ASX biotech shares were a mixed bag in 2021. Several of the majors came in behind their benchmarks whilst many smaller players outshone the pack.
The sector has been the benefactor of long-term tailwinds in diagnostics and demand for novel treatment solutions this year. However, the momentum has been pared back across the board.
For instance, the S&P/ASX 300 Pharmaceuticals & Biotechnology Index (AXPBKD) has spiked from its lows this month after collapsing hard in early December. Yet, zooming out a little, it is down 8% off previous highs and now trading at October 2021 levels.
As the impacts of COVID-19 begin to wind back, the growth outlook for the ASX biotech space is one to look out for over the coming 12 months, according to several experts covering the space.
Here's what stocks analysts are recommending for ASX biotech shares in 2022.
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Telix Pharmaceuticals Ltd (ASX: TLX)
Shares in oncology company Telix recently passed their previous 12-month highs over recent weeks and, at the time of writing, are now trading for $7.85 apiece.
Telix's novel imaging platform for prostate cancer, Illuccix, has been in focus lately. News surrounding Illucix has seen investors piling into Telix to secure a spot in the company's growth engine for 2022.
Most recently, the company advised the US Food & Drug Administration (FDA) had approved the technology for use as a diagnostic imaging platform for prostate cancer.
Aside from this, the company also recently advised its Illucix platform was awarded marketing authorisation application (MAA) in Europe. It now expects European approval for registration status no later than 23 March 2022.
All of this regulatory momentum has analysts updating their outlook on Telix's growth potential into the new year.
Indeed, the team at Wilsons recently raised its valuation by 53% to $10.35 and reckons Telix is a buy at its current prices.
Meanwhile, just before Christmas, analysts at Bell Potter also upgraded their valuation on Telix by another 16%. They feel the company's shares are worth $9.65 apiece whereas both Jarden and Jefferies also reckon Telix is a buy, valuing the company at $8.50 and $7 respectively.
CSL Ltd (ASX: CSL)
Shares in biotech giant CSL were on a rollercoaster ride in 2021 and showed a wide spread in pricing across the year to date.
For instance, the $140 billion company (by market capitalisation) traded as low at $246 and closed as high as $317 in that time — a 29% spread in price action.
Now, with CSL's acquisition of Vifor Pharma for US$11.7 billion confirmed and due to settle in the coming months, several experts reckon its share price is set to spike in 2022. They rate the company as a buy.
Certainly, the team at investment bank Citi reckons the acquisition to be "[approximately] 9% accretive to NPTA (NPAT before acquisition-related amortization)" – a proxy for cash flow.
When factoring in the non-cash item of amortization, the transaction is expected to be "modestly accretive" to earnings per share (EPS). CSL also raised $6.3 billion in capital to finance the transaction, the largest primary equity raise in ASX history.
Citi recently upgraded its recommendation on CSL shares to a buy with a bullish $340 per share price target, implying an upside potential of 16% at the time of writing.
Morgans is equally as bullish and just recently raised its price target by 3% to $334 per share. The broker says that investors' worries about the deal are "misplaced as this deal looks as unique as CSL itself, allowing access to a defensible specialty product portfolio with strong market positions and growth opportunities, far from a 'typical' pharma transaction".
Morgans reckons CSL is a buy in 2022 alongside Jarden, Jefferies and Macquarie — just to name a few.
Immutep Ltd (ASX: IMM)
Shares in Aussie biotech Immutep have also been on the back end of some wide-reaching volatility this year. They're now trading at 49.5 cents a share.
However, this is a substantial plunge from the company's 12-month highs of around 70 cents a share earlier in the year.
Immmutep's novel LAG-3 solution has been the major focus for investors and analysts this year, although the company has also seen growth in other areas of its pipeline in 2021.
For instance, the company recently advised it has signed a Manufacturing Service Agreement
(MSA) with contract manufacturer Northway Biotech, to manufacture IMP761 ahead of clinical testing.
IMP761 is one of Immutep's preclinical candidates for autoimmune diseases. It is classed as an immunosuppressive agonist antibody to LAG-3.
Under the agreement, Northway will manufacture IMP761 in large scale bioreactors. After completion of the required preclinical developments, the material produced will be used for Immutep's clinical trials of IMP761.
Momentum like this has the team at Jefferies interested, with the firm recently initiating coverage with a buy and a $1 per share price target.
Wilsons is also bullish on the company. It notes how LAG-3 has changed the narrative on cancer investigation and treatment for the better which, it believes, the market could be overlooking.
The broker values Immutep at 91 cents with a buy recommendation. Meanwhile, Bell Potter also rates the company as a "speculative buy" at $1 per share.
All in all, the average price target of $1.12 on Immutep's share price implies an upside potential of 124% into 2022 should these brokers' forecasts come to fruition.
