Biota – The Little Aussie Bird Flu Battler
A couple of months ago you could have bought Biota Holdings shares for around 50 cents. Last week they hit $2.60.
The reason – bird flu.
For Biota is the pharmaceuticals company behind Relenza (the marketing name for zanamivir), the ground-breaking anti-viral drug that is rated second only to Tamiflu in ability to fight bird flu.
Biota has its headquarters near Monash University, a 15-minute drive down Blackburn Road from my home here in the Eastern suburbs of Melbourne.
It is a leader in all kinds of biotechnological research. According to its latest annual report: “Within two years, we hope to see three respiratory antiviral drugs in the clinic, each potentially supported and funded by valuable licensing partnerships that could yield significant revenues in the form of license fees and milestone payments.”
Nevertheless, until recently I knew little of the company. To me, it was another of several dozen Australian biotech stocks which seem to tease investors with the occasional exciting breakthrough announcement that sends the shares into the stratosphere, where they enjoy a temporary flurry of out-performance before plummeting once more to earth.
Biota has only once made a profit since its 1992 public listing, in its June 2000 financial year (and in anticipation of this the shares for a while soared above $9). But the scientific community seems pretty unanimous in agreeing that Relenza is really a breakthrough drug, and a marvellous success story for Australian medical research. According to Professor Sir Gustav Nossal, one of Australia's leading medical biologists, Relenza is "one of the greatest Australian research inventions of all time.”
Unfortunately, much of its future will be determined by the courts. Biota is pursuing legal action against GlaxoSmithKline, which had undertaken to market Relenza globally. Biota claims that GSK has not done this adequately, causing sales to fall well below expectations.
And the shares remain highly volatile. Yesterday they fell 23%. Today, at around lunchtime, they’re up 17%.
October 25th, 2005