Pharma and biotech - Checking in on IPOs

Claire Aitchison

Independent Investment Research

Sector Overview

The IIR Pharma & Biotech Index increased 2.9% in the month of June, in line with the broader market with the ASX All Ordinaries Accumulation Index up 2.6%. Of the 141 stocks in the index, 43 stocks posted positive share price gains in the month of June. 

1. The IIR Pharma & Biotech Index is a market capitalisation weighted index and currently includes 141 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.
Source: Supplied.

The top 10 contributed strongly to the increase in the index with the top 10 constituents up 10.7%for the month. Race Oncology Ltd (ASX: RAC) joined the top 10 this month with Anteotech Ltd (ASX: ADO) slipping out of the top 10. RAC’s share price was up 424.3% over the 12-months to 30 June 2021.

Telix Pharmaceuticals (ASX: TLX) was the best performer of the top 10 with the share price increasing 35.3% in June as positive news regarding the product suite continued. TLX’s share price is up 375.8% for the 12-months to 30 June 2021.

Mayne Pharma (ASX: MYX) continued its slide from the highs in April with Credit Suisse trimming their price target for the company. Starpharma (ASX: SPL) also had a tough month, falling 15.8% on reports that it had received correspondence from regulators concerning promotional claims for the VIRALEZE product in both the UK and Australia with SPL pausing sales in the UK as the issues are addressed.

Performance of 2020 and 2021 IPOs

With the IPO of Lumos Diagnostics Holdings Limited (ASX: LDX) on 1 July 2021, we thought it was a good time to check in to see how the IPOs of 2020 and 2021 have performed.

There were 13 IPOs in the sector in 2020 and 2021, not including LDX. Doctor Care Anywhere (ASX: DOC) was the largest IPO with the company raising $102 million at an issue price of $0.80 per share. After hitting highs of $1.50 shortly after listing, the share price has been on the decline for most of 2021, trading at a price of $0.82 per share at 30 June.

A number of the IPOs were small with 7 of the 13 IPOs raising $10 million or less.

LGP has been the best performer since its listing in February 2021, with the share price increasing 95.6% from the IPO offer price. LGP produces and sells medicinal cannabis oil products domestically and overseas. The company seen continued revenue growth and importantly in 1H’FY20 reported a Net Profit. 4DX and SHG have also performed strongly, posting share price gains of 67.8% and 55.0%, respectively.

HXL has fallen the most from the offer price, with the share price declining 15.0%. HXL is a clinical stage biotech company developing pezadeftide as a potential new subscription topical treatment for onychomycosis (toenail fungal infections). With a market capitalisation of less than $20m, the company is small in size and there has been limited liquidity to date.

AT1 has fallen 7.5% from the offer price and CBL has increased 15.8%, however from the market open price upon listing the share prices have declined 52.6% and 37.9%, respectively.

Company News

Below we look at stocks in the IIR Pharma & Biotech Index that made notable announcements during the month that were received well by the market. These include: Prescient Therapeutics Limited (ASX: PTX), Patrys Limited (ASX: PAB), Cogstate Ltd (ASX: CGS), Vectus Biosystems Limited (ASX: VBS) and Suda Pharmaceuticals Ltd (ASX: SUD).

Prescient Therapeutics Limited (ASX: PTX)

PTX was the best performing stock in the IIR Pharma & Biotech index in June, with the share price rising 145%. During the month, PTX announced the successful completion of the manufacturing and delivery of crucial components of the OmniCAR platform for PTX’s in-house programs of next-generation CAR-T therapies. A range of binders against a variety of cancer targets have been manufactured and all binders have incorporated SpyTag, which is required for covalent binding to immune cells in the OmniCAR system. PTX has also received delivery of lentiviral vectors that will be used to produce CAR-T cells expressing SpyCatcher. Together the SpyTagged binders and CAR-T cells expressing SpyCatcher form the basis of the modular OmniCAR platform.

The Company has subsequently demonstrated that OmniCAR’s key components show minimal immunogenicity in silico. Immunogenicity testing evaluates the immune response against a new therapy which can adversely affect safety and efficacy. In CAR-T cell therapies, high levels of immunogenicity can adversely impact CAR-T cell expansion and persistence, which can impact the overall safety and clinical response of the treatment. The immunogenicity testing of OmniCAR’s binding components demonstrated very low immunogenicity, de-risking the platform and triggering the next steps in development.

Patrys Limited (ASX: PAB)

PAB’s share price increased 107.4% in June. A key driver of the share price appreciation was the announcement of a publication of preclinical data that demonstrates the ability of PAB’s PAT-DX1 antibody to cross the blood-brain barrier (BBB) and inhibit the growth of primary and secondary brain cancers.

The Company has subsequently announced new data from non-clinical studies that have confirmed its full-sized IgG deoxymab antibody (PAT-DX3), is able to cross the BBB in an animal model of primary brain cancer. Previous studies have shown that PAT-DX1, a deoxymab antibody fragment, is able to cross the BBB in animal models, however this is the first time it has been shown that the full-size dexoymab, PAT-DX3, is also able to cross the BBB. The Company intends to follow up on the discovery with studies to compare the effect of both PAT-DX3 and PAT-DX1 on tumour reduction and survival in a range of primary and secondary brain cancer models.

Cogstate Ltd (ASX: CGS)

CGS’s share price jumped markedly in June after announcing Eisai Co Ltd and their development partner, Biogen Inc, received accelerated approval for aducanumab (to be marketed as Aduhelm) by the FDA, the first-ever disease-modifying Alzheimer’s therapeutic. The announcement is a positive for CGS as CGS entered an agreement with Eisai Co Ltd in October 2020, granting Eisai the rights to exclusively develop and distribute CGS digital cognitive assessment technologies in healthcare and other markets worldwide. Since executing the agreement the two companies have progressed commercial plans for launching digital brain health assessment solutions using CGS technologies. It is expected that such digital cognitive assessment will play an important role in supporting the type of large-scale cognitive assessment necessary in the launch of disease-modifying therapies such as Aduhelm.

Following the approval of Aduhelm, in addition to the minimum contractual royalty payments over the first five commercial years of US$10m, Eisai is now also contractually obliged to make the minimum royalty payments over the following five commercial years of US$20m.

Vectus Biosystems Limited (ASX: VBS)

VBS’s share price rose 48.4% in June driven by the announcement that the Company had received approval for a Phase I Human Trial to determine the safety, tolerability ad pharmacokinetics of single and repeat doses of VB0004. The trials will commence in Melbourne in July 2021.

VB0004 aims to treat the hardening of functional tissue and high blood pressure. Vectus has conducted a range of successful pre-clinical trials, which have shown that VB0004 slows down the advances of fibrosis, potentially repairs damaged cell tissue and reduces high blood pressure.

Suda Pharmaceuticals Ltd (ASX: SUD)

SUD’s share price performed strongly in June, increasing 39%. The share price was buoyed by the announcement that the Company has licensed a novel invariant Natural Killer T (iNKT) cell therapy platform. The iNKT cell platform can be used in conjunction with multiple chimeric antigen receptors (CARs) to target blood cancers.

iNKT cells are expected to be suitable for off-the-shelf dosing, with one healthy donor able to supply cells to treat many patients. The natural properties of iNKT cells are expected to reduce the complexity of delivering the cell therapy to cancer patients and help to reduce the costs of treatment.

SUD has raised $3.65 million in a share placement to fund the initial development of the platform. 

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Claire Aitchison
Head of Equities & Funds Research
Independent Investment Research
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