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 of the week

The market mover this week was US biotech Moderna’s news that 45 people in its Phase 1 vaccine trial all developed higher levels of COVID-19 antibodies than seen in people who actually had the illness.

Interim data published in the New England Journal of Medicine shows the first 45 volunteers didn’t experience any severe — that means hospitalisation — side effects and the 100 microgram (μg) dose worked better than the 25μg or the 250μg doses.

However, it took time for antibody levels to rise and only after the second booster shot did they start improving on those in recovered patients. The volunteers will be followed over the next year to see how long the antibodies last.

Scott Power says while investors are seeing the headline and running, there’s much more to vaccine development than 45 people getting early good results.

“The rapid progression of Moderna, which is also pioneering experimental messenger RNA which is a method that’s never been approved for vaccines before, is likely to lead to problems down the track,” he said.

“It takes years, not months, for vaccines to be properly validated. We also don’t know whether antibodies protect against infection, or how much protection.

“The demonstration of neutralising antibody activity and good tolerability at lower dosing levels is promising though.”

Moderna is planning to start a Phase 3 study in 30,000 patients on July 27.

On Monday, The University of Queensland’s (UQ) COVID-19 vaccine became the 32nd to enter clinical trials, with the first human volunteers receiving their initial dose in a Phase 1 trial. There are about 180 vaccine projects in play around the world.

Also out this week were new restrictions on the kind of telehealth consults that will be funded by Medicare: only a person’s regular GP or physician (one they’ve seen in the last 12 months) can conduct one, potentially wiping out new services such as Chemist Warehouse’s partner InstantConsult.

Power says that while the move, which came after lobbying from doctors’ associations the Australian Medical Association and the Royal College of GPs, will slow the telehealth consulting sector, it’s also a sign that the government will let it continue after the September 30 deadline.

“The restrictions are not helpful but I think we have moved on from the days when doctors didn’t want to use it and the government feared telehealth would be used for rorting the system,” he said.

1st Group (ASX:1ST), a provider of telehealth booking and video conferencing services, surged on Tuesday after doing a deal with buy-now, pay-later company OpenPay.

What’s up and what’s down

Bluechiip (ASX:BCT) investors, as well as the company, are smarting this week after a key client, Labcon in the US, cancelled its chip supply contract.

Labcon is claiming $US500,000 in damages, Bluechiip is claiming $US3.5m in bills be repaid now, and the multi-million marriage spruiked through the media in 2018 has turned into an acrimonious divorce.

But as always with life sciences, most of the news is good.

Anteotech (ASX:ADO) shares were up over 80 per cent on Thursday after it said it had a proof of concept for a new point of care COVID-19 test.

“But Atomo Diagnostics (ASX:AT1) is already out there with their products. So what happens with these announcements with a COVID-19 twist is the shares pop and then they come crashing back,” Power said.

“Our recommendation is always to sell into that strength. These are very speculative companies that get massively hyped up.”

Race Oncology (ASX:RAC) got $3m from a trio of well healed investors.

“David Williams, Jeff Emmanuel and Andrew Chapman at Merchant Group are all guys that play this space pretty well. They bought stock at 60c and by mid week it was over $1,” Power said.

The company plans to use the money to fund its bisantrene Phase II combination myeloid leukaemia (AML) trial, planned to begin in late 2020.

Other bouncers were Pharmaxis (ASX:PXS), which got orphan drug status in the US for its anti-fibrosis drug for for the treatment of myelofibrosis.

LBT Innovations (ASX:LBT) signed up oneservice as a service provider for the APA Independence lab tool, continuing to round out its global distribution networks.

And pot stock Zelira Therapeutics (ASX:ZLD) released results from its Phase 1 safety study into chronic pain, which met all of its primary endpoints.

A few months ago released its insomnia trial results and it’s talking about doing more work on autism.

“This is an interesting company because they’re selling an unregistered product into various global markets, but also trying to find patentable, defensive data,” Power said.

 

Power’s picks

“We’re in the thick of quarterly reporting season and we’re particularly watching Adelaide portable Xray machine maker Micro-X (ASX:MX1), which should throw out some positive numbers given they’re won a number of contracts,” Power said.

Power also has anti-ultrasound-infection maker Nanosonics (ASX:NAN) on his watchlist, as one of several companies whose stock has drifted into cheap territory.

“The stock drifted back to $6 which is a price point we’re really happy to buy at — our price target is just under $7. We’re looking for periods of price weakness with some of these very good tech-based companies that have good business models,” he said.

Impedimed (AX:IPD) is “back round the 7c mark” and Mach7 (ASX:M7T) is back around 85c after shooting over $1, which is a spot Power is very happy to buy at.

The next price mover for Impedimed is the release of its meta-analysis showing whether its device stops people getting lymphedema, and for Mach7 it’ll be more contract wins.