In this edition of MST Access Sector Pulse, we spotlight the healthcare sector, back on investors’ radar after years of funding constraints, rising discount rates, and post-COVID de-rating. The recovery is evident in the numbers, with the S&P Biotech ETF (XBI) up 96% over the past 12 months.

What's driving the rebound:

Lower interest rates, supportive capital markets, and easing tariff concerns have lifted US sector sentiment. Six US biopharma IPOs raised US$1.8bn in 1QCY26, surpassing total funds raised in CY25. Deal value reached US$65bn, including 16 transactions above US$1bn, making it the strongest quarter since 2020.

M&A momentum is being fuelled by pharma majors chasing differentiated assets to offset an estimated US$400bn in revenue exposed to looming patent cliffs. Regulatory tailwinds including expedited FDA pathways, greater flexibility for rare diseases, and closer FDA-EMA coordination are supporting a strong development backdrop.

Closer to home, the ASX recovery remains more selective post-Budget, but companies with global exposure and clear catalysts are well placed to outperform.

These dynamics are playing out across MST Access' biotech coverage, with three companies entering clear catalyst windows:

Recce Pharmaceuticals Ltd (RCE.AX) — nearing Phase 3 interim DFI data in Indonesia for its anti-infective R327 topical gel. A positive result could de-risk the path to first revenue and open doors across ASEAN and MENA. Read the latest report here: https://lnkd.in/gGwvA4jV

Lumos Diagnostics (LDX.AX) — its new CLIA waiver for FebriDx unlocks access to 80m ARI patients annually in the US. With WellStreet already on board and 8 urgent care pilot sites active, LDX is well positioned heading into its first US flu season in 2026. Read the latest report here: https://lnkd.in/g6XPTPVy

Alterity Therapeutics (ATH.AX) — End-of-Phase 2 FDA alignment supports a leaner Phase 3 ATH434 trial in MSA, preserving the validated 50mg efficacy signal while cutting expected costs to ~US$60m and improving funding flexibility. Read the latest report here: https://lnkd.in/gMi_apV5

For a full list of MST Access stocks currently under coverage, explore here: https://lnkd.in/gdJGUvC8

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This general advice has been prepared by MST Access in consideration of fees payable by RCE.AX, LDX.AX and ATH.AX. It does not consider your personal circumstances. MST has also received compensation for investment banking services as Joint Lead Manager for LDX.AX and Lead Manager for ATH.AX in the past 12 months. Please see our full Disclosures and Financial Services Guide at mstfinancial.com.au

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