The 4 biotech firms the experts are most excited about

The biotech industry may be cooling off, but there’s still plenty to be excited about when it comes to the underlying innovations. Chances are, the next great medical breakthrough is already in clinical trials, and investors who know what to look for will have the edge.

It’s not an easy industry to navigate, however, unless you have a medical background ready to decipher the science and technology. Unsurprisingly, many of the experts managing funds foccussed on investing in biotech companies, have worked in healthcare companies and as scientists prior to switching to the investing side.

Dr Bianca Ogden, Portfolio Manager – Health Care Strategies for Platinum Asset Management and Hashan De Silva, Founder and Managing Partner for KP Rx are no exception to this.

Ogden worked as a molecular biologist on new HIV drugs and oncology drug targets with Novartis and Johnson & Johnson before working in investments, while De Silva worked at Eli Lilly.

I spoke to both in September last year for their favourite stocks and trials to watch. With so much change to account for, both kindly agreed to again share their latest views on the sector and the investments they are most excited about at the moment.

Constant change and trends in the biotech space

There was some shoots of growth in biotech in late 2024, only to be hit by regulatory uncertainty out of the US. Ogden comments that the “macro concerns have trumped (pardon the pun) fundamental investing at the moment.”

“Many investors are shunning the sector and it is trading on historical low valuations when looking at EV to sales metrics. We need to see consolidation among biotech companies versus even more drug target crowding,” says Ogden.

She adds that the valuation levels have created a great opportunity to invest.

“Have we cured diseases? Last time I checked, we had not, hence this bloodbath offers many opportunities from cardiometabolic to oncology and rare diseases, from small molecules to multi-specific antibodies and genomic medicines such as gene silencing molecules,” she says.

De Silva notes that reduced grant funding from the US means that “we are very focused on funding when looking at new companies. What is the runway that this capital raise provides? Who are the investors and what is their commitment to follow-on?”

The environment has driven a shift in the type of M&A activity De Silva is seeing, with a shift from early-stage companies in 2021/22 to later stage companies. This is shown in the below chart.

“Big pharma are willing to wait longer and pay higher prices to minimise clinical trial risk. This creates a challenge for biotechs needing to fund their programs for longer prior to seeing corporate interest,” De Silva says.

That said, Ogden believes that biotechs are in a better position to negotiate the current environment and she has seen fewer buyouts compared to partnerships. She notes buyouts are more likely in medtech where a large company can “simply slot it into their commercial infrastructure”.

An example of a recent partnership is between two of Ogden’s holdings, Zealand Pharma and Roche, which entered into a deal to build a weight management franchise together.

“Interestingly, no equity changed hands which again highlights the different environment we are in,” she says.

The emerging trends to watch

When it comes to major themes and trends across the sector, there are a few the experts are watching.

De Silva notes that the use of AI in drug discovery is ramping up and will drive an increase in new drugs to trial.

“We are assessing companies that can help to speed up pre-clinical drug development, such that these new drugs being developed can be quickly put through high throughput screening. We are also looking at companies with tech that can provide reproducible results and better mimic human disease than the traditional mouse model,” De Silva says.

And yes, for those wondering, the traditional mouse model is exactly what it sounds like - testing on lab mice. De Silva explains it is slow, tends to be a development bottleneck and is rarely predictive of human response.

He recently invested in Inventia, a private Australian medical device company.

“It has developed a best-in-class bioprinter which can quickly and reproducibly create 3D cell models that can be used in high throughput drug screening,” he says.

Ogden is monitoring the narcolepsy and wakefulness space.

“We are seeing next generation orexin receptor agonist progress through the clinic,” Ogden says.

For the non-medical minded, basically these are molecules that can interact with the chemical structures in our bodies responsible for physiological processes like sleep regulation, wakefulness or appetite.

She has invested in Centessa (NYSE: CNTA).

“The team there has produced a promising suite of orexin receptor agonist molecules with a solid therapeutic window. The potential for these types of assets is significant, given various indications all adding up to a US$15bn market,” Ogden says.

Other pockets of growth

Ogden continues to see opportunity in the weight management field, and is also watching developments in treatments for autoimmune diseases and cardiovascular diseases.

“Cardiovascular diseases is seeing quite a bit of new molecules in the pipeline and I am looking forward to some clinical data from oral PCSK9 inhibitors (Merck and AstraZeneca, two of our holdings),” she says.

How to pick the winners in the biotech sector

When it comes to selecting companies to invest in, both Ogden and De Silva are clear on the importance of:

• Strong clinical data and expertise
• Strong teams
• A solid balance sheet
• A solid development plan to translate the science into a product

“What we are looking for is a strong clinical data package with a well thought out clinical development plan and a management team with a track record in that field,” says De Silva. 

He focuses on biotech companies after they’ve conducted their first human trials and medtech companies that are closer to regulatory approval.

Ogden cautions that the science has to be backed by commercial acumen and execution for it to be a valuable investment.

“There has to be a strong sense of the product profile and how it fits into an ever more competitive environment. Execution is key,” she says.

An example of what she looks for is recent addition to her portfolio BeOne (NASDAQ: ONC) (known previously as Beigene).

“It is an agile global biotech focusing mostly on oncology, while being a therapeutic modality agonist,” she says, saying that the commercial execution for its product zanubrutinib, got her over the line for investment. She points out it has one of the largest clinical trial set ups in Australia and has been able to compete successfully with pharma incumbents.

“It really ticked several boxes for me from solid team, solid clinical translation and development, along with great commercial acumen,” Ogden says.

The companies the experts are most excited about

In a sector of constant innovation, a company must be something special if even the experts are excited. These are the four companies that De Silva and Ogden nominated – and chances are, you’ve never heard of them but be prepared for them to become superstars in coming years.

Hashan De Silva

1) Curvebeam AI – medtech company for orthopaedic imaging.

“Their flagship product, HiRise, is the first weight-bearing CT system enabling bilateral lower extremity scans under natural load conditions, enhancing diagnostic accuracy for joint issues,” says De Silva, noting the innovation has been adopted by leading US institutions and it has also partnered with Stryker to co-market HiRise in the US and Australia.

“Despite these achievements, CurveBeam remains significantly undervalued, with a market capitalisation of around A$40 million, well below comparable medtech peers. We anticipate that as HiRise gains broader adoption and revenue scales, this valuation gap will close, offering substantial upside potential,” De Silva says.

2) Syntara – a drug development company targeting extracellular matrix dysfunction (to help conditions like myelofibrosis and chronic fibrosis).

It has recently released Phase 2 data in myelofibrosis.

“We were particularly excited to see that patient responses improved over time indicating disease modifying activity of the drug, SNT-5505. We see 2025 as a watershed year for the company with 12-month data to be released this half, followed by engagement with the FDA on a potential pivotal Phase 2c/3 trial,” De Silva says.

He also highlights successful Phase 2 trials in skin scarring treatments, “including reduction in collagen, improvement in vascularisation which is the first time a pharmaceutical has been able to improve these markers of scarring.”

Dr Bianca Ogden

1) Vera Therapeutics – focused on treatments for immunologic and rare diseases.

Ogden explains: “Vera Therapeutics is developing atacicept, a rationally designed Taci-Fc fusion protein. Taci stands for “Transmembrane activator and CAML interactor”, which essentially is a receptor on the surface of B cells that specifically binds to proteins called BAFF and APRIL (Love the acronyms). 

These two culprits, when not controlled properly, cause autoimmune diseases. The idea behind atacicept is to trap BAFF and April and stop B cells from producing harming autoantibodies. Vera is advancing its fusion protein to treat IgA nephropathy, a kidney disease that is characterised by antibody build up in the kidney. Data so far shows that Vera’s antibody has disease modifying effects in IgAN.”

Ogden highlights there are expansion opportunities and Vera Therapeutics could have a commercial product on the market within 2 years, while still conducting studies on other autoimmune indication.

2) Oxford Nanopore – UK-based company offering nanopore sequencing, or as Ogden looks at it “atom sensing technology”.

“My belief is that over time, this technology will find itself in many medical centres as well as in biomanufacturing suites analysing DNA, RNA, as well as protein compositions,” Ogden says.

She points to the partnership between Oxford Nanopore and Biomerieux, one of the lead pathogen detection companies, “to translate the technology into diagnostic applications.”
Ogden also believes the data aspect of the investment will become more valuable over time.

Want to know more about the funds the experts manage?

Managed Fund

KP Rx Healthcare Opportunities Fund

Alternative Assets

View

Managed Fund

Platinum International Health Sciences Fund

Global Shares

View

Are you investing in biotech companies? Share what innovations you are most excited about in the comments below.