ScoPo’s Powerplays: Much needed July rally for beaten-down ASX health stocks
Link copied to
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.
Here’s some good news for struggling Australian avocado producers and lovers of avocado with new research finding the fruit can help decrease unhealthy cholesterol levels.
The co-ordinated study was conducted by researchers at Penn State, Loma Linda University, Tufts University, and UCLA, with coordinating support from Wake Forest University.
The researchers conducted a six-month experiment involving more than 1,000 participants experiencing overweight or obesity, half of whom were instructed to eat an avocado every day while the other half continued their usual diet and told to limit their avocado consumption to less than two a month.
Fat in the abdomen and around other organs was measured precisely using MRI before and at the end of the study.
Loma Linda University School of Public Health Professor Joan Sabaté said eating one avocado a day for six months was found to have no effect on belly fat, liver fat or waist circumference in people with overweight or obesity but did lead to a slight decrease in unhealthy cholesterol levels.
“This is positive because eating extra calories from avocados doesn’t impact body weight or abdominal fat, and it slightly decreases total and LDL-cholesterol,” she said.
Daily avocados resulted in total cholesterol decreasing 2.9 milligrams per deciliter (mg/dL) and LDL cholesterol decreasing 2.5 mg/dL.
The study is good news for producers with Avocado Australia chief executive John Tyas pleading with consumers to ease a rare oversupply burden by buying more of the fruit.
“It’s very tough for growers at the moment, many of whom are doing it at or below the cost of production,” he said.
And there’s been some good news for ASX health stocks in the first month of FY23, with the traditional July rally providing a much-needed boost. By 11am on Friday the S&P/ASX 200 healthcare index (ASX:XHJ) was up 4.8% since the close of markets on June 30, passing the S&P/ASX 200 (ASX:XJO) index which was up 0.2%.
While many ASX health stocks have been feeling the heat of sell-offs, Power said there has been a bit more reason to breathe a sigh of relief this week. Among companies up since the start of July is Power’s choice for stock of the week last week, health imaging company Mach 7 (ASX:M7T), which is up 10%.
Nanosonics has developed and commercialised the trophon EPR device, a unique automated disinfection technology, which was the first major innovation in disinfection for ultrasound probes in more than 20 years.
“Last week we were talking about the tax loss selling in June and we expected a bounce in the market and we have got that this week,” Power said.
“A lot of the beaten up growth names have been rallying which is showing that money is starting to come back into healthcare.”
ResApp Health (ASX:RAP) has received the US Food and Drug Administration’s 510(k) clearance for its mobile sleep apnoea screening app SleepCheckRx.
SleepCheck is an at-home test for adults who are at risk of moderate to severe obstructive sleep apnoea. It screens for the condition by analysing breathing and snore sounds recorded via phone.
It has been approved as a prescription-only software-as-a-medical device on Apple smartphones in the US. To download it from the Apple App Store, patients will have to secure a specific code from their care providers.
The company announced it plans to expand clearance for SleepCheck on Android phones in the future.
“At the moment to qualify for a CPAP machine people have to be tested at an authorised sleep centre but if it can be diagnosed using a mobile phone that will be much easier,” Power said.
“It may lead to more people being diagnosed and receiving necessary treatment.”
ResApp also announced this week it had agreed to a 12-month extension to its commercial licence agreement with Medgate, operator of the largest telemedical centre run by doctors in Europe.
The contract will allow the use of ResApp’s smartphone-based acute respiratory diagnostic test, ResAppDx, on Medgate’s telehealth platform.
Independent study results released in June revealed its COVID-19 cough algorithm achieved a sensitivity of only 84% and a specificity of 58%. The results were significantly lower than ResApp’s pilot study and thresholds specified under the acquisition terms with Pfizer, which set a minimum sensitivity of 86% and a minimum specificity of 71%.
As a result, Pfizer’s acquisition price was reduced from 20.7c to 14.6c per ResApp share in cash, representing an equity value of $127 million.
The ResApp share price remains flat despite the good news at 13 cents, trading just below the Pfizer offer of 14.6 cents.
Cardiac-focused Silicon-Valley based EBR Systems (ASX:EBR) has announced it has completed interim patient enrolment in the pivotal SOLVE-CRT IDE trial of WiSE.
The SOLVE trial is evaluating the safety and efficacy of the WiSE System in up to 300 patients with acute lead failures, chronic lead failures, high-risk upgrades and leadless upgrades.
The primary endpoints are to achieve more than a 9.3 per cent improvement in heart function and have less than 30 per cent of patients with device or procedure-related complications.
Following the six-month follow up of the last patient, EBR expects to release results in calendar year Q1 2023.
The WiSE System is the world’s only wireless, endocardial (inside the heart) pacing system for use in stimulating the heart’s left ventricle which is believed to be the more anatomically correct location for pacing equipment.
WiSE technology enables cardiac pacing of the left ventricle with a novel cardiac implant that is roughly the size of a grain of rice.
“They’ve hit a key milestone by completing recruitment for their pivotal trial and the share price has responded,” Power said.
The EBR share prices has risen 32% since the start of July to 50 cents.
Health imaging company Volpara Health Technologies (ASX:VHT) has risen more than 32% since July 1 to 55 cents after a deal with RadNet, the largest provider of outpatient imaging services in the US.
The volume-based contract, which will run for an initial period of 42 months, sees RadNet implementing Volpara Analytics and Volpara Risk Pathways software throughout its organisation.
Volpara Analytics’s artificial intelligence technology is expected to manage mammography quality across RadNet’s 350+ sites, while the Volpara Risk Pathways platform will provide risk-based screening to ensure RadNet patients have access to essential imaging and genetic testing.
Meanwhile Volpara’s CEO Teri Thomas, who took over from founder Ralph Highnam, who in turn became the chief science and innovation officer, has been undertaking a full strategic review of the company with results due out at the end of July.
“It’s a transition which I think has been done very well with Ralph having a very deep science background and has worked closely with Teri for the past 18 months,” Power said.
“What they’ve told the market is $18 million of cash is left on the balance sheet and they expect that to be sufficient to get them through to break even, so from the strategic review we will be hearing how they intend to do that.
“They’ve said they are focusing on larger, enterprise wide deals and we’ve seen evidence of that with the RadNet deal.”
Hearing device company Audeara (ASX:AUA) is Power’s stock of the week, which is up 31% since the start of July to 12.5 cents after announcing it had signed a global supply deal with international audiology retailing giant Amplifon Global.
Amplifon is one of the world’s largest audiology clinics with Audeara negotiating for its products to be available across all Amplifon owned audiology clinics for an indefinite term. That’s 9,200 points of sale across 25 countries, with Amplifon’s share of the global market sitting at 11%.
The deal comes less than a month after Audeara inked a reseller agreement with Specsavers. Brisbane-based Audeara makes headphones designed to complement hearing aids, helping people with entertainment experiences. The company listed on the ASX on May 18, 2021.
“The fact they have struck such a good deal is very impressive for this small Australian company and it deserves to be drawn to investor’s attention,” Power said.
“We think Audeara has a lot further to go.”
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.