Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 24 years, explains what the movers and shakers have been doing in health and gives his ASX powerplays.


Themes for the week

It’s been a volatile week with US-China trade tensions and AstraZeneca putting its phase-three vaccine trial on hold after one of the study participants suffered a possible side effect, Scott Power said.

“Everyone is going at breakneck speed, so the fact that we have some adverse events arising is not that surprising,” he said.


Currency headwinds

The US dollar has been weakening against the Aussie, which isn’t great for the large number of Australian healthcare companies that make most of their money in the US, the world’s largest healthcare market.

“It’s a headwind with a weaker US dollar and a tailwind when we have a weaker [Aussie] dollar,” Power said.

The Aussie was trading around 72.9 US cents on Friday, up from around 69 cents at the start of July.

Power says that after some consideration he thinks a victory by Joe Biden over Donald Trump in the November 3 US election might be a benefit for the Australian healthcare sector.

“He’s sort of — how do you describe him — a social Democrat,” Power said of Biden. “Kind to the environment and kind to healthcare.”


Cannabis companies smokin’

Cannabis companies mostly gave back some gains on Friday but still had a great week following an interim decision by the Therapeutic Goods Administration to loosen the regulations around CBD products.

If finalised in November, low-dose CBD oils and lozenges could be made available over the counter in pharmacies, rather than requiring a doctor’s prescription.

Scott Power says Morgans likes two companies in the space: Zelira Therapeutics (ASX:ZLD), which recently announced plans for a cannabinoid-based toothpaste, and Medlab Clinical (ASX:MDC), which is working towards receiving approval for its medicinal mouth spray product, NanaBis.

“They’re the ones that are trying to get proper clinical data to back up their claims, and that’s a strategy we like,” Power said.


Boehringer Ingelheim splits with Pharmaxis

Pharmaxis (ASX:PXS) was dealt a blow this week after German drug company Boehringer Ingelheim walked away from its drug candidate to treat diabetic retinopathy, citing a lack of clear efficacy signal and a risk of dose-dependent drug interactions of the compound.

“They’ve decided the compound’s not worth pursuing,” Power said of Boehringer Ingelheim.

While it is a blow to Pharmaxis, the company did receive $83m from the German drug giant since the two companies formed a partnership in 2015.

“They’ve now got that money in the bank,” Power said.

Pharmaxis shares didn’t react much to the news. “It’s been pretty low all year,” he said.


Power’s picks

In addition to Zelira and Medlab, Power remains impressed by Opyl (ASX:OPL), which released more information this week about its clinical trial prediction tool at the request of the ASX.

He is also closely watching Mesoblast (ASX:MSB), which is awaiting results from its phase-three clinical trials into its possible treatments for heart failure and chronic lower back pain.

“Whether that happens this week or next, will be very interesting for the market,” Power said.

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