• Street TalkPrint articleStreet TalkBiotech blooms as capital...

• Street TalkPrint articleStreet Talk

Biotech blooms as capital raisings surpass $1.3 billion

Anthony Macdonald and Yolanda RedrupJul 28, 2021 – 9.34pmSaveShare

The rivers of capital are raging for biotech stocks, with almost $150 million raised from ASX listed companies already this week.This week’s raisings bring the year-to-date tally to more than $483 million, not including initial public offerings - of which there have been many. If you include IPOs, more than $1.3 billion has been raised. When Paul Hopper’s Viralytics was acquired, this was a turning point for the biotech sector locally. Louie DouvisMaking up a chunk of this week’s raisings is one of Paul Hopper’s bets, Imugene, with the immuno-oncology company understood to have completed an upsized $95 million offer, having originally targeted $85 million.There’s four big reasons behind the recent flurry of raisings (including new funds, strong returns and big pharma collaborations), not least of which is the fact the sector has the flavour of the month for investors.“A lot of generalist funds are looking for alpha in their portfolios,” Bell Potter equity capital markets director Darren Craike said, whose firm has been heavily involved in the recent deals spree.“They have been playing a lot in tech, but that’s come slightly off the boil, so many have started to gravitate to healthcare where there have been some exceptional returns in the last two to three years.”Regenerative medicine company Aroa Biosurgery also banked $53 million in a placement and share purchase plan this week, having listed on the ASX this time last year.Other major raises in the last few months have come from the likes of Immutep, 4DMedical and Avita.For the first time in the past decade, investors like SG Hiscock and Merchant Funds Management have established dedicated healthcare funds. Hong Kong investor Karst Peak, which set up shop in Sydney this year, has also taken a particular interest in healthcare.These funds have been inspired by the returns being generated by the sector, which have put the loses of five-plus years ago firmly in the rearview mirror.Investors who bought into previous placements for companies such as Imugene, Oneview, Opthea and Immutep are looking at returns in excess of 300 per cent. Investors in Imugene’s 2019 placement, in particular, have done well, banking a health 1600-plus per cent return.And if the pre-IPO raises are anything to go by, there’s plenty more blue sky bets to be made.Regenerative medicine company Tissue Repair, which in April raised a pre-IPO round, is now understood to be targeting a $25 million raise through a listing.This is set to take place post-earnings season and, unsurprisingly, Bell Potter is the lead manager.The terms are out for Clarity Pharmaceuticals $358 million IPO, raising $92 million, while Triad Life Sciences and Vitrafy Life Sciences are also confirmed to be pursuing listings in 2021. ImmVirX, Nico.Lab and Artyra have also done pre-IPO rounds.Besides the companies, Bell Potter is the other big winner of the biotech bonanza.The boom in raisings has been a particular boon for the firm, which has managed all the raisings targeted at local investors, as well as numerous floats.“People have made an incredible amount of money in Viralytics, Imugene, Telix, Immutep to name a few. There’s been 5 to 10 times returns in only a few years,” Craike said.“It really kicked off when Viralytics was taken over by Merck in 2018. The market started to realise that good clinical data could be rewarded with big pharma and offshore investor interest.”