The market conditions are poor to say the least and the biotech sector has been diabolical. The XBI which is the broadest base S & P Biotech ETF has been in a downtrend since its high of 174.25 on the 8th Feb 2021 (that's right 2021 not 2022). Today it closed at 76.85, down some 56%. Meanwhile IHL has and to my understanding is still the best performing biotech on the ASX in that period.
Moderna is down 42% YTD and its done nothing but print money off the back of Covid 19 as we all know and speaking with my broker last week he pointed out that 176 listed biotech companies on Nasdaq were trading BELOW cash backing, numbers not seen since the GFC in 2008. On top of this the NASDAQ itself had its worst month since 2008 so what does this all tell me? I believe that the sector is completely oversold and is hopefully close to a bottom. On CNBC this morning they were also speculating on the same thing.
IHL is not Robinson Crusoe when it comes to share price pullbacks is my point and it and the sector is definitely due a bounce. Any of the hot money that has been in the market has been for anything "battery metals" related. I believe we saw peak Lithium etc last week. In my time in the markets which goes back a long way I have never seen a thematic more spoken about since the Dotcom boom. Every day it was either * or ********* publishing articles about picking the next "billion dollar Li company" etc. Its all over in my opinion, the Li price will come off and all of the air will come out of these things. No different to Li stage 1 which was a decade ago - markets always overshoot on the way up and also on the way down.
I can't say exactly when the bottom will be in in biotech but when it does turn the first 30% off the bottom will come very quickly and I believe IHL will follow suit.
IHL 42X, pre IND meeting with the FDA is coming next week, full dosing data sometime soon. Remember that if the dosing data suggests that the low dose combination has achieved the biggest reductions in AHI that we have already seen then look out, we have potentially got a major drug discovery on our hands.
The board clearly has a strategic vision with the APIRx acquisition that I'm sure will become clearer and clearer - they obviously thought it was great value at 57.2 cents - well its a fixed amount of shares (216m shares) so the acquisition on paper has just gotten $40 million cheaper. Well played management and not to mention the fact that as they usually do they have ensured the company's balance sheet is in the best shape its been at a point in time when markets are extremely vulnerable with circa $40 million cash at bank so there is no funding risk whatsoever in comparison with a number of companies who are trying to raise money in a market where money is hard to find - I've received multiple term sheets in the past week with companies trying to raise capital which shows their level of corporate ineptitude, something that IHL have proven to master over and over again.
Having taken up my full entitlement I've picked up a few more at 35 already this morning and I will continue to do so because the 1:15 was pretty light in the first place.
Hopefully I'm right and we're close to a bounce,
GLTA
Ted.
IHL Price at posting:
35.0¢ Sentiment: Buy Disclosure: Held
