The Pharmaxis share price reached an intraday high of 9.9 cents in late morning trade, but has since pulled back. At the time of writing, the Pharmaxis shares are up 6.8% to 9.3 cents.

What does Pharmaxis do?

Pharmaxis is an Australian biotechnology company committed to research and drug development for diseases involving inflammation and fibrosis including cystic fibrosis, pulmonary fibrosis and liver disease.

The company currently has two respiratory products approved in international markets that are generating recurring revenue. In addition, Pharmaxis has a diversified range of products at various stages of development.

Milestone payment

Pharmaxis advised this morning that it's received a milestone payment of US$7 million ($9.2 million) from its United States licensee, Chiesi.

According to the company, the credited funds follow the recent approval by the United States Food and Drug Administration (FDA) for Bronchitol.

Bronchitol is used for the treatment of cystic fibrosis in helping a patient clear mucus from their lungs. A spray-dried form of the active ingredient, mannitol, is delivered to the lungs by a specially designed, portable inhaler. Bronchitol works by rehydrating the airway/lung surface and promoting a productive cough.

The product is also sold and marketed across Europe, Russia, and Australia.

With the first payment received, Pharmaxis is anticipating a further US$3 million from Chiesi on the shipment of Bronchitol. The United States bound delivery is scheduled for the first quarter of 2021.

Reporting a cash holding of $10 million at the end of the last September period, the company has since bulked up its coffers. Pharmaxis recently added a $5 million R&D tax incentive in October, bringing its total cash balance to $24.2 million, including the $9.2 million payment.

How has the Pharmaxis share price performed in 2020?

The Pharmaxis share price is down almost 40% over the past 12 months. Its shares reached an all-time low of 5.3 cents in March and have failed to recover from its highs recorded at the start of the year.

The height of the Pharmaxis share price reached was 11 cents in April, straight after the pandemic took the world hostage. Since then, Pharmaxis shareholders have been going on a mini-rollercoaster ride.

The post Why the Pharmaxis (ASX:PXS) share price jumped 6% today appeared first on The Motley Fool Australia.

What's moving the Pharmaxis share price?

The company's announcement contained four very important issues for a drug research enterprise. One of which is linked to short term funding but all bode well for the Pharmaxis share price. 

First, the Food and Drug Administration (FDA) granted permission to progress its myelofibrosis drug, PXS‐5505, into a phase 1c/2 study. Myelofibrosis is a rare bone cancer. The company has moved quickly to contract Parexel to conduct the study which will start recruiting in Q1 2021.

Second, the FDA granted Pharmaxis orphan drug designation for PXS‐5505 in myelofibrosis. This means it is a treatment for a rare disease or condition. Or more succinctly, one that affects less than 200,000 persons in the US. This designation means the drug marketing application is not subject to a prescription drug user fee. 

Third, the Australian Government awarded Pharmaxis $1 million in funding for pre‐clinical drug. This was from the Biomedical Translation Bridge (BTB) program. It will significantly advance work on the company's drug discovery for the treatment of the devastating genetic disorder Duchenne Muscular Dystrophy (DMD).

In fact, the funding grant will take the company all the way to the start of phase 1 trials for this new drug candidate. Pharmaxis chief executive officer Garry Phillips said this was an example of the strategy to accelerate drug discovery until it could further define the commercial opportunity.

Bronchitol US FDA review

For the coming quarter, the company will be preparing to start the myelofibrosis study. However, there will also be considerable focus on the outcome of the Bronchitol NDA filed by US licensee Chiesi. The FDA have advised it has a 'goal action date' of 1 November 2020 which was yesterday. If successful, the company has a US$10m milestone payments attached to the approval and supply of launch stock to Chiesi.

The post Why the Pharmaxis (ASX:PXS) share price has rocketed up 48% today appeared first on The Motley Fool Australia.

The payment will now be made on the date the United States FDA approves Pharmaxis' drug Bronchitol. The drug is used in the treatment of cystic fibrosis and is already approved and marketed in Australia, Europe, Russia, and several other countries. 

What does Pharmaxis do? 

Pharmaxis is a pharmaceutical research company focused on drug development for inflammation and fibrotic diseases. The company has an expertise in amine oxide inhibitors, which has attracted interest from leading pharmaceutical companies looking to partner in this area of medical need. Pharmaxis has a number of approved products which it manufactures and exports from its facility in Sydney. 

How does the milestone payment work? 

Pharmaxis entered an agreement with Chiesi Farmaceutici SpA (Chiesi) for the commercialisation of Bronchitol in the United States. Chiesi funded US$22 million of the cost of the phase 3 trial of Bronchitol, which was required to seek FDA approval. Chiesi has now agreed to pay Pharmxis US$7 million of a US$10 million milestone payment when Bronchitol is approved by the FDA. This is expected to occur on 1 November 2020. Another US$3 million is payable to Pharmaxis on shipment of commercial launch stock in the first quarter of 2021. 

Pharmaxis CEO Gary Phillips said, "the development and commercialisation of Bronchitol reaches a pivotal point on November 1st. Approval by the FDA for Bronchitol would see the business segment generate immediate cash and move into profitability."

The approval will also provide the opportunity to investigate different ways of structuring the business and funding drug development activities.  

What's next for Pharmaxis? 

Chiesi is the exclusive distributor of Bronchitol in the US, as well as 11 countries in the European Union. Pharmaxis and Chiesi are preparing for the US launch of Bronchitol, subject to FDA approval. This will see the business segment generate immediate cash and move to profitability. According to Pharmaxis, this provides the opportunity to structure the business and activities that drive shareholder value in a much more significant way. Pharmaxis advises it is in discussions with its business partners about how to shape the future, post-FDA approval.

At the time of writing, the Pharmaxis share price is up by 8.24% to 9.2 cents per share, with a market capitalisation of $36.36 million.

The post ASX stock of the day: Pharmaxis share price surges 8% as milestone payment brought forward appeared first on The Motley Fool Australia.

Starpharma shares have been described by Bell Potter as a potential winner for FY20. They were listed as a speculative buy along with fellow healthcare and biotech shares, Pharmaxis Limited (ASX: PXS) and Mesoblast Limited (ASX: MSB).

The past financial performance of Starpharma

A look at the financial history of Starpharma is not pretty, with the company losing money 9 out of the past 10 years. Total revenue and income for Starpharma in 2018 was $5 million, while expenditure exceeded $15 million. This has been a consistent trend leading to accumulated losses for the company of more than $150 million. At the end of 2018, Starpharma had a cash balance of just over $50 million.

Although the described financial performance is undesirable, it is not necessarily unexpected, given what the company is trying to achieve. Starpharma is trying to develop and commercialise world leading drugs, using its dendrimer technology. This type of process can often require considerable upfront investment and is done with the hope of significant payoff in the future.

The future outlook for Starpharma 

Starpharma's VivaGel products have recently been released in Australia, Europe, and Japan. This has been done in partnership with already established brands and puts Starpharma in line for revenue share, royalty and milestone payments into the future. The VivaGel BV product has also been licensed for more than 160 countries but has not yet been successfully approved for the United States (US) market.

Starpharma continues to work to develop and enhance drugs for what it estimates are multibillion-dollar markets. There is also the belief that its technology could potentially enhance a large percentage of existing pharmaceuticals. These elements appear to give Starpharma a large window of opportunity and the potential for massive return on investment. However, we are still waiting to see if a product using Starpharma technology will be commercially successful. 

Foolish takeaway

Investing in Starpharma shares is very tempting given the described potential of their patented technology and the value of the markets involved. However, I would prefer to see how successful its newly launched products are and the level of compensation Starpharma receives before investing. Although this may mean missing out on the potential upside of this company, it will also mean protecting investment capital in the event these products do not penetrate the market as effectively as hoped.

The post Is the Starpharma share price a buy? appeared first on The Motley Fool Australia.

Companies like Prima BioMed Limited (ASX: PRR), Innate Immunotherapeutics Ltd (ASX: IIL), Pharmaxis Ltd (ASX: PXS), Cynata Therapeutics Ltd (ASX: CYP) and others are all investing heavily in researching their chosen treatments, which they hope will lead to life-changing (and financially rewarding) therapies in the future.

However, this lure of a bright future is like a naked flame for moths – a lot of the time, all it does is burn investors. Here are some key things to consider before purchasing any biotech business:

It's a binary outcome

It's common to think that by investing in an early stage company now, your patience and courage will be compensated for with a successful business, like this:

Investment + Patience = Treatment successfully developed = Profit

Unfortunately, that's not how it works. It's more like:

Investment + Patience + capital raising + plunging share price = 50/50 success or failure = _____?

At the end of the day, all it takes is a failed trial to see your investment worth $0 – like when Innate Immunotherapeutics plunged 95% on Tuesday.

That's a big problem, because:

Research is very expensive

There are 4 phases that every biotech researcher goes through. Each reflects greater complexity and a higher hurdle to prove that a treatment is viable:

Phase 1 > Phase 2 > Phase 3 > Regulatory approval (sales can commence after this)

As a rough rule of thumb, you could say that it takes at least 1 year to complete each Phase, although this varies hugely depending on the phase and the type of treatment and can easily be much longer (and rarely any shorter).

Following that, add a year for regulatory approval. It is often faster but there is always the chance that a regulator will require more research before approving a treatment, resulting in delays.

So as a rule of thumb it takes at least 4 years to get from pre-Phase 1 to having regulatory approval. Here's why that's concerning:

A fictional example

Imagine a fictional company, Magic BioPharmaCeuticals (ASX: MBPC). It has a successful Phase 1 trial under its belt, a market capitalisation of $60 million, $7 million cash at bank, and is burning $2 million cash per quarter in research and administration expenses.

We could say that the company is 'worth' $67 million, i.e., market capitalisation (the total value of all its shares on issue) + net cash.

If we take the rule of thumb that it will take at least 3 years (12 quarters) to complete phase 2 and 3, achieve regulatory approval, and commence sales, an investor is looking at $24 million in cash outflows. So, your $67 million at the time of purchase turns into at least $43 million and that's before the dilatory effects of capital raisings (issuing more shares to raise funds).

This works out to be about a 35% loss on your investment and that is before the company succeeds or fails. So it could look something like this:

You will lose at least 35% of your money on MBPC, and there is at least a 50% chance that the research either fails or is delayed longer than 3 years, resulting in even greater cash losses. Should you buy?

Most likely you should not. The only thing that could save you in that situation is if the market is more enthusiastic than you are, and offers to pay you a higher price for your shares. This is often why people buy these companies – in the hopes of a higher share price. However, it doesn't take too many years of constant cash losses to drain investor enthusiasm and I am yet to see a speculative biotech that can maintain a high share price.

This type of company is completely unsuitable for the vast majority of investors.

The post Warning: Every investor should read this before buying speculative biotech companies appeared first on The Motley Fool Australia.

Most investors entering the sector lack the expertise to really evaluate a company's scientific claims/research updates, and are enticed in by the potential 'billion dollar' markets of stem cell research, new life-saving drugs, and so on.

Many companies in the sector, like Cynata Therapeutics Ltd (ASX: CYP) and Pharmaxis Ltd (ASX: PXS), have little money-earning potential when they get started. They use a sexy story to attract enough shareholder cash to fund early stage research which may or may not result in a saleable treatment many years down the line.

The trouble is that research companies can run out of cash several times during the course of their development and have to solicit more from shareholders, which is quite difficult with nothing to show in revenues. Many who comment on the sector suspect companies occasionally 'play up' or exaggerate their progress so far, or the ultimate potential of their research, in order to pump up the share price for a capital raising (issue of new shares to raise funds) further down the line.

There's also no safe way to exit the business or recover expended costs should research prove fruitless. A company can't very well say "well, we've got a treatment in Phase 2 that's 3 years and $15 million dollars away from maybe being approved for use on humans" and expect to achieve an attractive price for all the millions of dollars spent reaching that point.

Shareholders trying to get out are also vulnerable to share price movements, because these companies are often quite small and illiquid.

Even businesses like Mesoblast Limited (ASX: MSB), once seen as one of the more promising prospects in the sector, are vulnerable to this vicious cycle of capital raisings, investor excitement, and subsequent disillusionment.

That's not to say that all businesses in the biotech/medical research sector are terrible investments. CSL Limited (ASX: CSL) is surely the shining light that all biotechs aspire to follow, while Sirtex Medical Limited (ASX: SRX) is also an attractive prospect. Every now and then something like Medical Developments International Ltd (ASX: MVP) shoots into the spotlight on the back of a successful treatment, but for every Medical Developments, there must be a dozen Prima BioMed Limited's (ASX: PRR).

Novice investors beware.

The post This high-risk sector is one ALL new investors should avoid appeared first on The Motley Fool Australia.

Should the trial prove successful then Pharmaxis will submit a response to the Food and Drug Administration (FDA) to gain approval to sell Bronchitol in the US. There appears to be a good chance of a positive outcome given Bronchitol is already approved in Australia, Europe and Israel.

The trial is expected to cost US$26 million, of which global pharmaceutical company Chiesi Farmaceutici SpA (Chiesi) will fund up to US$22 million. If approved, Bronchitol will be sold as part of Chiesi's cystic fibrosis portfolio.

Pharmaxis stands to receive milestone payments of up to US$25 million including US$10 million on the product's launch. The company will also manufacture Bronchitol on behalf of Chiesi, for which it will receive a high teens percentage share of sales revenue as its margin.

Sales for Bronchitol totalled $4.2 million in 2015, up from $3.3 million the previous year. US approval would almost double the addressable market for the drug given there are an estimated 30,000 cystic fibrosis sufferers in the US versus 37,000 in Europe.

Many irons in the fire

The Chiesi partnership is one of two major deals that Pharmaxis has struck with "Big Pharma" in recent times. The other is with German outfit Boehringer Ingelheim under an agreement that is potentially worth over $750 million to the company.

Boehringer purchased drug candidate PXS4728A from Pharmaxis last year primarily for its potential to treat non-alcoholic steatohepatitis (NASH), a disease of the liver that affects between two and five percent of Americans.

Following successful Phase I trial results, PXS4728A looks likely to progress to Phase II triggering a further milestone payment to Pharmaxis. Boehringer could pay a total of $80 million for commencement of Phase II and III trials combined, although the breakdown of this has not been disclosed.

In a further collaboration with respiratory drug development company Synairgen, Pharmaxis is investigating the use of its enzyme inhibitor technology to treat the fatal lung disease idiopathic pulmonary fibrosis (IPF). The disease affects 100,000 people in the US and if the collaboration leads to early stage trials then Pharmaxis is likely to seek a sale or partnership in keeping with previous deals.

Worth a flutter?

By partnering with large pharmaceutical companies, Pharmaxis gets the best of both worlds. It does not have to fork out for costly clinical trials but still shares in the spoils if the drugs are successful.

The company had $42 million in cash at the end of March 2016 and has a current monthly cash burn of $1.4 million. With a market capitalisation of just $87 million, Pharmaxis might make a suitable addition as a small part of a portfolio for the risk tolerant investor.

The post Revealed: This under-the-radar biotech has blockbuster potential appeared first on The Motley Fool Australia.

The company, which boasted a market capitalisation of just $31 million prior to today's announcement, said that patients who were treated with the CVac vaccine had a significantly better chance of survival.

Commenting on the results, the company's chairwoman Lucy Turnbull said: "This final clinical data for CVac is most encouraging for cancer patients in second remission… Our concerted focus will now be to find a development partner to make CVac widely available to cancer sufferers around the world."

Should you get on board the biotech train?

Prima Biomed isn't the only biotech group to have soared in price with Pharmaxis Ltd. (ASX: PXS) and Sirtex Medical Limited (ASX: SRX) both having skyrocketed in value recently. As these three stocks have demonstrated, those exposed to the sector can make gains on the back of strong trial results or successful new drugs, but there is also an enormous level of risk involved.

Companies within this sector can just as easily plummet in value, making many of them a dangerous option for long-term 'Foolish' investors to consider. While you could look to put a small amount of cash to work in the sector in the hope of striking gold, you would be wise to limit your exposure and maintain a diversified portfolio at all times.

A much safer bet than Prima Biomed

The post Here's why Prima Biomed Limited skyrocketed 59% today appeared first on The Motley Fool Australia.

Pharmaxis, which boasted a market capitalisation of just $52 million prior to today's rally, soared after it sold the rights of drug candidate PXS4728A to Boehringer Ingelheim, a global pharmaceutical giant, in a deal that could be worth up to $750 million if the drug is successful.

According to an update from Pharmaxis today, Beohringer will develop the drug for the treatment of liver-related condition non-alcoholic steatohepatitis (NASH). Boehringer has made a $39 million upfront payment for the drug, while up to $711 million worth of other payments could be made as certain sales and other milestones are reached.

Pharmaxis said: "Boehringer Ingelheim's clinical expertise will now be applied to the development of this drug which has the potential to make a real difference in the treatment of diseases with high unmet clinical need."

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The post Here's why Pharmaxis Ltd. skyrocketed 60% today appeared first on The Motley Fool Australia.

That is certainly the case for Pharmaxis Ltd. (ASX: PXS) which more than doubled in price earlier in the session, although it has since retreated marginally to be trading 64.6% higher for the day.

Source: Yahoo! Finance

The company, which is developing treatments for chronic respiratory disorders, said it had signed an Option and Purchase Agreement with Boehringer Ingelheim International (one of the world's 20 leading pharmaceutical companies).

Under the agreement, Boehringer was granted an exclusive option to acquire worldwide rights to Pharmaxis' PXS4728A product for approximately $1.8 million. The option provides Boehringer with the opportunity to complete its assessment on the treatment which it believes could be used to fight the liver-related disease Non-Alcoholic Steatohepatitis (NASH).

If the option is exercised, Boehringer will acquire Pharmaxis' entire PXS4728A program, while Pharmaxis would receive approximately $39 million and various other payments could also be received down the track. Given that Pharmaxis maintains a market capitalisation of just $25 million, this could be a very good deal for the junior biotech.

Pharmaxis isn't the only biotech bouncing today. Sirtex Medical Limited (ASX: SRX) has risen 3.7%, while Admedus Ltd (ASX: AHZ) has surged 14.6% higher.

NEW: The Motley Fool's TOP tech stock to buy in 2015

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These six stocks were heavily sold off.

Pharmaxis Ltd (ASX: PXS) plummeted 9.6% to 8 cents, despite no recent news from the company. As we have previously mentioned, investing in the highly speculative biotechnology space is risky business. Results can take many years to come to fruition while one miss-step can see the shares plunge dramatically. That applies equally to Pharmaxis, which is developing a treatment for lung diseases such as cystic fibrosis.

BC Iron Limited (ASX: BCI) and Fortescue Metals Group Limited (ASX: FMG) plunged 7.4% and 5.6% to 37.5 cents and $2.02 respectively, after iron ore prices fell 1.5% overnight to US$58.58 per tonne, the lowest price since May 2009 according to one source. News that net supplies will increase to around 75 million this year is likely to put further downward pressure on the commodity price.

Monadelphous Group Limited (ASX: MND) continues to fall as the resources contractor faces the equally unpleasant prospects of much lower margins on contracts it can win, or no contracts at all. Resource investment dollars continue to dry up, putting more pressure on mining services companies. Shares fell 10% today to $8.80, although 46 cents of that was due to the shares going ex-dividend today.

Maverick Drilling and Exploration Ltd (ASX: MAD) slumped 9.7% to 14 cents, despite no news from the company. It may simply be fund managers selling out of the small US oil producer after Maverick was kicked out of the All Ordinaries index by Standard & Poor's on Friday. With the oil price down more than 50% since June 2014, it remains to be seen how Maverick will position itself in the future.

Flight Centre Travel Group Ltd (ASX: FLT) saw its shares dumped, losing 4.6% to close at $41.29 as investors freaked out over the falling Australian dollar, which is now trading at around 76.7 US cents. As we pointed out in December 2014, Australians continue to travel overseas in ever greater numbers – no matter where the exchange rate is – and has no effect on Flight Centre's earnings.

The post 6 stocks smashed on the ASX today appeared first on The Motley Fool Australia.

Still, a number of companies rocketed up on the market today. Here's our view of four of them…

Pharmaxis Ltd (ASX: PXS) jumped 25% to 12.5 cents, despite no news from the company. The biotech is developing drugs for the treatment of lung diseases such as cystic fibrosis and announced in December 2014 that it had entered a deal to commercialise Bronchitol in the US. That is pending approval, following a phase 3 clinical trial of the drug. Shares have more than doubled since that announcement.

App developer Ziptel Ltd (ASX: ZIP) climbed 13.3% to 51 cents, after the company announced today that it was seeing an "explosion of global traffic to its ZipT website". More than 1.3 million unique visitors went to the site in the past week alone, and more than 50,000 founding members have subscribed to the new service. 76 different countries were driving that traffic. Ziptel is expected to launch its ZipT comprehensive website on January 26.

Vitamins and supplements provider Blackmores Limited (ASX: BKL) gained 11.6% to $38.50, after reporting strong growth. The company says group sales for the first half ending December 31 were $206 million, up 22% compared to the previous period. Blackmores expects it to drive net profit growth of around 50% compared to last year's first half net profit, with results announced to the market on February 26.

Alexium International Group Ltd (ASX: AJX) also gained 11.6% to 72 cents, after the company announced its first significant commercial sector account. Alexium produces environmentally friendly, fire retardant chemicals, which can be used to treat clothing and various other fabrics. The company's first account is expected to generate recurring monthly revenues starting this quarter, and resulting in annual revenues of between US$1 and US$5 million. This may be one company to watch given the additional potential of its US military involvement.

The post 4 stocks soaring on the ASX today appeared first on The Motley Fool Australia.

Today Pharmaxis Ltd (ASX: PXS) dropped 16.9% to 6.4 cents, after the company announced that it may not receive a second tranche payment of US$20 million from partner NovaQuest, after a dispute erupted.

NovaQuest is alleging that Pharmaxis has breached its funding deal. The company is accused of not working in a commercially reasonable manner to obtain reimbursement status for its cystic fibrosis drug, Bronchitol, from key European governmental and non-government payers. As a result, NovaQuest has threatened to withhold a US$20 million payment, which may be the knockout blow for Pharmaxis.

The biotech is still recovering from its third knockback by the US Food and Drug Administration (FDA) for Bronchitol, as well as disappointing trial results, which saw its shares plummet 50% in March last year. It's not alone though, Acrux Limited (ASX: ACR), Prana Biotechnology Limited (ASX: PBT) and QRxPharma Ltd (ASX: QRX) have also experienced volatile share prices in the last year or so.

Pharmaxis CEO Gary Phillips says, "The full investment of US$40 million by NovaQuest is central to our business plan, and the Agreement entered into 18 months ago".

Mr Phillips added that it puts in jeopardy a clinical trial, which is a key step to FDA approval, as well as a US partnering agreement, which included partial funding of the trial, payment of significant approval and sales milestones and a share of sales revenues.

Partner deals can make or break biotech stocks. Bionomics Ltd (ASX: BNO) shares soared 17% in late June this year, after the company announced a deal with giant pharmaceuticals company Merck & Co, worth up to a cool US$506 million.

If Pharmaxis can't resolve the dispute with NovaQuest, the company's options appear limited. While it still has some cash, it is burning through it at a fast pace.

The post The big reason why Pharmaxis Ltd shares slumped today appeared first on The Motley Fool Australia.

That's big bikkies for the junior biotech, and a major step toward developing its BNC375 program that is targeting cognitive dysfunction associated with Alzheimer's disease, Parkinson's and other central nervous system disorders.

Under the new deal, Merck will fund all research and development, including clinical trials, and will be responsible for commercialising any products from the collaboration. Bionomics will receive an upfront payment of US$20 million and is eligible to receive US$506 million to achieve certain milestones, and royalties on any product sales.

Alzheimer's is the most common type of dementia and affects 1 in 9 Americans older than 65 years. It's also the 6^th most common cause of death in the United States, with Bionomics estimating the direct cost of the disease in the US this year at $214 billion.

Bionomics shares have been on a rollercoaster this year, plunging 37.5% to 51.5 cents in March this year, after research results for its anti-cancer agent BMC105 were poorly received.

Volatility is common amongst smaller biotech stocks, with Acrux Limited (ASX: ACR) losing 67% in the past 12 months, while QRxPharma Limited (ASX: QRX) has slumped 93% over the same period and Pharmaxis Ltd (ASX: PXS) is down 55%.

Much of the falls can be attributed to decisions made by the US Food & Drug Administration (FDA). With the US perhaps the most important market for new drugs, approval by the FDA is a key requirement for any drug to achieve commercial sales. Bionomics has some way to go, but has certainly improved its chances of success.

The post Here's why Bionomics Ltd shares soared today appeared first on The Motley Fool Australia.

Here are four stocks that could be worth adding to your watch list.

1)      Acrux Limited (ASX: ACR) is developing an array of drugs which are administered through the skin. A major positive for Acrux shareholders is the firm's diverse portfolio of treatments which reduces the single product risk associated with many biotech companies. The share price has been as high as $4.12 in the past year, but is currently trading at just $1.86, which is one cent above its 52-week low. Interestingly the stock has attracted the attention of fund manager Allan Gray, who became a substantial holder in October 2013.

2)      Pharmaxis Ltd. (ASX: PXS) is trading at just 11.5 cents which is close to its 52-week low of 10 cents and a long way from its 52-week high of 61 cents and a very long way from the $3 level the stock traded at in 2011. The company continues to develop therapies to treat respiratory diseases including cystic fibrosis, however the progression to commercialisation hasn't gone as investors were expecting.

3)      Mesoblast Limited (ASX: MSB) is performing relatively well compared with the other three stocks in this list. At $5.71 the stock is well off its 52-week high, but it is still up over 600% in the past five years. With medicines aimed at repairing damaged tissue, the applications for its products provide an exciting potential pipeline for future sales.

4)      Starpharma Holdings Limited (ASX: SPL) has lost 37% in the past year, but like Acrux offers investors exposure to a diversified portfolio of potential products. These products include VivaGel which has been shown to inhibit infection of sexually transmitted diseases such as HIV.

 Foolish takeaway

While investing in the biotech sector will often have a low success rate – and hence position sizing needs to be carefully considered – the occasional big winners can well and truly make up for a number of small losers.

The post Could these 4 bruised biotech stocks be about to recover? appeared first on The Motley Fool Australia.