Health Check: The Winner Takes It All as US investors back advanced biotech plays

US-listed biotechs with “very good” phase III data are now valued at close to US$4 billion on average, leaving the minnows behind. 

Pic via Getty Images

Health Check is renowned biotech journo Tim Boreham’s daily wrap covering morning movers and shakers of note in the ASX Healthcare sector, Monday through Thursday.

• PYC Therapeutics notes a growing valuation chasm between the data-rich, phase III US biotechs and the less advanced ones, although the gap here appears to be smaller
• Cancer radiotherapy house Oncosil Medical has reached the halfway mark with recruiting candidates for two of its trials
• FDA approval for Echoiq’s aortic stenosis detection ‘algo’ could come any day – or at least that’s what some investors think

With apologies to ABBA, PYC Therapeutics (ASX:PYC) highlights a growing ‘winner takes it all’ division between the valuation of US-listed late-stage drug biotechs compared with the early-stage ones.

The developer of RNA (gene) therapies for two childhood eyes diseases, polycystic kidney disease and Phelan McDermid syndrome, PYC puts the average value of a phase III company with “very good” clinical data at close to US$4 billion, 42 times the average US$94 million worth of a clinical play with no data.

“We have not seen a quality premium like this before in biotech,” the company says in an otherwise routine prezzo to the E&P (Evans & Partners) Healthcare conference.

“Very good” is defined as data likely to “meaningfully improve” standard of care treatments. Companies with “good” data – likely to merely beat the standard of care – are valued at an average US$269 million.

So investors look to be skewing their dollars to the de-risked advanced plays, leaving the losers standing so small.

We’re not privy to similar ASX data, but suspect that Australian investors are more egalitarian in their willingness to back the less-advanced plays.

Take PYC, which is in early clinical stage with its eye programs, for retinitis pigmentosa type 11 and autosomal dominant optic atrophy. The other two programs are preclinical.

Given that, we’re sure management isn’t too peeved by the company’s $770 million valuation (the shares have gained 175% over the past year and this morning closed 6.5% higher at 16.5 cents).

Should the company get to approval stage it is heartened by the utterances of US Food & Drug Administration biologics chief Peter Marks, who says there are a lot of rare disease gene therapies “about there” and “it’s a question of how do we get them to the finish line.”

Halfway there for Oncosil Medical

And now with apologies to Bon Jovi, oncology device house OncoSil Medical (ASX:OSL) is halfway there with recruitment for two of its pancreatic trials – and surely livin’ on more than a prayer.

Oncosil reports the 40th patient has been recruited for its TRIPP-FFX, which amounts to 50% of planned enrolments.

Its separate investigator-led Pancosil trial has reached the halfway mark, with the tenth patient treatment.

The studies are testing the safety and efficacy of Oncosil’s eponymous targeted radiation treatment for pancreatic cancer, on the most fatal cancers.

The TRIPP-FFX is being carried out at the UK’s Christie National Health Service (NHS) Foundation Trust in collaboration with Manchester University NHS Foundation Trust.  The treatment combines Oncosil with the standard chemotherapy Folfirinox for locally-advanced pancreatic cancer.

Carried out at Amsterdam University Medical Centre, the Pancosil trial is evaluating the safety and feasibility of computed tomography (CT) -guided delivery of Oncosil via the skin, for patients  with non-progressive locally advanced pancreatic cancer.

Oncosil shares this morning were up 4% to 1.4 cents.

Is Echoiq on the cusp of FDA approval?

Investors are betting that heart disease-monitoring house Echo IQ (ASX:EIQ) is on the cusp of US Food & Drug Administration (FDA) approval of its AI-based tool to detect aortic stenosis, the most common form of heart-valve failure.

Echoiq shares have surged 40% over the past month. The company has said approval was “achievable” in under 12 months, so given the FDA application was lodged on May 7 we’re less than five months into that timeline.

The small-cap bargain sniffers at Next Investors are more definitive, saying approval could happen “any day now”.

“This is a significant share price catalyst that we are watching out for, as it can unlock commercialisation deals for the company.”

Echoiq’s Echosol-AS tool seeks to provide an earlier and more accurate warning of heart disease, which accounts for 30% of mortalities globally.

Based on capturing the heart images with ultrasound soundwaves, Echocardiograms (ECGs) are  widely available and cost effective. But cardiologists are often looking for multiple conditions at once and as they have similar symptoms this leads to under diagnosis.

The company is armed with the results of a US study showing the tool was close to 100% accurate in cases of severe aortic stenosis. Aortic stenosis is when the heart valve narrows, making it harder for the heart to pump the claret.

An earlier study of 9189 ECG images from St Vincent’s Sydney and Melbourne Hospitals, Echosol-AS detected 376 aortic stenosis cases compared with 218 for the human appraisers.

The tool also detected a further 174 patients at high risk of developing aortic stenosis.

Echoiq is able to access ‘big data’ from National Echo Database of Australia, the world’s biggest repository of ECG images, to ‘train’ its algorithms.

Should the FDA give the nod, Echoiq has access to a market of 1.5 million US aortic stenosis  sufferers, who cost the health system US$10 billion.

The company estimates that penetrating 2% of the market would deliver annual recurring revenue of US$1.3 million, rising to US$16.25 million with 25% uptake.

This is based on reimbursement of US$68 per test, with the company taking 25% of the spoils

Partly to support its US commercialisation, the company earlier this month raised $7.1M at 15c per share in an institutional placement.

Echoiq shares this morning lost 2% to 20 cents, valuing the company at $177 million.

Originally published as Health Check: The Winner Takes It All as US investors back advanced biotech plays