Biota goes up as France stockpiles flu drugs
By Stephen McMahon
November 12, 2005
Bird flu fears are pushing up Biota Holdings' share price.
Photo: Reuters
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AVIAN flu fears propelled Melbourne drug company Biota Holdings' share price up 36 per cent yesterday, after the French Government confirmed a significant order for its drug.
The French order of 9 million units of Biota's Relenza, which is a preventative and curative measure against the latest strain of bird flu, is three times the global sales of the product since it was launched in 1999.
Biota chief executive Peter Molloy is positive this order is just the start of a stockpiling of Relenza by governments: "We would expect this is the start of a list of substantial orders over the next year or so that we are going to be able to report."
A major order in August from the German Government for 1.7 million units of the drug, combined with an article in The Lancet medical journal calling on governments to consider stockpiling Relenza — as well as rival product Tamiflu — as part of their pandemic planning, caused a surge in Biota's share price from 50¢ to a high of $2.48 in mid-October. It fell to $1.36 on Wednesday.
The announcement yesterday helped Biota's share price to finish trading up 51.5¢, at $1.94.5, with more than 31 million shares changing hands.
Matthijs Smith, biotechnology analyst at stockbroker Patersons Securities, said that while the deal was good news for Biota, the market response was an overreaction.
"The stockpiling of drugs is a temporary thing and the market is overreacting," he said.
"The more panic there is about avian flu, the more the stockmarket overreacts to news like this."
Biota is seeking to confirm the value of the French Government order as it is involved in litigation with the drugs licensee, GlaxoSmithKline.
Relenza normally sells for between $25 and $30 a unit and Biota receives a 7 per cent royalty payment, but no details are available about the new deal.
Biota is seeking damages from GSK, claiming its lackadaisical marketing efforts allowed rival product Tamiflu to corner the global market. The company has valued its claim at $308-$430 million. GSK is defending the case.
GSK chief executive Dr JP Garnier said that production of Relenza was increasing due to a surge in demand: "The ramp-up of our production is going to really have a major effect next year and even more the year after, but we start from a very low base in 2005."
Biota made an operating loss of $24.8 million for last year, but is confident it will be successful in its litigation against GSK. Mediation broke down this week and a directional court hearing is scheduled for Friday.
