Major healthcare investors say Aussie diagnostics companies have had an edge over drug developers in the fight against COVID-19, with limited progress made so far on virus treatments.
Across the S&P/ASX200 index, several healthcare firms including CSL have poured resources into research for virus treatments, though many projects have been shelved or remain in clinical trials. No home-grown COVID treatment hase been approved by the Therapeutic Goods Administration.
In contrast, Australia has been able to make a name for itself in the diagnostics market, where rapid testing companies have become world leaders in tracking the virus.
Thousands of clinical trials across the globe have been chasing treatments for COVID-19.
Nine Webster, head of biopharma company Dimerix, admits the sheer number of studies into treatments of the virus has caused some “COVID fatigue with investors” across the sector.
“The expectation was that regulators were [accelerating] pathways for COVID studies,” she said. “The reality is this is just not the case.”
Dimerix’s flagship compound DMX-200 product is in two clinical trials for use in patients with pneumonia from the virus. Dr Webster says despite the challenges, the research could bear significant fruits for treating respiratory diseases in general.
‘With all the initial enthusiasm for trialling drugs that may be effective in treatment, it has been very challenging. The initial enthusiasm has been tempered by the reality, which has set in.’
Venture capitalist Paul Kelly
More than a year on from the start of the pandemic, healthcare investors says the unique challenges of coronavirus research must be acknowledged. Paul Kelly, the founder of venture capital firm OneVentures, said that while thousands of projects into treatments have been launched, setting up these trials has become increasingly difficult for countries like Australia, where there have been relatively few cases of the virus.
“With all the initial enthusiasm for trialling drugs that may be effective in treatment, it has been very challenging. The initial enthusiasm has been tempered by the reality, which has set in,” he said.
ASX-listed operators Starpharma and Mesoblast have made some of the most significant progress on treatments for the virus. But they too have hit hurdles along the way.
Starpharma’s preventative nasal spray is not registered in Australia but has been sold overseas, though it has caught the attention of medicines regulators due to some of its advertising claims about the product.
Mesoblast is still working on getting its flagship product approved for the treatment of acute respiratory distress due to the virus, but cut its phase 3 clinical trial short last year after it failed to meet a primary goal. The company is now looking to meet with the US Food and Drug Administration to discuss how to get the product approved.
While finding COVID treatments has hit roadblocks in Australia, the nation’s rapid testing companies have become a global success.
Many of these remain unlisted, like over-the-counter COVID tester Ellume and Platinum-backed SpeedX, which released a tool for analysing variants of the SARS-CoV-2 virus this week.
“For rapid and fast turnaround testing, those businesses have benefited tremendously,” Dr Kelly said. “It has been a great opportunity for Australian companies advancing in that area.”
Victor Windeyer, the portfolio manager of investment house Australian Unity’s $200 million healthcare fund, says the speed with which vaccines and other products have come to market has been “incredibly exciting”, but he is looking beyond Australian COVID treatment projects for investment opportunities.
Mr Windeyer’s fund was an early backer of rapid tester Lumos Diagnostics, and the investor concurs that testing businesses have made a greater impact during the pandemic so far.
“The question for them I think is whether that creates a sustainable position for them in the market in the longer term?“, he said.
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Emma Koehn reports on healthcare companies for The Age and The Sydney Morning Herald. She is based in Melbourne.
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