The 3 best ASX biotech stocks for September!

Here are a trio of companies that we think are the best ASX biotech stocks for September!

 

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The 3 best ASX biotech stocks for September!

 

1. Cyclopharm (ASX:CYC)

As a stock that is in our view one of the top stocks for September irrespective of sector, it is only natural Cyclopharm makes the cut here. Cyclopharm has a radiopharmaceutical product, Technegas, that allows potential lung diseases to be revealed. The patient inhales it and is then examined by a gamma camera enabling the camera to see how ventilation is performed in the context of lung imaging. Technegas is sold in over 60 countries, but not in the US and it is hoping to gain US approval this month.

Why are we optimistic it will happen after it has taken so long? Well, the FDA has never had an issue with the effectiveness of the device – the issue was around the manufacturing of one particular element (the crucibles). Technegas has strong support in the US medical community, been examined by the FDA in person twice (yes, they came Down Under to see it), not to mention ex-FDA employees the company hired to examine it.

We think the company has a bright future ahead of it being ready to go once approval is granted and has potential to be approved against further lung diseases. But this month it will be all about the FDA giving it the green light (or not).

 

2. CSL (ASX:CSL)

This $130bn company is one of the biggest on the market. And now might be a good opportunity to buy in at an unusually discounted price. CSL’s bread and butter businesses are flu vaccines and blood products. But it has a long R&D pipeline that grew substantially after the 2021 acquisition of Switzerland’s Vifor Pharma, which cost US$11.7bn.

The reason investors have a chance to buy the business at a discount is its FY23 profit downgrade and poorer than expected FY24 guidance. Margins were suffering given foreign currency headwinds, higher costs it had to pay to collect plasma as well as increased competition in the iron deficiency market – which it entered after acquiring Vifor. It is expecting its post-tax profit (excluding amortisation and impairments) in FY24 (the 12 months to the end of June 2024) to be US$2.9-$3bn whilst consensus had suggested US$3.5bn.

Arguably the impact was magnified because it has a virtually spotless record – at least in the last decade under the leadership of Paul Perrault. But it is still a solid business that is still expecting good growth in FY24 even with the downgrade.

Consensus estimates (among 18 analysts) expect 13% revenue growth, 19% EBITDA growth and 21% EPS growth in FY24. Looking ahead to FY25, 9% revenue growth, 15% EBITDA growth and 18% EPS growth. And the median target price is A$321 per share – a 15% premium to the current price.

Whilst buying the dip may not be an investing strategy that works out with all companies, CSL might well be an exemption.

 

3. Neuren (ASX:NEU)

Hasn’t this biotech had its run? We think it isn’t over just yet. It has a drug called Trofinetide that it got FDA approved against Rett syndrome, a rare brain disorder in young female toddlers, and is the only drug of its kind approved against the disease.

In our view, there are two further catalysts. First, the revenue that will flow in from the US. And second, its addition to the ASX 200. This will trigger mandatory institutional buying of the stock.

 

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