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Health & Biotech
Morgans healthcare and life sciences expert Iain Wilkie is filling in for his colleague Scott Power to explain what the movers and shakers have been doing in health and gives his ASX Powerplay.
People diagnosed with a major depressive disorder who don’t respond to traditional antidepressant medications may find relief in probiotic supplements, according to a recent study published in JAMA Psychiatry.
The study, conducted by researchers from King’s College London and ADM Protexin, investigated the impact of probiotic supplementation on mental health by focusing on gut health improvement.
The double-blind trial involved 50 outpatients with major depressive disorder who were already taking antidepressants. Out of these participants, 49 individuals who showed no response to prescription antidepressants were randomly assigned to receive either a 14-strain blend probiotic supplement or a placebo.
Although both groups experienced symptom improvements during the study, the probiotic group demonstrated more significant improvements, particularly in anxiety scores starting from the fourth week.
The study concluded the acceptability, tolerability, and estimated effect sizes on key clinical outcomes are promising and encourage further investigation of probiotics as add-on treatment for people with MDD in a definitive efficacy trial.
And ASX health stocks are looking a little depressed for the last week of trading for FY23. At around 12pm (AEST) on Friday the S&P/ASX 200 healthcare index (ASX:XHJ) was down 0.51% for the past five days, while benchmark S&P/ASX 200 (ASX:XJO) was up 1.30% for the same period.
“This week is the end of tax year selling and anything that has been beaten down in FY23 will have seen a bit of pressure,” Wilkie.
Developer of next-generation exosome solutions and precision diagnostics INOVIQ (ASX:IIQ) has soared 76% in the past five days after announcing what it calls “excellent results” from an independent clinical validation study of its SubB2M/CA15-3 test for breast cancer detection.
The study showed high accuracy (87%), sensitivity (81%), and specificity (93%) for INOVIQ’s SubB2M test, outperforming a leading approved CA15-3 test.
The SubB2M/CA15-3 blood test detected all-stages of breast cancer with 81% sensitivity and 93% specificity, outperforming a leading CA15-3 test.
IIQ intends to present the data and its development plans to potential partners and KOLs to advance commercial discussions for its SubB2M/CA15-3, SubB2M/CA125 and SubB2M multi-cancer tests.
INOVIQ’s disruptive SubB2M technology is an engineered protein that detects the pan-cancer biomarker Neu5Gc, found in multiple human cancers.
“It’s impressive what they have done so far,” Wilkie said.
“They still have a bit of work to do to but they’re on the right track and if the results are maintained further on then that is fantastic.”
Ramsay Health Care (ASX:RHC) has had several announcements this week including that together with its partner Sime Darby Berhad (Sime Darby), a decision has been made to explore selling its 50:50 joint venture in Asia, Ramsay Sime Darby Health Care (RSD).
Australia’s largest private hospital operator also said it had secured $1.5 billion in new bank loan facilities with two of its key relationship banks.
The facility matures in H1 FY26 and will be used to repay facilities maturing in H1 FY25.
Power said RHC continues to explore ways to diversify the source and tenor of its borrowings over time.
Furthermore, the company announced named David Thodey as chairman taking over from Michael Siddle in November.
Thodey is current chairman of global cloud-based accounting software group Xero (ASX:XRO) but is best known as the former Telstra (ASX:TLS) CEO. Siddle will stay on as a non-executive director after nine years as chairman.
Morgans has a 12-month target of $75.57 on RHC with an Add rating.
Brisbane-based medical software technology company ImpediMed (ASX:IPD) has also had no shortage of news for the market this week, with positive announcements boosting the share price by ~12%.
IPD announced more than 80% of the insured population in its key US target state of Michigan has access to reimbursement coverage for its bioimpedance spectroscopy (BIS) SOZO testing for lymphoedema.
Blue Cross Blue Shield of Michigan (BCBS Michigan) published a BIS-only medical policy covering testing using SOZO for cancer patients at risk for limb lymphoedema.
The achievement comes after the US National Comprehensive Cancer Network (NCCN) included BIS as part of its new guidelines announced in March.
The new NCCN Guidelines specifically named BIS as an objective measurement tool to identify early signs of lymphoedema.
Wilkie said large regional payors, like BCBS Michigan, are considered a key step in IPD gaining broad national coverage for SOZO.
Meanwhile, IPD announced the appointment of oncologist Dr Michael Seiden and Daniel Sharp, CFA as independent non-executive directors effective July 1, 2023.
IPD said Seiden brings a broad background of leadership positions across the cancer care and business ecosystems. Until his retirement in 2020, Sharp was responsible for equity capital market banking transactions and corporate advisory services in the life sciences and healthcare sector at Canaccord Genuity Australia.
He currently serves as a non-executive director at Alcidion (ASX:ALC) and Botanix Pharmaceuticals (ASX:BOT) and is a member of the Investment Committee for the Baker Heart and Diabetes Institute Foundation.
Wilkie said some on-market director buying in the stock during June has also helped boost confidence for investors.
Despite the positive buying Morgans has downgraded its rating on IPD from an Add to a Hold.
“We have downgraded our recommendation to a HOLD from ADD and think the recent strength in share price presents an opportunity to trim overweight positions,”
“We like the long-term growth outlook but see some short-term risk and view any pullback as presenting a buying opportunity.
“We maintain our 19 cents per share price target.”
Health imaging company Mach7 Technologies (ASX:M7T) is Wilkie’s stock of the week.
“Looking ahead, investors should expect a bumper Q4 with significant cash collections expected to draw FY23 operating cashflows to positive territory,” Wilkie said.
He said strong sales orders continue to roll through, with 55% of orders recurring in nature.
“A positive Q4 report shows M7T remains well positioned to meet or surpass FY23 guidance,” he said.
“This last quarter Mach7 will come home with a wet sail as far as the cashflows go.
“It’s just all due to time of collections and the problem with this one is quarter on quarter it’s pretty choppy and will be for a while. But you have to take a step back and not look quarter on quarter (to see) the business is progressing.”
Morgans has a $1.34 12-month target for M7T and an Add recommendation.
The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead. Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.
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