Several biotech stocks surging during strong January
January has been a strong month for stock markets, characterised especially by gains among many high-risk stocks. Biotechnology is a sector that has seen several price surges during the month. BioStock identified some of the winners on the Swedish lists as well as some of the winners outside Sweden.
For many listed biotech companies, 2022 was a not very cheerful year. The investment climate in the sector was at times ice cold and many companies saw their valuations drop sharply. This did not only affect stock prices. The temperature on the M&A market also declined significantly, both in terms of number and volume, mergers and acquisitions were at a lower level compared to previous years. Read more here.
After last year’s downturn in the stock market, 2023 has started on a more positive note and there is a plethora of stocks that have performed strongly in January. Slightly lower inflation rates and the fact that more and more analysts believe in a mild recession instead of a crash seem to have increased risk appetite in the markets.
Strong movements among the Swedish biotech companies
The improved sentiment has spread to the biotech sector, with the Nasdaq Junior Biotechnology Index climbing 10,7 per cent in January. Among the Swedish companies in the sector, we note sharp gains in, among others, Abliva, that advanced 75 per cent during the month. One possible explanation for the movement could be that Dutch investment bank Kempen’s coverage of the company has recently attracted attention in the Swedish media. Kempen has a buy recommendation on the stock, with a target price of SEK 1. This compares with the stock’s closing price of 0,3135 SEK at the end of January.
Another stock that has performed well is Hemcheck, with an increase of 75 per cent in January. Hemcheck sells a solution for the detection of hemolysis in blood tests. BioStock reported on this summer’s rights issue, which was carried out to strengthen the ongoing market expansion. The company begun year by extending their agreement with Region Skåne, whilst the distributors in Ireland and Spain placed follow-up orders.
Lund-based Cantargia climbed as much as 102 per cent in January. The company recently completed the toxicology program with the drug candidate CAN10, an antibody primarily being developed for the treatment of myocarditis and systemic sclerosis. According to the company, the results from the toxicology study were good. The next step will be to start a phase I clinical trial, which is expected to take place in the second half of 2023.
In an analysis from January 13, the investment bank Carnegie comments that the results reduce the risk in the project and reiterates its buy recommendation. However, the investment bank’s target price remains at 20 SEK, despite the new results, which can be compared with 6,235 at which Cantargia shares were trading at the close of this Tuesday.
Several surges in US companies
Swedish biotech companies are not the only ones that have seen strong share price developments. Vivos Therapeutics has advanced as much as 172 per cent in January after receiving FDA approval for its treatment of mild to moderate obstructive sleep apnoea.
DermTech rose 207 per cent this month after the company’s skin cancer detection solution was recommended for inclusion in the U.S. military’s TRICARE healthcare program.
Another strong U.S. biotech stock in January was Intelligent Bio Solutions. The stock climbed 325 per cent after the company presented promising test results regarding its diagnostic biosensor platform.
Some optimism in the fundraising market
Another sign of an improving mood is that capital rounds have begun to attract more interest. Going from a near lull on the fundraising market during the autumn, we have lately seen more companies that dare to raise capital again. The investors have also shown an increased willingness to participate, most recently in Lund-based Spermosens rights issue, which was oversubscribed by 21 per cent.
Only the future can tell whether the optimistic mood in biotechnology is here to stay or not. Generally, stock prices still have quite a way to go to reach the levels of January last year. However, it seems that the toxic climate that characterised much of 2022 has turned into a more optimistic environment for the moment.