Q3 dragged down local biotech in 04/05: Intersuisse

A lacklustre third quarter for Australian biotechnology stocks resulted in an overall fall of almost 20 per cent for the year ending June 2005, according to the Intersuisse Biotechnology Index.

Biotech stocks fell 19.7 per cent in 2004/05, while the All Ordinaries grew by 19.8 per cent.

Several biotech companies bucked the trend: Pharmaxis rose by a massive 244 per cent, GroPep by 86 per cent, Cochlear by 72 per cent, Phosphagenics by 54 per cent and CSL up 51 per cent.

The worst performing stock on the Intersuisse index was Benitec, down 83 per cent. Prana Biotechnology, Eiffel Technologies, Chemeq and Occupational and Medical Innovations all fell more than 70 per cent.

"The two biggest factors in the drop have been the negative lead from the US and the flight of risk capital into resources," said Jonathan Buckley, director of Intersuisse Corporate.

On the up

On the positive side, biotech's downward slide slowed in May and June, with a 0.5 per cent drop closing at just over 6000 points. These levels were last seen in early 2003 before the index rose 25 per cent from August to January 2005.

Buckley said he believed the biotech sector was likely to come back into favour. "There are now better valued opportunities for investors. All that is needed is good news within the sector which will trigger interest," he said.

"A number of companies now have the key attributes of a commercial focus, and good pipelines including later stage products, experienced management and adequate cash."

While the figures look poor at face value, since January 1996, when the Intersuisse Biotechnology Index first tracked the ASX-listed biotechnology sector, the average annual compound growth has risen 21 per cent. In the US, the Nasdaq biotechnology index performed better than the ASX over the last year, falling 8.5 per cent with a June recovery of 2.5 per cent.