Health Check: Did the earth move for you? The world shifts on its axis as it enters the Trump era mark two

The health sector awaits the Trump Administration’s first moves under health czar RFK Junior
Key Republicans love supplements and that bodes well for EZZ Life Sciences
Proteomics prepares to launch four finger-prick predictive tests

The day that many thought would never come has dawned: the big orange one now presides over the red button as Commander in Chief, while the Bidens and their German Shepherd Commander have been banished from the White House into Washington’s winter chill.

More pertinently for the life sciences sector, the quixotic Robert F Kennedy Junior is now officially the heath secretary and on the warpath against health bureaucrats.

For Australian biotechs operating in the US it’s a case of ‘wait and see’ as to what vaguely enunciated policies such as expedited drug approvals, lower drug reimbursement and drug pricing crackdowns really mean.

Goldman Sachs has run the ruler over the sector’s Big Three – CSL (ASX:CSL), Cochlear (ASX:COH) and ResMed (ASX:RMD), as well as Resmed’s rival Fisher & Paykel Healthcare (ASX:FPH).

The firm opines that all four stocks have “meaningful exposure” to potential US policy changes, given 40% of their collective revenue derives from Trumpland.

“In our view the key consideration … is renewed pressure on federal government healthcare funding, particularly through potential cuts to Medicaid and Affordable Care Act subsidies.”

The firm believes Cochlear (hearing implants) is best placed to withstand the potential pressures, “given its low market penetration and recent funding expansion in the region”.

CSL (blood products) and Resmed (sleep apnea) are relatively more exposed to this risk given their higher US market penetration and greater reliance on government reimbursement.

As for the Kiwi-based Fisher & Paykel, the company manufactures in Mexico so will be wary of any new tariffs. But Goldmans believes the company has the “necessary levers to mitigate a material drag to earnings from potential tariffs.”

CSL also faces a potential crackdown on Mexicans who cross the border on day passes to donate blood at its collection centres. But Goldman says the more likely impact will be higher inflation driving up donor fees.

The Trump risk factors are a case of ‘all other things being equal’ and other factors such as new competitors (or fat-busting drugs in the case of Resmed) will also drive the companies’ fortunes.

EZZ says the FTA is here to stay

Some biotechs are quietly optimistic about the new US landscape, such as dietary supplement and beauty products play EZZ Life Science (ASX:EZZ).

EZZ drives most of its revenue from China but is making a sales push into the US$100 billion a year US supplements market.

EZZ’s key advantage is that its products are made here – not in China – and there’s no suggestion the 2014 US-Australia Free Trade Agreement will be ripped up.

“The Australian-US partnership is strong in so many areas and we are one of their biggest export markets,” chairman Glenn Cross says.

“We are not factoring in any major risk at this stage, but no-one really knows.”

Another potential advantage is that the new US administration reportedly is red-hot on vitamins and supplements.

Proving that the business of America is business, Trump’s pick for surgeon general, Dr Janette Nesheiwat, sells her own line of vitamins.

Kash Patel, the likely head sleuth at the Federal Bureau of Investigation, recommended pills that could “rid the body of the harms” from Covid-19 vaccines.

Now the head of Centers for Medicare and Medicaid Services, Mehmet Oz promotes supplements sold by online retailer iHerb, including fish-oil pills that “probably slowed” his mother’s Alzheimer’s disease.

Such zealous advocacy raises the prospect of an unregulated free-for-all, but the vibe is positive for EZZ and its more scientifically proven offerings.

Proteomics comes of age

Diagnostics house Proteomics International Laboratories (ASX:PIQ) has flagged the imminent launch of four of its predictive finger pin-prick tests, including its flagship Promarker D assay for kidney decline in type 1 diabetes patients.

The company expects to launch Promarker D locally in the current quarter and in the US by June.

In its December quarterly report today, the company said it had applied for US certification to offer Promarker D as a lab-certified test, a short cut to full-blown approval.

The company says Promarker D advances diabetes management by enabling earlier detection and intervention, to prevent end-stage stage renal disease that means dialysis or a kidney transplant.

Diabetes affects over 537 million people worldwide, with the unpreventable type 1 accounting for about 10% of patients.

Proteomics is also close to launching assays for endometriosis (Promarker Endo), esophageal cancer (Promarker Eso) and muscle damage in athletes resulting from oxidative stress (Oxi Dx).

The tests are based on the company’s Promarker tech, which searches for protein ‘fingerprints’ in a sample and can identify protein biomarkers that distinguish between people who have a disease and those who do not.

The company says the tech can identify fingerprints from any biological source, “from wheat seeds to human plasma”.

Also slated for a local launch in the current quarter, Promarker Eso diagnoses esophageal adenocarcinoma, the most common form of esophageal cancer “and an area of significant unmet medical need”.

The company hopes to launch Promarker Endo in the June quarter.

Endometriosis affects about one in nine women and girls, causing cause pelvic pain, painful periods and infertility.

“Currently, there is no simple way to test for endometriosis, which takes an average of seven years to diagnose due to the reliance on invasive laparoscopy,” the company says.

As reported in the prestigious tome Human Reproduction, testing showed Promarker Endo can diagnose all stages of endometriosis with “high accuracy”.

“Literally a game-changer for sports medicine”, the Oxi Dx test can be used to monitor athletic performance.

By detecting unseen muscle damage, the test allowing athletes to adjust their training regime to avoid more serious injury.
The company plans to launch the test locally in “in mid 2025”.

Meanwhile, Proteomics reported customer receipts for the quarter of $285,000 (for analytical services), with cash inflows of $246,000 resulting from $2.2 million of government grants and R&D incentives.

At Stockhead, we tell it is as it is. While EZZ Life Sciences is a Stockhead client the company did not sponsor this article.