Good press drove October biotech enthusiasm: Intersuisse

Biotech shares bucked the trend during the month of October - the Intersuisse biotechnology index gained 6.6 per cent in contrast to the All Ordinaries and the Nasdaq Biotech Index, which fell by 3.9 per cent and 3.8 per cent respectively.

And according to Intersuisse director Jonathan Buckley, a little positive press over issues like avian flu has gone a long way toward reversing biotech's downward trend of the previous quarter.

"Cash has continued to flow towards biotechnology and medical device stocks after the long drought that ended over six months ago," Buckley said.

Biota Holdings was the pacesetter in the quarter to September 30 -- it gained 219 per cent. However, despite continuing media coverage of the potential for a bird flu pandemic, during October Biota made gains of 40 per cent, moving its ranking to fifth place for the month although it remains the clear leader since 30 June 2005 with a price gain of 347 per cent. During October the first four places went to PanBio, up 58 per cent, SciGen (+57 per cent), Meditech Research (+52 per cent) and Avexa (+43 per cent).

"There has been an upswing in the sector in two parts. There has been a return to value for some of the more advanced companies like Acrux and Alchemia and at the same time a more retail orientated enthusiasm for the sector driven by stories in daily newspapers for companies like Biota and Rockeby.

"The sector is now $20 billion and it is quite mature, and there are some top quality companies that are being recognised, but it still remains clear that there is a long tail of small biotech sector who don't have the critical mass and they will be opportunistic," Buckley said.

"The real focus should be looking at the top half -- there are some very interesting companies moving thorough the clinic."

On the downside, Antisense Therapeutics slid 20 per cent, Somnomed 19 per cent, Solbec Pharmaceuticals 18 per cent, with Medical Developments and Pharmaxis each off 17 per cent.

Of the 82 companies in the Intersuisse Biotechnology Index, 41 rose while 36 fell in price. However, only 12 of the falls were in double digits compared with 27 gainers, of which 19 exceeded 20 per cent.

"There are several companies due to float on the ASX before the end of the year," Buckley said. "There is limited capacity in the sector for investment in IPOs -- the window will remain open in the foreseeable future and how long it remains open depends on the weight of money required. It is likely there will be indigestion -- we saw that in 2004 following the float of Proteome systems. "