Signs of life are emerging in the global biotech sector, after the longest and sharpest downturn in history that was so severe it left hundreds US companies trading below cash backing.
The green shoots of recovery are also being felt in the local sector, with sentiment improving on the back of positive company specific news.
But market participants also warn that funding conditions remain very difficult, with early stage and poorly capitalised unlikely to access equity capital without a compelling story.
A proxy for the life science sector globally, the SPDR S&P Biotech ETF (XBI) has lost more than half its value since February 2021 – the longest decline in record.
But the fund has also rebounded 20 per cent since its mid June low point. Similarly, the Nasdaq biotech index fell 38 per cent between its early September 2021 zenith and its mid June nadir, but this loss has now been trimmed to 28 per cent.
Locally, the sector has enjoyed a buoyant month, with the rising tide of sentiment lifting all but a few boats.
According to the industry newsletter Biotech Daily, the “dramatic turnaround” saw 32 of the top 40 ASX listed biotechs rebound in July, with 28 of them gaining more than 10 per cent and five surging more than 50 per cent.
