• Mach 7 announces patent infringement lawsuit settled in its favour
  • Lumos Diagnostics tanks after device submission for FebriDX rejected by US FDA
  • Three companies announce major milestones in clinical trials

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 ASX health stocks.

Let’s be honest, brushing your teeth – while important for your oral and overall health – can get a little cumbersome.  For people who lack manual dexterity cleaning their teeth adequately themselves can pose further challenges.

But researchers at the University of Pennsylvania might have a solution, having created prototypes for microbots.  Using a magnetic field, the researchers could direct their motion and configuration to form either bristle-like structures that sweep away dental plaque from the surfaces of teeth, or elongated strings that can slip between teeth like a length of floss.

In both instances, a catalytic reaction drives the nanoparticles to produce antimicrobials that kill harmful oral bacteria on site. Experiments on mock and real human teeth showed that the microbots can conform to a variety of shapes to nearly eliminate the sticky biofilms that lead to cavities and gum disease.

The innovation arose from what has been described as serendipity. Research groups in both the university’s dental medicine and engineering departments were interested in iron oxide nanoparticles but for different reasons.

The dental group was interested in the catalytic activity of the nanoparticles and how they can activate hydrogen peroxide to release free radicals that can kill tooth decay-causing bacteria and degrade dental plaque biofilms.

Meanwhile, the engineering colleagues were exploring these nanoparticles as building blocks of magnetically controlled microrobots.  The two departments married the two applications together for the future benefit of tooth cleaning.

Senior research investigator in Penn’s School of Engineering and Applied Science and co-corresponding author Edward Steager said nanoparticles can be shaped and controlled with magnetic fields in surprising ways.

“We form bristles that can extend, sweep, and even transfer back and forth across a space, much like flossing,” Steager said.

“The way it works is similar to how a robotic arm might reach out and clean a surface.”

And it doesn’t matter if you have crooked or orthodontic straight teeth, the researchers say the system can adjust for a thorough clean.

To markets……

To markets where there is definitely something to smile about as the ASX health sector is up for the second week in a row.

By 1pm on Friday the S&P/ASX 200 healthcare index (ASX:XHJ) was up ~3.5% for the past five days, passing the S&P/ASX 200 (ASX:XJO) index which was up ~0.8%.

“The healthcare market is getting a bit of support for the second week in a row and we are seeing some rotation back into the big end of town particularly,” Power said.

Hearing solutions giant Cochlear (ASX:COH) is up 7% for the week to $215.46, while blood products company CSL (ASX:CSL) is up 3.8% in the past five days to $296.80.

Lumos plunges after FDA rejection

Diagnostics company Lumos Diagnostics (ASX:LDX) saw its share price fall 65% on Monday after announcing that its device submission for FebriDX has been rejected by the US FDA.

According to Lumos, the FDA has expressed concerns regarding the risk that false negative viral infection test results could lead to missed opportunities to treat patients, and contribute to the spread of SARS-CoV-2 infections.

Lumos said this decision was unexpected, considering that FebriDx had previously received regulatory registrations in the UK, Europe, Canada, UAE, Brazil and Australia.

“That was a key product Lumos was hoping to get on the market and they’ve been knocked back and have just been smacked,” Power said.

“It goes to show there are significant risks in these plays both upside and downside.”

US court finds in favour of Mach 7 in patent litigation

Health imaging company Mach 7 (ASX:M7T) has risen ~19.60% in the past five days and 30.6% to 64 cents since it was Powers’s stock of the week two weeks ago.

The company’s wholly-owned subsidiary Mach 7 Technologies announced a patent infringement lawsuit brought by Al Visualize Inc, a Texas corporation, had been settled in its favour.

Mach 7 announced the United States District Court for the District of Delaware had granted Mach 7’s request to dismiss all claims asserted by Al Visualize.

In the announcement Mach 7 said the court based its dismissal on a finding that Al Visualize’s patents were not eligible for patenting and therefore its claims of wilful infringement were dismissed.

Al Visualize has until August 8, 2022 to appeal the dismissal to the US Courts of Appeals for the Third Circuit. Mach 7 said it will continue to defend itself on appeal, if necessary, and keep the market updated.

“The settling of the litigation has helped Mach 7’s share price this week,” Power said.

Trial news from Neuren, Telix and Antisense

Neurological disorders specialist Neuren Pharmaceuticals (ASX:NEU) this week announced that its Phase 2 clinical trial of NNZ-2591 in Angelman syndrome (AS) is open for enrolment.

The first patients are expected to enter the trial imminently at the Children’s Health Queensland Hospital. The open label Phase 2 trial will enrol a single group of up to 20 children aged 3 to 17 years with AS.

“This is their next generation product which they are very excited about,” Power said.

However, the key milestone Morgan’s is interested in relates to Neuren’s trial into rare disease Rett Syndrome.

“Their US partner who conducted the Rett’s trial is due to submit to the FDA the application for approval,” Power said.

“That’s due at any point and will trigger a $10 million milestone payment back to Neuren.”

Meanwhile, Telix Pharma (ASX:TLX) has now dosed the final patient and completed recruitment into its Phase 3 pivotal study called ZIRCON.

The trial is studying Telix’s investigational renal (kidney) cancer imaging agent, TLX250-CDx.  If successful, TLX250-CDx may provide a non-invasive method to aid in diagnosis and the identification of metastatic disease through whole-body imaging.

Telix has also announced appointment of Kevin Richardson as its new CEO of Telix Americas.

Biotech Antisense Therapeutics (ASX:ANP) has submitted its first application for the Phase 2b/3 clinical trial of ATL1102 (its compound) in non-ambulant patients with Duchenne muscular dystrophy (DMD) to the Federal Institute for Drugs and Medical Devices in Germany for their evaluation and subsequent approval.

Morgans expects the first patient to be dosed in 4QCY22 in Europe and sees it as an important milestone as Antisense works with the European regulatory agency to ensure the clinical program, if successful, leads to a regulatory approval.

Antisense is reviewing its cash position, which sits at A$21.7m at 3Q22 to ensure its cash runway is extended for as long as possible. Management note reducing upfront capital requirements and exploring other funding options.

“That’s a positive step forward for Antisense as they also look to extend their cash runway to make their cash last as long as possible.”

ScoPo’s Powerplay

Imaging devices company IMEXHS (ASX:IME) is Power’s stock of the week after the company announced another major customer contract renewal, this time with the Colombian National Police Force.

The renewal is for a further six months, with an automatic three month renewal.  Morgans has noted while the contract term isn’t particularly long, the longevity of the relationship has been solid, having retained and grown this client since 2019.

IME will provide its enterprise imaging solution along with its patient portal, advanced post-processing tools, proprietary artificial intelligence tools and Nuance’s voice recognition software which will integrate across all the radiology functions in the hospital.

Renewed terms of the contract includes a 15% increase to ~A$1.3m and requires no capital expenditure.

Morgans has a speculative buy 12-month target price of  $2.53 on IME, which has a market cap of ~$21.4 million.  The company’s share price is up 12% in the past five days and 24% in the past month to 66 cents.

“It’s a microcap but it’s signed some good contracts and is heading towards profitability,” Power said.

“Our view is that there is probably more in it for IME and they are due to report their quarterly results in the next couple of weeks and could get a kick on from that.”

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