Media Thread, page-12143

Interesting article on how the Biotech sector have performed in 2024.

ASX Health Winners February: Law of attrition applies but biotech is a long term game; Nyrada up 5x last month - *

ASX Health Winners February: Law of attritionapplies but biotech is a long term game; Nyrada up 5x last month

Health & Biotech

• ASX Health Index down -1.5% for February
• 76 biotechs rose, and 78 fell during the month
• But essentially, biotech is a long term game for investors

The S&P/ASX200 Health Care [XHJ] struggled in February, finishing -1.5% lower andtrailing the broad ASX 200 index benchmark which gained +1.5%.

Source: Google

Source: Google

The Healthindex was dragged down by the two biggest stocks in the sector – CSL (ASX:CSL) and Sonic (ASX:SHL) – which dropped -3.5% and -5.5% lower respectively last month.

In thesmaller end of town however, things looked more even – with 76 biotechsrising and 78 falling during February.

But still,2024 is seen as a year of attrition that could push biotechs to prioritise keyprograms, while mothballing those that aren’t too promising.

Also,while there will be some exceptions, analysts agree that fundraising and IPOswill be tough this year.

Thecurrent situation is similar to a game of musical chairs, where the fate ofeach company essentially depends on where they were positioned when pursestrings started to get tighter.

Thosebiotechs which were lucky enough to get funded before the downturn might stillbe OK now, but those that didn’t, might be feeling the squeeze.

Remember, biotech is a long game

Securingcapital is one thing, but managing the rate at which cash is depleted (alsocalled cash burn) is key to sustainable growth.

For lifesciences companies, the usual target is having 12 months or more of runway atany time.

But justbecause a business does not make any money right now, doesn’t mean it’s a badinvestment; biotechs and miners often lose money for years before findingsuccess.

And one ofthe advantages of being a publicly listed company, of course, is that it cansell new shares to investors to raise fresh cash to fund growth.