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Further to the daytona000 post, an article by Tim Boreham was published by Biotech Daily on 31 March 2022.

The indiscriminate pull-back in valuations across the world’s biotechnology sector has created opportunities for patient investors willing to sift through the wreckage for quality companies selling at deep discounts.

The biotech sell down is a global phenomenon, driven in part by the broader attack on speculative technology stocks sensitive to high interest rates. In most cases the red ink is driven by this general sentiment, not specific company news.

In the US, investment bank Jeffries recently cited 30 stocks of more than $US100 million market valuation that were trading below cash backing. We can’t quite find such bargains on the ASX, but many local biotechs look to be selling for a proverbial song.

Before investors start trilling, they should be aware that some of the shares were overbought during the pandemic, so they’re coming off an unjustified level in the first place.

In adversity lies opportunity, so what lies in the ASX biotech bargain bin?

Spray-on skin developer Avita Medical (AVH), has lost 60 percent of its value over the last year. Listed on the ASX and the Nasdaq, Avita has a $US104 million ($A140 million) cash balance, which means it is trading on an enterprise value (market cap less cash) of around $150 million. At its peak in early 2020 the stock was worth $16 compared to today’s $2.00 +.

Avita reported revenue of $US14 million for the six months to December 31, 2021, up 37 percent and mainly from its approved chronic burns indication. The company is eyeing US Food and Drug Administration assent for the bigger markets for vitiligo and soft tissue injuries.

“The fundamentals of the company … have only improved since we were a $1 billion market cap company,” says Avita chief Dr Mike Perry.

Fair enough! We also note that while the many broking analysts covering the stock are generally supportive, Wilsons’ Dr Shane Story warns that profitability for Avita “is still several years distant and [the company is] likely to require further capital raising(s)”.