BioWorld International Correspondent
SYDNEY, Australia - A surge of more than 40 percent in the share price of one biotech company could be an indication that the long dry spell for Australian biotech stocks may be over, analysts say.
The share price of stem cell researcher BresaGen Ltd. in Melbourne shot up 42 per cent to A$0.65 in just one day of trading last week, for no apparent reason.
When queried by the Australian Stock Exchange the company could only suggest that news of a breakthrough in stem cell research at St Vincent's Hospital in Sydney may have triggered the surge.
The research, which does not involve BresaGen or any of the cell lines held by the company, used a mouse model to show that adult stem cells can develop into myelin-producing brain cells called oligodendrocytes.
Another publicly aired suggestion is that the recent arrival of disabled actor and stem cell research advocate Christopher Reeve in Australia, which has received considerable publicity, has raised public awareness of stem cell research.
Bresagen's share price has since fallen back to A$0.48 or a few cents above, where it was at the beginning of the surge, but other biotech companies also experienced share-price increases. These include Sirtex Medical Ltd. and Peptech Ltd., both based in Melbourne, and DNA test materials company Gradipore Ltd. in Sydney. Gradipore was also recently queried by the stock exchange about an increase in its share price rise.
Peter Russell, an analyst at Inersuisse in Melbourne, who has just released a substantial report on the biotech sector, said the increases indicate that Australian investors are starting to become interested in biotech stocks again.
He said that many of companies in the sector had been poorly run but had "cleaned up their acts" in the lean period and the share prices had fallen a long way.
As a result he believes that many biotech stocks now represent a good value.