Sirtex shines as biotech gears up for big year

By AusBiotech
Tuesday, 08 January, 2013

At the close of trade on Christmas Eve, the S&P Indices replaced Integra Mining Limited with Sirtex Medical Limited (SRX) on the S&P/ASX 200 and the good news didn’t end there for the oncology treatment developer.

Having freshly joined the S&P/ASX 200, Sirtex took second place for the highest share price increase for 2012 at 193 precent, on the back of its September report of a 37 per cent increase in sales of lead product, SIR-Sphere microspheres. The performance prompted The Australian Financial Review (7 Jan 2013) to refer to Sirtex as the “poster child for the medical research and bio-pharmaceutical sector.”

Amid the economic predictions for the year ahead, many have acknowledged the difficult year for small caps, especially small mining outfits, in attracting risk-shy investors in 2012. While the large cap biotechs enjoyed a brilliant year, as evidenced by the Bioshares Large Cap Index showing a rise of 60% for the year, the rest of the sector faced a challenging time.

BioShares (31 December 2012) released its annual capital raising figure for the industry at $256.9 million, which compares poorly to 2011 at $630 million, 2010 at $554 million, 2009 at $672 million raised. This underscores the difficult year 2012 was for biotechs, the result was not far from the dismal low of the GFC in 2008 when only $185 million was raised.

Many believe the tide will shift in 2013, especially for the small caps, as investors seek better returns than interest rates alone will offer and investors look for growth stocks instead of yield stocks.

The Sydney Morning Herald this week (8 Jan) commented that “overall returns from the biotech space can be patchy, but for the savvy investor it promises big returns.”

The article noted Starpharma, Phosphagenics and Mesoblast as stocks to watch and said “the potential for heady gains has prompted a number of brokers to encourage clients to look at committing some funds to biotechs for speculative gains.” “Mesoblast is now a $1.5 billion stock and Sirtex is worth $750 million as they look to join the sector's heavyweights such as CSL, Resmed, Cochlear and Fisher and Paykel Healthcare.”

The Australian Financial Review said: “Due to the capital intensity and regulatory burden in getting drugs and devices to market, a lack an analyst coverage, and poor earning visibility, biotech stocks have been somewhat marginalised part of the share market, but some analysts are tipping the sector to be a hot space in 2013.”

For AusBiotech’s part, we are addressing the issues important to biotech companies. The annual CEO Industry Position Survey for 2013 will begin in mid-January and provide an important opportunity for members to provide detailed feedback on the state of the industry and shape AusBiotech’s policy priorities for 2013.

Biotechnology company leaders are urged to keep an eye out for the survey and participate, as industry’s involvement is critical to the quality of the information, which AusBiotech use actively throughout the year to underpin our work on members’ behalf.

Coming up in 2013 are a range of key industry events. Save the dates for the following: