Reading through the business daily today and stumbled across an article on the front page entitled:
"Biotech deal spurs portfolio review"
Here is the link: http://www.heraldsun.com.au/business/biotech-deal-spurs-portfolio-review/story-e6frfh4f-1225984640061
Summary: Seasoned biotech investors are now likely to put their porfolios under the microscope after missing out on stem cell researchers 'Mesoblast's' unexpected $US1.7n Billion dollar licensing deal. The Melbourne company which specialises in bone diseases recently attracted a big investment from US pharmaceutical giant Cephalon even though it could still be another two years before it has approval to see its therapies. Dr Silviu Itescu(chief executive of 'Mesoblast') says "That's where the suprising factor came in, but in the US, large parma often take risks on proven technology" He then goes on to say "What the Australian market is not used to is early-stage research companies doing major transactions, like ours" "
He said investors should open their minds to the increasing possiblily that similar deals would be announced by the Australian biotech sector soon, as some drug developers get close t putting their therapies on the market in the next 12months" The bio sector watchers admit that they had underestimatd the implications of the milestones 'Mesoblast' achieved which had cause the stock to more than double in value. This has now forced investors to "determine if there are other sleepers in the biotechnology sector going unnoticed" It then goes on to describe the company and the deal involved.
Summary: The biotech sector was perceived as a risky investment after many companies in the sector had collapsed back in 2008/2009. But now bioshares analyst Mark Pachacz now believes that the sector has now "been validated. It has investment class" and believes that:
"the broader market has been slow to realise is that it's no longer a sector that's based on hype or blue sky. It's now a sector that's based on very significant commercial outcomes.""
The biosectors index of stocks had reach its lowest point in the last quarter of 2008 but has since recovered 75% by the third quarter of 2010. He did say that growth had been concentrated in later-stage companies with floats overseas going poorly. "The market is not as negative as it was, but there is still a degree of lack of risk appetite,"
"As to the future, Mr Pachacz says Australia is moving to a time when the sector will be characterised by companies generating "in excess of $30 million to $50 million revenue a year from new products". "That'll create more interest," he says."
Seems to me that this will be the year that big deals will be made within the biosector and that will essentially put the biosector back on the map. This will then allow traders to to scope through the stocks and determine which will be the next big story. Lucky for us i'm sure OBJ will be a big name in the investors circle,after we land some crucial licensing deals. 2011 sure as hell is shaping up to be a ripper year. GL to all holders!
OBJ Price at posting:
2.3¢ Sentiment: Hold Disclosure: Held
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