ScoPo’s powerplays: It’s been a rollercoaster ride, but take a look at Neuren
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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.
“It’s been a real rollercoaster ride,” says Scott Power.
“It’s all been driven by rising bond yields, and also the confidence around the rollout and expectations that economies will open up.
“So you’ve got two opposing forces there, which has basically meant that for a couple of days we’re down significantly, and then the next couple of days we’re recovered — which is sort of amazing.”
As of Thursday, the XJO healthcare index had enjoyed three straight days of gains to put it up 1.3 per cent for the week, following last week’s 4.5 per cent decline. That included a massive 3.5 per cent drop on March 4, and a 2.3 per cent drop on March 5, as rising bond yields led to a rotation out of the sector.
The biggest mover this week has been Bard1 Life Sciences (ASX:BD1), which closed Thursday at $3.63, up 24.7 per cent from last week, despite not having any new announcements.
Bard1 is also the biggest gainer in the sector so far this year, up 433.8 per cent.
“Absolutely rocketed this week,” Power said. “It’s really caught investors’ attention.”
Bard1 is working on developing tests to detect breast and ovarian cancer through simple blood tests. Power compares it to Rhythm Biosciences (ASX:RHY), whose shares caught fire last year, gaining 669 per cent as it made progress on a blood test for colorectal cancer.
“Sort of a thematic in early detection of cancer in the blood,” Power said.
Nuheara (ASX:NUH) closed Thursday at 4.7c, up 6.8 per cent since last week, after receiving US Food and Drug Administration approval for its IQbuds2 PRO next-generation hearing aid, which also work as wireless headphones.
Nuheara says this Pro model offers even better hearing technology and amplification than its Max earbuds that were named one of 2020’s best inventions by Time magazine.
“Some good news for them,” Power said.
Race Oncology (RAC) finished Thursday at $4.07, up 10.6 per cent for the week and more than tenfold (!) from a year ago, after announcing positive preclinical results for its lead drug candidate in treating breast cancer.
Bisantrene was able to kill some cancer subtypes that resist currently used chemotherapeutic agents, according to the research conducted by University of Newcastle associate professor Nikki Verrills.
Race Oncology said the results would be published in a high-impact scientific journal, and that it would update its clinical trial plans before the end of this quarter.
Bisantrene was the subject of multiple clinical trials in the late 1980s and 1990s but then was essentially “lost” during a series of pharmaceutical mergers until RAC rediscovered it.
Power’s “powerplay” pick this week is Neuren Pharmaceuticals (ASX:NEU), a $147 million Melbourne company developing treatments for rare childhood neurological disorders such as Phelan-McDermid syndrome, Angelman syndrome and Pitt Hopkins syndrome.
Neuren shares finished Thursday at $1.27, up 1.6 per cent for the week, following its announcement on Wednesday that it had completed manufacturing enough of its drug candidate NNZ-2591 to move forward with phase 2 clinical trials.
“The big big milestone that we await towards the end of this year, so in the fourth quarter, is the results of their phase 3 trial for Rett syndrome, that’s being funded by a large pharmaceutical company called Acadia (NASDAQ:ACAD),” said Power.
“That’s a company that we think very highly of,” Power said.
Morgans also this week officially upgraded its recommendation on CSL (ASX:CSL), Australia’s largest healthcare company. The recommendation is now “add,” from a “hold,” while the $301.10 price target remains. CSL shares closed Thursday at $253.90, up 2.1 per cent for the week, but down 10.3 per cent so far in 2021.
“Quality on sale,” Power said. “They’re a good quality company, and the share price is going to come right back. So we’re happy to get that into client’s portfolios.”
(For those interested in large-cap names, Morgans also last month moved glovemaker Ansell (ASX:ANN) to an add, with a target price of $44.45. The $4.7 billion company was trading Thursday at $35.19.)
Overall, Power said, his view is that the volatility in the market is being driven by the rapid rise in bond yeilds.
“My view is that we’re not going to see these bond yields continue to rise. They will sort of moderate, and that will create positive momentum in the stock market.
“The rollout of the vaccines, the expectation that economies will continue to open up, that bond yields aren’t going to keep rising at the rate they have been, that will create a better environment for the stockmarket.
“So that why we’re confident to be talking about these good quality healthcare companies which have come down in share price.”
Bard1, Nuheara, Race Oncology, Neuren and CSL shares