The large healthcare markets in America and Europe are key targets for ASX many health small caps, but in many jurisdictions COVID is having a ‘freezing effect’ on non-essential treatments.

When it comes to COVID, Australia has enjoyed a relatively good run. Many small caps exclusively focused on Australia were briefly affected by local restrictions on non-essential procedures, but this only lasted a few weeks before patients could return.

The US and Europe have been a different kettle of fish for ASX health stocks.

The US has ostensibly been the worst hit nation by COVID-19 with 25 million cases and over 400,000 deaths. European countries like Spain, Italy and France have also been hit especially hard.

This has made it difficult for some companies, like medicinal cannabis stock Medlab Clinical (ASX:MDC)

“In the northern hemisphere at the moment you don’t go to hospital unless you’re 101 per cent COVID,” explained Medlab boss Sean Hall.

“So we’re already looking down the barrels of people missing chemo or cardiac treatment because of the federalised response to the virus.”

Last week, the FDA gave Dr Hall’s company Investigational New Drug (IND) status for its medicinal cannabis drug NanaBis against cancer pain. America’s FDA has a reputation as the world’s most sophisticated and professional medical regulator. Passing their standards gives companies confidence that a product can “make it anywhere”.

While Medlab already obtained approval to run the trial in the UK and Australia, America’s green light means NanaBis is the only cannabinoid-based drug under development for cancer pain initiating Phase III trials in the US.

Dr Hall is hopeful COVID-19 will ease in the US allowing it to start the trial on time.

“Providing that [COVID] comes under control in the next 6 months then we’re probably going to come very close to our anticipated start date,” he said.


It helps to be in software

Medibio (ASX:MEB) sells sleep staging software (MEBsleep) that aims to identify mental illnesses. Last week it won CE Mark approval — allowing it entry into Europe — but getting FDA approval remains a work in progress.

The company has its headquarters in Minneapolis and is conducting clinical trials in Ohio. When asked about the impact of COVID-19 on its American operations, Medibio’s managing director Claude Solitario said experiences differed across the country.

“Minneapolis did slow down but in other states like Ohio they haven’t slowed down so it’s a patchwork for the United States,” he said.

It was a similar story in Europe but the company is now closer to commercialisation and Solitario thinks his company’s product will help it.

“There’s no doubt things have slowed down but people are still moving in and out of hospitals,” he said.

“The other thing is with our product — it’s software so as long as people are attending hospitals our product can be implemented cheaply and easily.

“Because at the end of day what we’re selling is a software program wrapped around algorithms.”


Companies preparing for the “spring return”

It’s a slightly different story if you’re making physical medical devices.

One such company is brain scanning device maker Compumedics (ASX:CMP).

CEO David Burton says doing business hasn’t been as easy from a logistics point of view, but demand remains strong.

“We’ve been delayed because we can’t get access to the markets with our MED program, and as with everyone else there’ve been a whole lot of restrictions and logistics delays,” Dr Burton told Stockhead.

“That’s contributed to a relatively minor minor delay in shipments but our orders are stronger then they’ve ever been.”

“As markets open up we’ve been careful to prepare for that ‘spring’ to emerge and that is how we see it in a nutshell.”

Dr Burton expected his company to benefit from trends triggered by COVID-19, particularly telehealth.

“We’ve been a participant [in] the emergence of different forms of online, clinical and home diagnostics treatments throughout the COVID period,” he said.

“So we believe we are one of the beneficiaries of that based on us adapting very quickly to support that program.”

“It will allow that spring return to be quite significant.”