ScoPo's health powerplays: 'We said October was going to be volatile'

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

“We said October was going to be volatile going into the US election and with the growing number of Covid cases – and we’ve certainly seen that this week,” says Scott Power.

The ASX200 has slipped almost every day this week, finishing the week down 3.9 per cent in its worst performance since April.

Power said the market was “getting the wobbles” like a child riding a bike for the first time.

The biggest company news for the week, according to Power, was Cogstate (ASX:CGS) expanding its partnership with Japanese pharmaceutical company Eisai (TYO:4523) to sell its digital cognitive assessment tests worldwide, instead of just in Japan.

Eisai is paying $US15 million for Cogstate’s technology, plus royalties.

The distribution agreement specifically excludes clinical trials, where Cogstate will continue to market its offering independently.

Power said Cogstate’s platform has broad application for clinical trials for indications such as depression, dementia and even cancer where drug companies might want to ensure their treatment had no cognitive side effects.

Cogstate’s shares have risen from 80c last Friday to 97c on Monday after the partnership was announced, peaking at $1.21 on Tuesday before closing on Friday at $1.10.

EMvision Medical Devices (ASX:EMV) also had a good week, announcing that a clinical trial of its brain imaging technology at Princess Alexandra Hospital in Brisbane had been able to correctly differentiate between haemorrhagic or ischaemic strokes around 95 per cent of the time.

EMV shares, which had been trading around $2.80 for the past two weeks, closed at $3.25.

Kiwi breast-density imaging company Volpara Health Technologies (ASX:VHT) had a setback, meanwhile, after the US Food and Drug Administration delayed a decision on requiring American women to be informed about their breast density when they receive a mammogram. The agency will now rule on the issue in December.

“I think this is a victim of stagnation in the United States before the election,” Power said, who believes ultimately this will just be a “blip in the road” for Volpara. There the potential for “enormous media upside” if the FDA issues a breast-density mandate, as expected.

VHT shares were trending downward, closing at $1.33 after hitting $1.53 last week.

Zelira Therapeutics (ASX:ZLD) had a better week, following Australia’s Therapeutic Goods Administration approving its cannabinoid medicines for the treatment of autism by prescription. But the news didn’t budge its share price much.

It was a similar story for Clinuvel Pharmaceuticals (ASX:CUV) whose shares finished at a one-month low of $20.70 despite getting TGA approval for its SCENESSE implant to treat a rare disorder known as EPP that makes patients extremely intolerant to light.

Antisense Therapeutics (ASX:ANP) received orphan drug designation in the United States for its ATL1102 drug candidate to treat Duchenne muscular dystrophy, “which is very positive for them,” Power said.

But it too was a victim of the market downturn – ANP shares closed at 11c, after trading at 13 and 14c last week.

ScoPo’s powerplays

Power remains bullish on ImpediMed (ASX:IPD), his pick from two weeks ago when it was trading at 8c. It was up to 9c for most of this past week, before closing at 8.4c.

“It’s played out really nicely this week,” Power said. But he expects further upside on the release of the Brisbane-based company’s metadata analysis of the potential of its bioimpedance spectroscopy products to detect limb swelling.

He’s also picking another Brisbane-based company, ResApp (ASX:RAP), which makes telehealth apps to diagnose and manage respiratory diseases.

“ResApp’s looking like it wants to move higher,” Power said. Some international partnership agreements are expected, he added.

Its shares were on sale on Friday, closing down two cents to 9c – their lowest level since March.

“This volatility gives up better entry points into some of our preferred plays,” Power said.

The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.