FourFour two: The biggest news of the week.
First up, the Australian Securities Exchange’s (ASX) approval of Amag Pharmaceuticals, a biopharmaceutical company that uses a protein-based injectable to treat the rare blood disorder known as BPS, for sale in the US.
The company’s stock is trading at $9.90, up $5.70 or 5.6 per cent.
Its price-to-earnings ratio is now at 0.65, which is higher than the 0.62 that Amag Pharma’s share price is trading.
The announcement has been greeted with optimism, with some predicting that the stock will hit $10.10 within a matter of days.
It’s a strong signal that Amagi Pharma’s investors will be rewarded if the company’s business grows.
The big news for Australian stocks in the last two weeks has been the approval of an investment vehicle, Commonwealth Investment Management, to buy a controlling stake in another Australian biotech company, Tivit, worth $1.2 billion.
The Australian Government, which controls most of Tivat’s shares, said it was committed to a strong and sustainable growth strategy.
Tivit has a $1 billion debt and is looking to raise $2 billion of capital, including through the sale of stock.
The new venture capital vehicle will invest $2.7 billion in Tivits growth and operating model, and Tiviton’s capital needs to be funded by private capital, Commonwealth investment manager Matthew Daley said.
“I think there’s a lot of optimism around TivIT,” he said.
Titans shares rose by more than 2 per cent to $6.00.
In a separate announcement, Australian pharmaceutical giant Pfizer is set to raise an additional $1bn through a new equity investment vehicle.
The US company is aiming to grow to $18.4 billion in revenue by 2021.
Pfizer said it would be the biggest single investor in the company and would help support growth.
The investment is expected to generate about $2bn for the Australian economy and create 2,200 jobs.
Pfizer shares have risen more than 3 per cent in the past two weeks.
The latest US investment in Australian biotech stocks is also set to help boost the country’s economy, as the US Drug Enforcement Agency (DEA) said last week it was approving another $600m in grants to help grow the Australian pharmaceutical industry.
“We are delighted to continue our collaboration with the US Department of Justice to support the pharmaceutical industry and ensure it is in a position to invest in Australia,” Pfizer chief executive Paul Rifkind said.
Australia’s pharmaceuticals industry is one of the largest in the world and one of a handful of developed nations with a robust private pharmaceutical industry, according to the World Economic Forum.
Its growth is underpinned by high prices, high demand and a growing market for pharmaceuticals and related technology.
Australian investors are being encouraged by a number of big names in the pharmaceuticals sector, including GSK, Bristol-Myers Squibb and Roche.
The world’s biggest pharmaceutical company, AstraZeneca, said its investment in the Australian biotech industry had a positive impact on the Australian business and is the largest single shareholder in a growing number of pharmaceutical companies.
“This is another step forward for Australia’s pharmaceutical industry which is a cornerstone of our country’s economic growth,” it said in a statement.GSK chief executive Michael Osterholm said the US decision to approve the $1-billion grant would help the Australian drug sector grow.
“It is a huge boost for our pharma businesses and a great way to support Australian innovation and development,” he told ABC Radio.
“With a big pharma deal of this scale in Australia, it will help us in a number a ways, and we are really happy to support our competitors in this space.”
Roche said it has been in talks with Pfizer about a potential investment in its Australian operations.
“The Pfizer investment in Australia is part of a long-term strategic plan to grow our Australian business to more than $40 billion,” it told ABC News.
“In addition, Pfizer will work closely with the Government of Australia and Commonwealth Governments to deliver more effective support to our Australian businesses.”
“We believe that our pharmacy sector is in an extremely strong position with the right mix of support and investments,” Roche said.