the market did not see the true value

I bought more last week, now im holding 50t shares..

good luck all

http://www.news.com.au/heraldsun/story/0,21985,23013816-664,00.html
Faith the healer for ailing biotechs

Liam Walsh

January 07, 2008 12:00am

"I'M PERSONALLY extremely embarrassed by where the share price is at the moment," was how Pete Smith began his presentation for drug researcher Alchemia.

He was speaking at his first annual general meeting as chief executive of Alchemia, where share prices had dipped over the past 12 months.

Alchemia was not alone in posting a weak share price. In fact, a healthy start at the beginning of last year for the whole biotechnology sector effectively sputtered out by December.

This came despite some organisations, developing goods from cancer drugs to heart pumps, reporting progress.

Dwindling returns were blamed on factors including a focus on booming sectors such as mining and fallout from the US sub-prime mortgage crisis.

Company-specific factors included prominent disappointments with test results (like for a weight-loss drug) or missing milestones.

Analysts at Bioshares said an index of 122 of smaller-cap biotechs had lost 13 per cent over the year (on preliminary basis to early December).

That reversed growth in 2006's second half, including a 19.2 per cent rise in the final quarter.

"Biotech has turned out to have had, on the basis of share price performance, a bad year," Bioshares' David Blake said.

He noticed companies were acknowledging share prices had suffered but many believed they had improved their business's value.

That was the tone Alchemia tried to strike. It hopes to launch a generic version of an anti-clotting drug in the first quarter of 2009 while researching a potential cancer drug.

Alchemia chairman Mel Bridges said he was frustrated the market did not "see the true value" in the business, which had received positive broker coverage.

Shares were partly hit when a US partnership deal fell over in 2006, though another has since been signed.

A $15 million share placement might have alienated some investors. Further, major shareholder and businessman Mark Rowsthorn has been selling down his stake.

Another company expressing frustration was Progen Pharmaceuticals.

Its results for a compound targeting liver cancer were well received, but it had a failure on a less vital lung cancer target.

Exiting chairman Stephen Chang said that excluding the lung result, the fall in prices from a high of $9.60 to a low of $2.26 was "bewildering".

But some specific factors might have been at play -- Progen has attracted hedge funds, and chatter about a potential competitor might have impacted on shares.

Mr Chang also had supporters, but a few long-time shareholders were also upset about him and the company's pace.

Progen managing director Justus Homburg, speaking on the general biotechnology sector, raised the prospect of drug development receiving a boost if the Democrats won the White House due to a greater focus on medicine.

But he attributed sluggish sector share prices to investors putting money into rising mining stocks.

"Why would you put your money somewhere else?" he said.

Share price is important for investors in the speculative biotech sector. Many companies do not pay dividends, so price increases are the path to crystallising wealth.

But investor focus, according to ABN Amro Morgans analyst Scott Power, has again been on larger listed entities and resource stocks, sapping demand for biotech shares.

Bioshares' Mr Blake also thought strong dividend and capital appreciation in industrial stocks had contributed.

"There's been far more attractive opportunities elsewhere," he said.

Even the credit crunch's spooking of global sharemarkets had an impact.

"It's . . . had the effect of getting people to put a pause in their investment activities," Blake said.

Mr Blake said some biotechs struggled because of "clinical trial failures, issues with distribution and marketing partners, failure to meet performance milestones as well as program delays and failure to secure capital in a timely manner."

But Australia also generated "a number of quite solid companies" which had made good advances, he said.

He highlighted Acrux, which is launching an estrogen spray in the US through its marketing partner.

He also said some companies had recorded good trial results, like Pharmaxis which is developing a treatment for lung conditions.

Test results for later-stage compounds had been expected to drive investor enthusiasm. While some results were good, the industry also had an early setback with poor results of Metabolic's potential weight-loss drug.

For this year, Mr Blake said potential drivers would include clinical data results, product sales and the possibility of a lucrative deal.

Mr Power predicted greater interest in biotechnology stocks due to potential deals with drug giants.

In that case, AGM speeches might be a little more positive this year.