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2009: BIOTECHS CLIMB FIVE TIMES FASTER THAN ASX200

EDITORIAL: THE YEAR IN REVIEW

CHEMGENEX ‘ASX’S MOST UNDERVALUED BIOTECH’

AUGUST BDI-40 UP 7.1%: BENITEC UP 90%, HEARTWARE 80%

YEAR TO JUNE BDI-20 UP 32%; BIOTECHS RAISE $30m/MONTH

FERMISCAN, POLARTECHNICS STRAPPED FOR CASH – AND THE WEDDING’S OFF

EDITORIAL: ASX IN WONDERLAND III - CORPORATE REGULATION

DIA-B, PALLANE AND A FLEA IN THE EAR

EDITORIAL: BIOTECHS, THE LAW AND MATTERS OF PRINCIPLE

BUDGET 2009 SURPRISES BIOTECH SECTOR: FAR MORE THAN EXPECTED

BIOGUIDE: BIG PHARMA GETS IT WRONG - PEPLIN A FIVE-BANGER

CRISIS, WHAT CRISIS? ‘STRUGGLING’ BIOTECHS RAISE $370m-$500m

Editorial: A Once In An Economic Lifetime Opportunity

PEPLIN’S TOM WIGGANS: THIS ISN’T CANCER ANYMORE, TOTO

BIOTECHS A TEST FOR THE TENACIOUS INVESTOR

FRIENDS OF MERVYN & THE PERILS OF OWNER-DRIVERS

[ more ]

Biotech Daily

2009: BIOTECHS CLIMB FIVE TIMES FASTER THAN ASX200

February 8th 2010 02:24

BDI-20 UP 155%, ASX200 UP 31%, Prima 4,700%, Biota 643%

Monday January 4, 2010

Special Editiion

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BIOTECH DAILY’S TOP 40 INDEX

The year of the global financial crisis seems to have missed the Australian stock market, with biotech companies arguably the best bet on the ASX for 2009.

The Biotech Daily Top 20 Index (BDI-20) was up 154.5 percent for the year to December 31, 2009 compared to the S&P ASX200 up 30.9 percent for the 12 months. Adjusting the index to compensate for company changes, the BDI-20 climbed 169.7 percent in 2009.

The Second 20 climbed 89.9 percent for the year, taking the overall BDI-40 (which does not include the Big Caps of Cochlear, CSL and Resmed) up 142.2 percent for the year and 163.8 percent in adjusted terms. While the S&P ASX indices use adjusted calculations, the Biotech Daily Indices compare existing total market capitalizations with previous totals, regardless of the change in composition. Biotech Daily has calculated the adjusted BDI-20 and BDI-40 rates for this report.

The BDI-40 continues to numerically surpass the ASX200 with the gap narrowing in December between the ASX200 at 4871 and the BDI-40 at 5055. While the BDI-40 is 281 points (5.3%) from its May 31, 2007 historical best, the ASX200 is 1,980 points (28.9%) short of its November 2, 2007 peak of 6851 points. The more than 100 biotechs monitored by this publication – excluding the Big Caps – climbed 143.2 percent in 2009.

Collectively, the three Big Caps finally turned positive, up 4.3 percent in December and 0.16 percent for the year, with Cochlear up 25.5 percent for the year, Resmed up 15.6 percent and CSL down 6.6 percent.

Most BDI-40 companies more than doubled their share price and market caps for the year with just five companies falling and Labtech unchanged at $12 million.

Prima was best from a $2 million low base, soaring 4,700 percent to $96 million, with a more representative Biota climbing 643.1 percent from $58 million to close the year at $431 million.

Nanosonics was up 585.7 percent to $144 million, followed by QRX Pharma (515.4%) and Tissue Therapies (450%), with Acrux, Alchemia, Avexa, Genera, Sirtex, Starpharma and Phylogica up more than 300 percent for the year. Universal Biosensors more than trebled in value - from $93 million to $291 million (212.9%) - as did Psivida, while Bionomics, Chemgenex, Living Cell, Pharmaxis, Cathrx and Cellmid merely doubled in value.
Of the few Top 40 companies that fell, Prana was the worst, losing 45.3 percent for the year from $64 million to $35 million, followed by Bone (23.5%), Genetic Technologies (15.8%), Novogen (12.9%) and Phosphagenics (2.0%).

Just outside the Top 40, Biopharmica has been impressive, with a very recent capital raising, up 1150 percent from $2 million to $25 in 12 months. Halcygen’s merger with Mayne Pharma has driven its market cap up 850 percent from $10 million to $95 million, with Avita, Immuron and Unilife up by more than 400 percent and Neuren recovering from 2008’s failed phase III trial - up 333 percent to $13 million. Further down the lists, OBJ was up 833 percent to $28 million and Karmelsonix rose 550 percent to $26 million.

While tempted to make changes to the indices, Biotech Daily will resist and monitor for the time being.

Biotech companies raised $75.2 million in December and more than $492 million in the 12 months to December 31, 2009, not including institutional raisings.

Below are two charts, the first showing the past year and the second a longer term 42-month comparison of the ASX200 and the BDI-40.

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EDITORIAL: THE YEAR IN REVIEW

February 8th 2010 02:10

Thursday December 17, 2009

Daily news on ASX-listed biotechnology companies

* ASX, BIOTECH UP: PRIMA UP 17%; CELLMID DOWN 7%
* BIOTECH DAILY EDITORIAL: THE YEAR IN REVIEW
* FDA SETS DATE WITH CHEMGENEX IN FEBRUARY 2010
* PHARMAXIS BRONCHITOL CYSTIC FIBROSIS APPLICATION TO TGA
* LEON CARR APPEALS NSW COURT ORDER
* FLUOROTECHNICS RIGHTS ISSUE TO RAISE $1.8m
* BIOTRON SAYS BIT225 CUTS HIV VIRUS LOAD 99% IN VITRO
* ELLEX DOWNGRADES H1 REVENUE FORECAST
* FDA GRANTS CLINUVEL AN ADDITIONAL ORPHAN DRUG DESIGNATION
* GENETIC TECHNOLOGIES EVALUATES BREAST CANCER TEST
* PHYLOGICA REQUESTS PARTNERSHIP TRADING HALT
* CORRECTION: NANOSONICS
* PHOSPHAGENICS INSULIN PATCH ‘ON TRACK FOR 2010 TRIALS’

To read all these articles in full, subscribe to Biotech Daily at the link above or at www.biotechdaily.com.au

BIOTECH DAILY EDITORIAL: THE YEAR IN REVIEW

We lost a few companies in 2009, but it was Apollo Life Sciences that claimed the status of the first casualty of the recession that passed us by.

The departures were not Darwinian in the sense that some companies that are not the best in terms of board, management and technologies have survived the law of the economic jungle, while others that may have been “better” companies have failed.

On October 24, 2008 Apollo went into administration and was lost to biotech. More significant was the failure of Ventracor to sprint the last 100 metres of its FDA registration marathon in March 2009.

Dia-B reported its own death prematurely, with two companies claiming to be Pallane Medical squeezing each other out through the back door listing, with the loser the one with Peter King, the Winteray gang, no $12 million and a virus test and the winner was Peter Stafford hoping to take the original diabetes technologies forward.

Biosignal was attacked and eaten by Dr Paul D’Sylva and his Perth-based Empire entrepreneurs metamorphosing from anti-microbial film to actors on film.

Narhex Life Sciences was on life-support itself until its supporting pillar Dr Michael Cohen died suddenly in November. Biotechnology also lost Living Cell founder David Collinson - tragically - as the type 1 diabetes technology gained New Zealand approval and has begun trials. Living Cell is in good shape, but the future of Narhex is uncertain.

The folly of Fermiscan directors focusing on inventor Prof Veronica James instead of developing her breast cancer technology cost the company everything and dragged Polartechnics down with it. Polartechnics is very unwell, but is not dead, yet.

Agenix, once the great $100 million Agen, has been in a suspension since September 2008, but this is all to do with its management and nothing to do with any global recession. The company’s former chief financial officer and chief executive officer Neil Leggett has been facing charges in the Queensland criminal justice system. The Chinese biopharmaceutical companies Agenix thought it bought are proving to be as viral as their remedies.

Companies we thought would have died by now, but have surprised by surviving are Norwood Abbey, OBJ and Rockeby Biomed.

Solagran remains the only quasi-biotechnology company with a dedicated cheerleader contingent despite giving nearly half the company to Opes Prime. We continue to be amazed by the company’s announcements, despite the unexpected departure of director Denis Kilroy and the sudden death of company secretary Peter Stedwell, replaced by his son Justyn in that role. The links to Bioprospect, which boasts Elias Leo ‘The Gun’ Khouri and Snr Sgt Anthony Langdon of Victoria’s Water Police Unit are worthy of attention.
Similarly, Stirling has former career policeman, Peter Boonen, marketing forest-based products from Kiev, except unlike Solagran’s over-the-counter cure-all for liver cancer, alcoholism and Alzheimer’s, it appears that Stirling is merely a distributor rather than owner of the over-the-counter cure-all for influenza, tuberculosis and HIV.
In a merger more like a distressed auction, Cytopia will become part of Toronto’s YM Biosciences, just as Stem Cell Sciences was given up for a song to Stemcells Inc.

Portland Orthopaedics and Advanced Ocular were two more biotechnology losses and Nusep almost became the bigger better longer sex company Nxgen for a prematurely shorter smaller time than most and has returned as a normal ordinary sperm separator.

In good news departures, Arana and Peplin both accepted offers they could not refuse from Cephalon and Leo Pharma, respectively, making most but not all investors very happy.

Big winners improving their market capitalizations by more than 5-fold in the 12 months to November 30, 2009 included Acrux, Avita, Biopharmica, Biota, Genera, Halcygen, Healthlinx, Nanosonics, Prima and, Unilife, with many others more than doubling their share prices and market capitalizations during the year.

At last count, biotechnology companies raised more than $426 million in the year to November 30, 2009, while the total raised, including biotechnology institutions, was more than $600 million - or an average of $50 million a month.

Biotech Daily has taken an activist role on several issues in 2009, strongly advocating that the Federal Government begin to comprehend that the sector was worthy of significant investment. So far we have not been successful in winning the hearts and minds of the Federal Government and its advisers. The efforts have continued since unveiling of the less-than-radical Commercialisation Australia and will be redoubled in 2010. Biotech Daily has also written submissions on taxation policy, corporate governance and the roles of the ASX and the Australian Securities and Investments Commission.

Biotech Daily’s last edition for the year will be published tomorrow and we return on January 18, 2010. There will be a modest subscription price increase in the New Year.

We wish all our subscribers and readers a very relaxing Summer holiday break, Happy Chanukah, Merry Christmas and Summer Solstice.

David Langsam, Editor
Marc Sinatra, Analyst

To read all these articles in full, subscribe to Biotech Daily at the link above or at www.biotechdaily.com.au

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CHEMGENEX ‘ASX’S MOST UNDERVALUED BIOTECH’

September 22nd 2009 00:25

Biotech Daily

Wednesday September 9, 2009

Daily news on ASX-listed biotechnology companies

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MARC SINATRA’S BIOGUIDE BRIEF: CHEMGENEX

Last May, I put a valuation of $5.50 on Chemgenex shares with an 18-month time frame for that valuation to be met.

Today, Chemgenex announced that it had completed what is the first real Australian submission of a new drug application (NDA) to the US Food and Drug Administration for its lead compound Omapro (formerly known as omacetaxine). But three months from my self-imposed deadline, Chemgenex shares are trading at 66 cents.

While it is true that this milestone is more process than a major value creation point, it is a significant achievement and a marker of what should be a much higher share price.

This is particularly so, given how difficult it is to get to NDA submission, as evidenced by Progen and Novogen ceasing their phase III trials and Neuren’s Glypromate failing its phase III trial. Not to mention the premiums that even moderately successful phase III trials can bring, as evidenced by the 70 percent premium bid for Peplin.

It has been suggested that I look at Chemgenex through rose-colored glasses and given how overweight I am in Chemgenex shares, the argument may have some merit.

But Chemgenex’s basic equation remains the same:
1.) There are 5000 identified chronic myeloid leukaemia (CML) patients worldwide carrying the T315I mutation for which Chemgenex is seeking approval to market Omapro;
2.) Regulatory approval seems as certain as it has been for any drug given Chemgenex’s data and the extraordinary amount of independent data demonstrating the efficacy of Omapro like compounds in treating CML; and
3.) A conservative price estimate for Omapro of $US30,000 per year per patient, based on the price of Gleevec.

That gives a market size of $US150 million year, which translates into a profit of $US75 million based on a 50 percent free cash-flow.

Based on profit multiples of 15-25 times, this gives a share price of $US5.75 ($A6.70) to $US9.50 ($A11.00) once a profit of $US75 million is achieved. But these are back-of-the-envelope numbers and Chemgenex isn’t making $US75 million a year.

The numbers can be refined by factoring-in that about 80 percent of T315I carriers are likely to benefit from Omapro and licencing the product in Europe will see some value slip to the licensee, while the fact that first Omapro sales are a year away will reduce net present value.

On the other hand, the drug is likely to cost more than $US50,000 a year, rather than $US30,000, based on the prices of second line CML treatments Sprycel and Tasigna.

While my view of Omapro for T315I indication remains the same, I have become less bullish on Omapro’s chances for success as a treatment in patients who have failed two tyrosine kinase inhibitors (TKIs) and acute myeloid leukaemia (AML).

I believe most CML patients who have failed two TKIs, will simply go on to the remaining TKI they haven’t failed, while Chemgenex’s failure to produce results so far from its long running AML trial suggests, as does previous independent research, that AML is a tough indication for Omapro.

A new bright spot, however, is the potential use of Omapro for the treatment of minimum residual disease in CML patients being treated with Gleevec. An indication for which some independent data provides support and one that that would see Omapro used in a combination therapy.

If I were to completely revalue Chemgenex, I might temper my previous valuation a little bit, not based on what is written above, but mainly on the basis of the capital raising Chemgenex undertook at 43 cents per share earlier this year. I certainly didn’t factor a capital raising at that price into my previous valuation.

All in all, I still believe Chemgenex to be the most undervalued listed life science company on the Australian stock exchange and should currently trading about $5.00.

Marc Sinatra, Analyst
marc@biotechdaily.com.au

* Marc Sinatra and Biotech Daily editor David Langsam both hold Chemgenex stock.

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