The Starpharma share price jumps on new partnership deal

The Starpharma Holdings Limited (ASX: SPL) share price is bucking the market downtrend after the biotech announced a new partnership deal.

Brendon Lau

Brendon’s passion for shares started by accident in 2003 and he has worked in various roles around capital markets ever since as a trader, stock analyst and markets reporter with the Australian Financial Review. Most of his wealth has come from share investing than any other asset class, and that has given him the financial freedom not to work full-time, if he chooses to. Brendon is a medium to long-term investor who aims to hold positions for a year or longer and is focused on fundamental analysis, although he will occasionally use technical indicators to time his entries and exits. Brendon has an MBA from Melbourne Business School and is RG 146 certified. He lives in Melbourne with his wife, three kids and two dogs.

Published August 17, 2020 3:34 pm AEST

The Starpharma Holdings Limited (ASX: SPL) share price is bucking the market downtrend today after the biotech announced a new partnership deal.

The news isn't quite as exciting as Mesoblast limited's (ASX: MSB) FDA announcement, but shareholders will still be happy to see Starpharma rally 1.9% to $1.05 in late afternoon trade.

In contrast, the S&P/ASX 200 Index (Index:^AXJO) slumped 0.6% as ASX bank stocks dragged the market lower.

woman testing substance in laboratory dish, csl share price — Image source: Getty Images

Why the Starpharma share price is outperforming

But the pessimism isn't infecting Starpharma. Management said it signed a research partnership to develop several DEP nanoparticle formulations for an anti-infective drug.

DEP is Starpharma's drug delivery technology and the partnership is with Tianjin Chase Sun Pharmaceutical Co., Ltd.

Chinese partner with deep pockets

Shanghai Stock Exchange-listed Chase Sun will foot the bill for the development program. Starpharma will initially develop its nanoparticle technology for an anti-infective product for the Chinese partner with the view of enhancing its performance and expanding its therapeutic utility beyond anti-infectives.

If Chase Sun wanted to use the technology in any commercial application, it will need to strike a license agreement with the ASX biotech.

The Chinese partner should have deep pockets as it reported annual sales of over $1 billion in 2019 and its current market capitalisation stands at around $3 billion.

Will the Starpharma share price play catchup?

"We are delighted to sign this new DEP partnership with Chase Sun. Chase Sun are a rapidly growing and innovative company in an important global market," said Starpharma's chief executive Jackie Fairley.

"This agreement illustrates the broad applicability of the DEP platform and will further develop the commercial potential of DEP in the anti-infective space, a therapeutic area of growing interest and need."

Investors will be hoping that the news marks a turnaround in Starpharma's share price. It fell 13% since the start of 2020.

ASX stocks to buy post COVID-19

This is below the 2% gain by the CSL Limited (ASX: CSL) share price. That says a lot given that the blue-chip biotech isn't much of a star performer during the COVID-19 pandemic.

If you are hunting for stocks to buy in the post COVID world, you might like to download this free report from the experts at the Motley Fool.

Follow the link below to find out more.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.