 55% increase for the stock on the NASDAQ overnight after the company announced it had filed a provisional patent for its Covid-19 Severity Risk Test with the patent office in Australia. The patent filing comes after the company announced in June that the company had filed a provisional patent for its Covid-19 Severity Risk Test in the US. The trading halt was in lieu of an announcement to raise US$5.1 million through the issue of 1.025 million American Depositary Shares (ADS) at a price of US$5 per ADS. The company has raised US$16.34 million (before costs) over the last 4 months.

The company is developing a Polygenic Risk Score test for Covid-19 which may enable an assessment of the risk of an individual developing a serious disease should they contract Covid-19. The test is intended to predict ‘disease severity’ using a combination of genetic and clinical information.

The company has commenced ordering its first SNP array panel from US based Thermo Fisher Scientific Inc, a genetic testing and GTG manufacturing partner for GeneType products. The SNP array panel is a key reagent that is required to process the polygenic risk test portion of the Covid-19 Risk Test.

GTG has confirmed the capacity to scale up production for a global roll out of the Covid-19 Risk Test with major manufacturers in the event approval is granted. The product uses technical components that are already being produced by healthcare manufacturers for other genetic-based tests, which will support plans to accelerate production to meet global demand. GTG’s Australian facilities will have the capacity to produce up to 250,000 tests per year. According to the company, the scale-up manufacturing will require global distribution partnerships if the Risk Test is widely adopted.

The company is currently in discussions with the Centres for Medicare and Medicaid Services (CMS) and the National Association of Testing Authorities, Australia (NATA) for regulatory approval of the Covid-19 Risk Test in the US and Australia.

Anteotech Ltd (ASX: ADO)

ADO’s share price increased 63.6% after the company announced it has produced multiplexed proof of concept assays using an Axxin AX-2X-S Lateral Flow Reader which are designed to provide high sensitivity concurrent detection of Covid-19 and Flu A&B in a rapid test format.

ADO has developed a proof of concept for two separate rapid tests, one for antigens using swab samples from the nose, throat and mouth, and a second for antibodies using collected blood samples. These tests are designed to deliver results in approximately 15 minutes. The company believes that the market for antibody tests is crowded and therefore will be focusing on the development of the antigen test.

ADO owns the IP for the assays developed and Axxin own the IP for the reader that is used to produce the results. ADO’s assays can be used in other reader platforms after some development work has been carried out.

The next steps for the development aim to optimise the tests, improve further the lower limit of detection, verify and validate the design, conduct clinical studies required for targeted markets, gain regulatory approvals and prepare for outsourced scaled manufacturing. The company seeks to undertake this development over the next six to nine months.

The company’s share price was up 125% for the month.

Reece Pharmaceuticals Ltd (ASX: RCE)

RCE’s share price jumped over 50% on the news that its compound had been selected by CSIRO and University of Melbourne at the Doherty Institute for the SARS-CoV-2 antiviral screening program. Reece 327 was selected for its unique mechanism of action against hyper-mutation, as indicated on bacteria and virus. Reece 327 is a broad-spectrum synthetic antibiotic formulated using synthetic polymer technology to treat blood infections and sepsis.

The company subsequently announced that the Reece 327 and Reece 529 compounds will be evaluated in a study led by Path BioAnalytics Inc, based in North Carolina, USA, for their antiviral activity against SARS-CoV-2. The purpose of the study is to evaluate both compound therapies for the prevention and/or mitigation of SARS-CoV-2 infections in an ex-vivo respiratory model system. Preliminary data is expected in September 2020. The announcement saw another rise for the share price. RCE’s share price increased 94.8% for the month of July.

Immuron Limited (ASX: IMC)

IMC was featured in our previous issue after the company announced a pre-IND meeting was requested with the FDA by its partner, the Naval Medical Research Centre (NMRC), regarding the new oral therapeutic being developed for the treatment of campylobacteriosis and E-coli. The share price saw another substantial increase during the month of July after the company announced it had received written guidance from the FDA regarding the clinical development plans of the new therapeutics. The shares rose in excess of 100% on the back of the announcement. The share price was further buoyed by the company reporting that IMM-124E used to manufacture Travelan and Protectyn demonstrates antiviral activity against the Covid-19 virus in laboratory studies.

After hitting a high of $0.95 per share the company finished the month trading at $0.36, up 38.5% for the month of July. This is in addition to the 221% increase in June.

VIP Gloves Limited (ASX: VIP)

VIP was the best performing stock in the IIR Pharma & Biotech Index for the month of July with the share price increasing 297.1%. VIP manufactures medical grade gloves at a plant in Malaysia. The Covid-19 pandemic has seen significant demand for disposable gloves. The company has announced that sales orders have been filled through to 2Q’21. The high demand has allowed for price increases. The company envisages increased demand in nitrile gloves to continue for the foreseeable future and as such is seeking to install up to four new glove production lines over the next 18 months. The new lines will increase production capacity by up to 60% to ~1 billion pieces per annum at full production capacity. The expansion is expected to cost $6.5 million. The company recently completed a capital raising to assist with funding the expansion. During the month, the company announced they had entered into a sale of land and buildings and subsequent leaseback of the land and buildings in Malaysia. With Covid-19 restrictions in place in Malaysia, VIP has agreed to extend the conditions precedent period to 3 August 2020 to allow for the transaction completion.

Osprey Medical Inc. (ASX: OSP)

OSP shares increased 263.6% over the month of July, the second best performer in the index for the month. The company announced that they had entered into a strategic alliance with GE Healthcare under which GE will exclusively distribute OSP’s product portfolio in Europe, Russia, Middle East, Africa, Central Asia and Turkey. The companies signed a four year exclusive distribution agreement, under which GE Healthcare will commercialise OSP’s DyeVert portfolio which reduces the amount of contrast that reaches the kidney with no compromise in image quality. OSP’s technology is the only FDA cleared medical device that is indicated for reducing patient contrast exposure.

Contrast minimisation devices offer healthcare professionals a technology platform to address the rising problem of Acute Kidney Injury (AKI) following interventional coronary angiograms in patients with Chronic Kidney Disease.

Aroa Biosurgery Limited (ASX: ARX)

ARX jumped out of the blocks on it’s first day of trading on the ASX on 24 July. The company raised $45 million through the issue of 40 million fully paid ordinary shares and the sale and transfer of 20 million fully paid ordinary shares at an issue price of $0.75 per share. The company opened trading on the ASX at $1.40 per share, an 86.7% increase on the issue price. ARX finished the month of July trading at $1.48 per share.

ARX is a soft tissue regeneration company that focuses on improving the rate and quality of healing in complex wounds and soft tissue regeneration. ARX has developed Endoform, a proprietary soft tissue regeneration technology platform, which can temporarily replace damaged tissue by acting as a scaffold in the wounds or soft tissue to grow new tissue. ARX currently has five commercial products based on the Endoform technology.

DorsaVi Ltd (ASX: DVL)

DVL experienced extreme volatility during July. The share price was up over 1,900% at its high on 2 July 2020 before finishing the day up 277% to close at $0.049. The volatility came on the back of an announcement by the company that they had entered into a commercial collaboration with QBE Australia to provide QBE customers with access to DVL’s VISafe and myViSafe wearable sensor technology and data insights with the aim of reducing movement risk, injury claims and workers compensation premiums. DVL’s on-body sensors will be used in real time and real work environments to monitor and measure movement and muscle activity, quantify movement risk and guide decision making on appropriate risk mitigation strategies.

After all the excitement on 2 July, DVL’s share price ended 84.6% higher for the month of July.

Memphasys Limited (ASX: MEM)

MEM shares performed strongly in July, up 98.3%, with the company announcing it had satisfied all legal and regulatory requirements to distribute its Felix device in its first market jurisdiction (Canada). This was the first milestone the company has achieved for vesting performance shares. The achievement of the milestone provides a pathway for first commercial sales of the Felix device in 4Q’CY20 once verification and validation activities are completed.

The Felix device is a unique device for quickly separating high quality sperm from a semen sample for use in human IVF procedures.

Canada represents a key market for MEM with 16,852 IVF treatment cycles initiated and 16,939 cycles of frozen embryo transfers, producing 9,324 clinical pregnancies in 2018, according to the Canadian Fertility & Andrology Society. The company is in the process of finalising legal and regulatory requirements in other early markets including Japan, India and New Zealand.

Never miss an update

Stay up to date with my content by hitting the 'follow' button below and you'll be notified every time I post a wire. Not already a Livewire member? Sign up today to get free access to investment ideas and strategies from Australia's leading investors.



catch Fu

What is the company working with Oxford University called? AstraZeneca or AstraZenca mentioned in your article?

Shaishav Patel

What about Mesoblast?

Vijay Ghelani

Great article Claire , surely if AnteoTech can actually produce an Antigen Test for Covid with results in 15 minutes , ready in 6 months time, it would be sought after world wide ? Thoughts ?

Carlos Cobelas

Chances of effective vaccine commercially available to the masses within the next 12 months is next to nil and the stockmarket is being excessively optimistic about it. As for Mesoblast : forget it !

Claire Aitchison

Catch Fu, you're right the company name is AstraZeneca. Thank you for picking up this spelling error.

Zabi Rawan

Great read Claire, would be great to see an article on Anteotech and what they offer - 15min test would do a world of good, literally.