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ScoPo’s Powerplays: ASX health stocks dancing to a positive tune
Health & Biotech
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- ASX Health sector is continuing its upward trend, marginally up this week 0.87%
- Sonic Healthcare announces a plan to acquire ~20% holding of Microba Life Sciences
- Mayne Pharma shares takes a hit after company warns it won’t hit positive earnings until next year
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 health and gives his ASX Powerplays.
A new study has found a sense of purpose lowers the risk of all causes of mortality, regardless of gender, race, or ethnicity, with the effects more pronounced among women.
The study was led by Boston University’s School of Public Health assistant professor Dr Koichiro Shiba and recently published in Preventative Medicine.
Previous research has also found strong associations between having a sense of purpose in life and greater longevity.
For the recent study, researchers analysed a diverse, large, and nationwide sample of older adults in the US looking for associations between a sense of purpose and mortality across gender, race, and ethnicity.
The data came from 13,159 adults over the age of 50 who took part in the longitudinal Health and Retirement Study in the US. After an eight-year follow-up period, 3,253 of the participants (24.7%) had died.
The analysis revealed those with the strongest sense of purpose lowered their risk of death by 15.2% compared to people with the least sense of purpose.
Results showed no significant differences in this association regardless of the participants’ race or ethnicity.
The findings showed that purpose was more strongly associated with longevity in women than men, although it provided a significant benefit for both.
Researchers found women lowered their risk of all-cause mortality by 34%, compared to men, whose risk was reduced by 20%.
To markets….
And ASX health care is also showing positive signs of health this week. By 1.30pm (AEDT) on Friday the S&P/ASX 200 healthcare index (ASX:XHJ) was up 0.87% in the past five days, passing the S&P/ASX 200 (ASX:XJO) rose 0.54%.
Australia’s inflation rate eased in October, adding to expectations that the rate of price rises may be nearing their peak.
The Australian Bureau of Statistics reported headline consumer price index for October was 6.9%, slowing from the 7.3% pace reported for September.
The trimmed mean tally was 5.3%, the RBA’s preferred measure that trims away large price movements, lower than the 5.4% pace recorded in September.
“What we are seeing is a reasonable amount of positivity coming back into the markets given the inflation numbers heading in the right direction and the peak of interest rates in sight,” Power said.
“The markets are having a bit of a rise including many of the healthcare names.”
Microba soars 60% on Sonic deal
Microba Life Sciences’ (ASX:MAP) share price rose 60%+ on November 29 after diagnostics giant Sonic Healthcare (ASX:SHL) announced it would invest $17.8 million to acquire a 19.99% shareholding.
Furthermore, SHL is seeking to acquire options for an additional 5% equity position, subject to shareholder approval. Exercise of the options would result in a further investment of $7.5 million in MAP.
MAP focuses on gut health with a revenue-generating business in microbiome testing. The two companies have agreed on the terms to deliver the microbiome testing technology into Australia, New Zealand, Germany, United Kingdom, Belgium, Switzerland and the US.
“That was very good news for Microba and now they have $44 million of cash when the around $18 million comes in from Sonic, so they are well positioned,” Power said.
“They are also looking to run some clinical trials around certain indications and they will be well cashed up to do so.”
He said the deal is an example of healthcare companies attracting strategic partners.
“It’s an interesting trend of companies focusing on what they are very good at and then attracting strategic investors which is a good endorsement,” he said.
Immutep enters second clinical trial collaboration with Pfizer and Merck
Immutep (ASX:IMM) has entered into a second clinical trial collaboration agreement with Merck (Germany) and Pfizer to study its LAG-3 candidate, Eftilagimod Alpha, combined with Avelumab to treat urothelial cancer.
The new Phase I clinical study called INSIGHT-005 will examine patients with urothelial cancer, and builds on Immutep’s strategy to increase target indications for its drug candidate when combined with standard of care drugs.
Furthermore, the collaboration with Merck and Pfizer also builds on encouraging clinical data previously reported from the INSIGHT-004 trial.
“This is a company with some very good science and we wouldn’t be surprised if there some sort of deal happening around this company given the quality of what they are doing,” Power said.
The IMM share price has risen more than 14% in the past five days.
MAP & IMM share price today
Mayne Pharma shares fall ~18% on disappointing trading update
Mayne Pharma (ASX: MYX) has plunged more 17.86% in the past five days after the company warned shareholders at its AGM on Wednesday it won’t hit positive earnings until next financial year.
In the trading update MYX said the company’s revenue had fallen sharply during FY 2023. For the four months ended October 31, MYF’s revenue from continuing operations was $59 million, down 29.5% over the prior corresponding period.
The fall is despite MYX generating $6.3 million in revenue from its new Nextstellis product, which wasn’t on sale a year ago.
According to MYF, Nextstellis is the first combined oral contraceptive in 50 years to contain a newly approved estrogen.
MYF’s dermatology division has been impacted by co-pay charges and price pressure which has been feeding through to its bottom line.
“They recently sold their clinical trials return and doing a capital return and special dividend so all was looking pretty good, but we’ve found out at the AGM that the dermatology part of the business has not been faring that well,” Power said.
Healius drops ~7% on trading update
Diagnostics specialist Healius (ASX:HLS) saw its share price fall 7.06% for the past five days after its trading update for the first four months of FY23.
HLS reported a 31% drop in YTD FY23 revenue to $617.5m, while EBITDA also fell 64% to $124.3m as it works to contain headwinds such as shortage in staff and GPs, as well as a decline in GP bulk billing rates.
Power said the update was below analysts consensus.
“Healius came out with commentary which was less than the analysts were thinking and that share price has come under reasonable selling pressure,” Power said.
“There is speculation they’re looking to sell their day hospitals and earlier in the year they sold their IVF business and they’ve been selling their GP practices.
“If the rumours are correct and they end up selling their day hospitals that leaves them as a day pathology and radiology operator so one could speculate they’re probably a takeover target.”
Morgans has reduced its 12-month target price for HLS from $3.96 to $3.77 but maintains an Add rating.
MYX & HLS share price today:
ScoPo’s Powerplay: Neuren Pharmaceuticals
Neuren Pharmaceuticals (ASX:NEU) is Power’s Stock of the week. Its share price is up ~325% in the past year with the US Food and Drug Administration (FDA) accepting for review a New Drug Application (NDA) of trofinetide for the treatment of Rett syndrome. It will be the first drug for the treatment of the rare neurological disorder.
The rise in Neuren’s share price saw the company promoted to the S&P/ASX 300 in the September quarterly rebalancing.
Power said there’s talk Horizon Therapeutics (NASDAQ:HZNC) will be potentially taken over by a big pharma company, which has made him think about the future for Neuren. Horizon develops medicines for rare and immune disease.
“With the takeover talk of Horizon, you ask the question ‘what about the Australian market?'” Power said.
He said two companies come to mind including Antisense Therapeutics (ASX:ANP), which is targeting Duchenne muscular dystrophy (DMD), and Neuren.
“Neuren’s large pharmaceutical partner Arcadia ran a positive Phase 3 trial and they’ve submitted the results to the FDA for approval who said they’ll make a decision on March 12 next year,” Power said.
“We’re confident that the decision will be positive and if that is the case then their drug will be on the market and trigger milestone payments and royalties to Neuren.”
The Neuren share price is currently ~$7.42 and Power reckons it’s a good buy below the $8 mark.
“Below $8 we thinking it Neuren presents good buying,” he said.
