ASX December health sector winners… and a 91pc drop for a trial-flopped stock

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• The S&P/ASX 200 Health Care Index fell 1.85% in December but rose 7.51% overall in 2024 
• Mesoblast surged 52% in December after the US FDA approved its cell therapy Ryoncil for treatment of paediatric GvHD
• Percheron plunged 91% in December after failure of phase 2b trial of avicursen into non-ambulant boys with Duchenne muscular dystrophy

The S&P/ASX 200 Health Care (ASX:XHJ) Index fell 1.85% in December but rose 7.51% in 2024 to place seventh out of the 11 S&P/ASX 200 sectors. (Technology took out top spot, up ~50% for the year. Read more on that > here.)

For the year, the XHJ trailed the benchmark S&P/ASX 200 Index, which fell 3.15% in December and finished 2024 up 11.44%, according to S&P Dow Jones Indices (S&P DJI).

The pullback in December was part of a global sell-off after the US Federal Reserve signalled it would make fewer rate cuts in 2025.

“December finished the year with a bit of a wet sail with no Santa rally as we were expecting, which was a disappointing end to what was otherwise a good year,” Morgans healthcare analyst Scott Power told Stockhead.

“We still remain bullish into 2025 in terms of the healthcare market with a number of capital raisings and potential IPOs slated to come through, which is driven by the interest rate cycle starting to ease.”

He said the market expects to get a clearer read on policy and regulation in the healthcare sector under Donald Trump’s second presidency soon after his  inauguration on January 20 in the US.

The driving force behind MAHA (‘Make America healthy again’), Robert F Kennedy Junior – aka RFK Jr – was controversially appointed to head the US Department of Health and Human Services (HHS) under the upcoming Trump administration.

“Ultimately drugs and medical devices are still being approved and he (RFK Jr) has a particular stance on vaccines and that is probably an area that needs more clarification but the innovation is still coming through,” Power said.

“The whole GLP-1 story for weight loss is still evolving and has a long way to run and that will continue to provide interest in that part of the market.

“There’s more drugs and products to be approved to improve efficiencies and save lives, which is positive for continued investment in the sector.”

How ASX biotechs performed in December

Medical imaging stock Singular Health Group Ltd (ASX:SHG) topped the leaders board for the sector in December, up 105%. The company announced Dr Ronny Low, a practising radiologist with more than 20 years of clinical experience, had joined the company as a technical advisor.

Singular Health said Low has held several positions with the Royal Australian and New Zealand College of Radiologists (RANZCR).

He currently serves as a member of the RANZCR Clinical Radiology Education and Training Committee and in January started a term on their Clinical Radiology Curriculum Advisory Committee.

Mesoblast (ASX:MSB) surged 52% after the US Food and Drug Administration (FDA) approved its cell therapy Ryoncil, for the treatment of  paediatric graft-versus-host disease (GvHD).

Resulting from bone marrow transplants, GvHD is a life-threatening condition with high mortality rates. Ryoncil applies to patients resistant to steroids, the standard-of-care treatment.

Read: Health Check: Joy as Mesoblast wins its first FDA approval for a stem-cell therapy after decades of trying

Other stars in December included Orthocell (ASX:OCC), which was up 67% amid “outstanding” clinical trial results and expected US approval of its nerve-repair product Remplir, which is already approved in Australia, New Zealand and Singapore.

Micro-X (ASX:MX1) rose 53% after its US subsidiary Micro-X Inc was awarded a multi-million dollar development contract with the US Advanced Research Projects Agency for Health (ARPA-H) to develop a lightweight, portable full body CT scanner.

Percheron Therapeutics (ASX:PER) sustained the biggest losses in the sector in December, down 91% after failure of its phase 2b trial of lead candidate avicursen (ATL-1102) into non-ambulant (unable to walk unassisted) boys with Duchenne muscular dystrophy (DMD).

Percheron announced the trial failed to achieve its primary endpoint, which measured upper limb function at week 25 of treatment, compared with placebo.

“We are not the first company whose drug candidate has failed to meet hopes expectations and, like so many of our peers, it falls to us now to adapt and reorient our business so as to place it back on the path to success,” the Percheron board noted in a letter to shareholders.

At Stockhead, we tell it like it is. While Singular Health and Orthocell are Stockhead advertisers, the companies did not sponsor this article.

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