Bell Potter says biotech very much a non-cyclical performer driven by catalysts including clinical trial data
\nRadiopharmaceutical-focused Clarity Pharmaceuticals has risen 76% YTD after promising trial results
\nMerchant Funds is bullish on Neurotech International, with its lead asset showing promise across a range of conditions<\/p>\n
From laboratories and hospitals to company boardrooms, \u00a0there is much to keep an eye on in the ASX biotech sector for the remainder of 2024 according to fund managers and analysts.<\/p>\n
Bell Potter healthcare analyst John Hester says biotech stocks tend to be driven by stock specific news rather than more general economic conditions.<\/p>\n
\u201cBiotech is very much a non-cyclical performer driven by catalysts including data from clinical trials and regulatory announcements from the likes of the FDA,\u201d Hester says.<\/p>\n
\u201cYou get a positive clinical readout and that can lead to a significant appreciation in the share price and conversely if the data is poor the share price can collapse.\u201d<\/p>\n
Hester says the volatility associated with biotech is why some a lot of fund managers tend to avoid the sector because they don\u2019t like the binomial outcomes.<\/p>\n
\u201cThat said 17 of 25 stocks that we cover appreciated in value in the six months to April 2024 including some that are volatile and subject to speculative risk,\u201d he says.<\/p>\n
Hester says typically many of the biotech stocks particularly in the small and mid-cap sector have no revenue, so the focus is on balance sheet strength.<\/p>\n
\u201cAll the boards of these biotechs are focused on these cash runways which is why the flow of data is really important to them,\u201d he says.<\/p>\n
So, what are some of the ASX biotech stocks standing out to analysts and fund managers in 2024?<\/p>\n
\u00a0<\/p>\n
The clinical stage radiopharmaceutical company has risen 76% YTD after promising trial results and now has a market cap of more than $1bn.<\/p>\n
CU6 is developing next-generation products to address the growing need for better diagnostics and treatments in oncology.<\/p>\n
The company headquartered in Sydney has several novel products currently in clinical trials.<\/p>\n
\u201cTheir most advanced drug is for the imaging of metastatic prostate cancer (64Cu-SAR-bisPSMA) and it is currently enrolling patients in a Phase 3 trial.\u00a0 Data from earlier studies was very encouraging,\u201d Hester says.<\/p>\n
\u201cWe expect that will be the first product to market in late calendar year 2026.\u201d<\/p>\n
CU6 \u00a0recently announced<\/a> that the first patient to be dosed with two cycles of\u00a0 its therapeutic drug 67Cu-SAR-bisPSMA at 8GBq to treat metastatic castration-resistant prostate cancer (mCRPC) achieved a complete response.<\/p>\n The patient had previously received multiple lines of hormone therapy and chemotherapy prior to enrolment in the clinical trial.\u00a0 He remains cancer free more than six months after treatment.<\/p>\n Hester says Bell Potter was recently lead manager on a ~$120 million capital raise, providing sufficient funding to support its commercialisation efforts.<\/p>\n \u201cThe company raised new capital in late March at $2.55\/share.\u00a0 Since then it had the announcement regarding the complete responder in the Secure trial and this has been very well received by investors.\u00a0 The stock is trading well above the issue price,\u201d he says.<\/p>\n Bell Potter has a Buy Speculative rating on CU6 and valuation of $4.<\/p>\n \u201cIt\u2019s seen a tremendous return in the period of about two weeks following recent data announcement so that is the type of good volatility you can see,\u201d Hester says.<\/p>\n \u201cThe company has $150 million of cash post the raise providing at least two years cash runway being ample time for the next key data points to emerge. \u00a0\u201d<\/p>\n The other major radiopharmaceutical company on the Aussie bourse is Telix Pharmaceuticals (ASX:TLX)<\/strong><\/a> which is at commercial stage and recently reported an 18% rise in revenue for Q1 FY24 to $175m.<\/p>\n \u201cThey\u2019ve both been very well held by institutions,\u201d Hester says.<\/p>\n \u00a0<\/p>\n Merchant Funds fund manager Reece O\u2019Connnell<\/a> is bullish on clinical-stage biopharmaceutical development company NTI which is focused predominately on paediatric neurological disorders, where there is persistent neuroinflammation.<\/p>\n The company\u2019s lead broad-spectrum cannabinoid drug therapy NTI164 has shown success across a range of neurological conditions affecting children including PANDAS\/PANS, Autism spectrum disorder (ASD) and Rett Syndrome.<\/p>\n NTI this week reported<\/a> further primary and secondary endpoint analysis of its Phase 1\/2 trial NTIRTT1 showing significant additional benefits in Rett Syndrome girls after 12 weeks of daily oral treatment with its broad-spectrum cannabinoid drug therapy NTI164.<\/p>\n \u201cRett Syndrome is a rare genetic neurological and developmental disorder that affects the way the brain develops in females,\u201d O\u2019Connell says.<\/p>\n \u201cRett Syndrome symptoms are horrible and permanently life altering for both the patient and caregivers.\u201d<\/p>\n Data from NTI\u2019s Phase 2\/3 ASD trial shows 54 children suffering medium to severe autism now living with only mild to medium autism after eight weeks of treatment, having improved on the autism scale\/spectrum by a 1.65 point average. The extension of this Phase2\/3 trial is\u00a0 underway with all 54 children.<\/p>\n \u201cThese are real kids, real families and carers, real hardship and suffering, real improvement and real results,\u201d O\u2019Connell says.<\/p>\n He says NTI is currently expanding its PANS\/PANDAS study into Phase 2\/3 off the back of excellent Phase 1\/2 results.<\/p>\n \u201cIt\u2019s another rare paediatric disorder offering yet another opportunity to improve lives with significant potential and large commercial upside,\u201d he says.<\/p>\n \u201cNTI is now well funded for what will come next \u2013 we\u2019re hoping engagement with the TGA is the starting point for a step change in the company\u2019s trajectory on the charts.\u201d<\/p>\n He says the company is in discussion with regulatory authorities including the Therapeutic Goods Administration (TGA) in Australia and the US Food and Drug Administration (FDA).<\/p>\n \u201cNeurotech has a well-defined and focused regulatory and pharmaco-economic strategy for APAC and USA,\u201d O\u2019Connell says.<\/p>\n \u201cThe first regulator that NTI will be talking to is the TGA which will provide NTI with guidance across all of its treatments areas.\u201d<\/p>\n \u00a0<\/p>\n O\u2019Connnell says ALA\u00a0is one of a handful of companies globally that is working with CAR-iNKT cells for cancer treatment.<\/p>\n He says the company has licensed its intellectual property from Imperial College London, Sparx Group \u2013 a US\/Chinese based biotech company \u2013 and the University of North Carolina Linerberger Comprehensive Cancer Center.<\/p>\n \u201cArovella is developing its novel invariant Natural Killer T (iNKT) cell platform for the treatment of blood cancers and solid tumours,\u201d he says.<\/p>\n \u201cIt has a pipeline of programs to use its CAR-iNKT cell platform to tackle solid tumours such as gastric cancer and pancreatic cancer.\u201d<\/p>\n O\u2019Connell says ALA\u2019s tech is allogeneic which means that immunity cells from healthy donors can be used and is classified as\u00a0\u2018off-the-shelf\u2019 as the technology, if proven in humans, means that donor cells can be engineered and frozen, ready to inject into a patient when ready.<\/p>\n He says the last INK-T therapy asset (APPIA-BIO) was transacted by GILEAD in 2021 for US$875m, and at a current market cap of $120m (~US$80m),\u00a0 potential upside is substantial.<\/p>\n \u201cIt is one of only 4-5 INK-T therapy assets available globally, and the only one listed in Australia,\u201d he says.<\/p>\n \u201cWe know that T-cell therapy works, it has been around for some 12 years, and saves lives leading to the cautious use of \u2018cure\u2019 and \u2018cancer\u2019 in the same sentence.\u201d<\/p>\n However, he says T-cell therapy remains\u00a0 very expensive (~$500k per patient) and has challenges associated with being autologous (meaning they must use the immunity cells from the sick patient).<\/p>\n \u201cThis makes it slower, expensive and less effective as the patient\u2019s immunity cells are already compromised by the cancer and therapy such as radio and\/or chemotherapy,\u201d he says.<\/p>\n \u201cAssets and opportunities like these don\u2019t come along often and it remains one of our strongest recommendations this year with rare and revolutionary technology that can change the way we treatment and manage cancer.<\/p>\n \u201cOur exit strategy is a likely trade buy-out following IND approval and commencement of human trials.\u201d<\/p>\n \u00a0<\/p>\n \ufeff<\/span><\/span><\/span>\u00a0<\/p>\n \u00a0<\/p>\n At Stockhead, we tell it like it is. While Neurotech International is a Stockhead advertisers, the company did not sponsor this article.<\/em><\/p>\n Disclosure: Merchant Funds holds shares in Neurotech International and Arovella Therapeutics.\u00a0<\/em><\/p>\n <\/span><\/p>\n The post Top ASX biotechs catching the eye of analysts and fund managers in 2024 \u2013 Part 1<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Neurotech (ASX:NTI)<\/strong><\/a><\/h2>\n
Arovella Therapeutics (ASX:ALA)<\/strong><\/a><\/h2>\n
The CU6, NTI, ALA share price today:<\/h2>\n\n