ScoPo's Powerplays: ASX health stocks fall in stormy week but regain ground on Friday

ASX health stocks fall 0.37% over past five days in line with broader markets
Cardiac company Imricor’s VISABL-AFL trial for US FDA starts in US
LBT Innovations has secured a major deal with big pharma AstraZeneca

Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 27 years, explains what the movers and shakers have been doing in health and gives his ASX Powerplay.

Massachusetts General Hospital and Harvard Medical School researchers have found that taking aspirin may help reduce colorectal cancer risk in people with unhealthy lifestyle choices.

In the study, recently published in the journal JAMA Oncology, researchers recruited ~108,000 adults with an average age of 49 for the study and followed them up for more than 30 years.

Participants were evaluated for five lifestyle factors associated with colorectal cancer including BMI, smoking, alcohol intake, physical activity, and diet, and were given a healthy lifestyle score from zero to five.

Scientists also tracked participants’ regular aspirin use, which was defined as two or more standard-sized tablets per week.

At the end of the study researchers found that the 10-year cumulative incidence of colorectal cancer was 1.98% among participants who regularly took aspirin, compared to 2.95% in those who did not.

When examining absolute risk reduction, the researchers discovered that the largest reduction occurred in participants who took aspirin and had the unhealthiest lifestyle scores.

The most significant differences in colorectal cancer risk reduction were observed in participants who took aspirin and had lifestyle risk factors related to BMI and smoking.

The researchers concluded the study suggests that lifestyle risk factors may be useful to identify individuals who may have a more favourable risk-benefit profile for cancer prevention with aspirin.

Previous studies have also linked aspirin use to a lower risk of colorectal cancer.

To markets…

And ASX healthcare stocks look like they could do with an aspirin this week overall but… are generally faring better than the broader market, regaining ground in a stronger Friday.

At 11.20pm (AEST) on Friday the benchmark S&P/ASX 200 (ASX:XJO) was down just 0.37% in the past five days, while the S&P/ASX 200 healthcare index (ASX:XHJ) fell -2.5% for the same period.

“It’s been a choppy week to say the least after worse-than-expected US job numbers and interest rate hikes in Japan sent markets into a spin last Friday and Monday but have steadied over the last few days,” Power says.

“Leading into the US elections there’s always a bit of volatility but the point to focus on is potential US interest rate cuts which have been flagged for September and if that happens I think you’ll see the market rotate back to growth-oriented companies.”

He says with the reporting season underway investors can expect some more price volatility.

Power says among large-cap health names to report full year results next week is ProMedicus (ASX:PME) and Cochlear (ASX:COH).

He says CHL is looking fairly expensive from a valuation perspective but Morgans is confident the hearing specialist will hit its FY24 numbers.

“Our FY25 numbers are 10% upside on FY24 and we are slightly below consensus,” he says.

“It’s a quality company and if there’s any sort of price weakness it’s worth jumping into and if it gets back to $312 that’s probably a good entry point.”

He says PME is also a great company but from a valuation perspective the health-imaging stock always looks expensive.

“We expect them to hit their FY24 consensus numbers and there’s a fair degree of growth coming into FY25 and it will just be a question of how the market reacts,” he says.

Imricor’s cardiac ablation trial starts in US

Imricor Medical Systems (ASX:IMR) this week announced the first real-time iCMR-guided cardiac ablation in the US has been performed at The Johns Hopkins Hospital in Baltimore as part of the company’s pivotal clinical trial supporting US Food and Drug Administration (FDA) approval of its products.

IMR is succeeding in the long desire of clinicians to do cardiac ablations under the superior imaging capabilities of magnetic resonance imaging (MRI) rather than X-ray.

Protected by more than 70 patents, its equipment looks and feels the same as the ones physicians currently use for the procedure but are said to be safe and effective for use inside the strong magnetic fields created by an MRI scanner.

Johns Hopkins is the second hospital to join IMR’s Vision-MR Ablation of Atrial Flutter (VISABL-AFL) clinical trial.

IMR says the VISABL-AFL trial for FDA approval is a repeat of the trial the company already did in Europe for CE Mark approval, which showed 100% success at the three-month follow-up.

The company says it’s on track to complete enrolment in VISABL-AFL this calendar year, and hopes to have FDA approval by mid-2025.

IMR is also about to start its pivotal European ventricular tachycardia (VT) trial VISABL-VT.

“That will be another key milestone for the company,” Power says.

In July, IMR undertook a $35m capital raising and Power says it’s now well positioned to execute on its two key clinical trials.

Morgans has a speculative buy rating and 12-month target price of 96 cents on IMR.

LBT up 40pc on lucrative AstraZeneca deal

LBT Innovations (ASX:LBT) surged by 40% on Wednesday after announcing the sale of five APAS Independence instruments to global pharma AstraZeneca.

LBT says the contract value ranges between $3.4m and $4.1m, depending on the maintenance and support services chosen by AstraZeneca with the bulk of this amount to be received as instruments are installed over the next six months.

The APAS Independence instrument is an advanced microbiology automation system designed to streamline the process of analysing culture plates used in laboratories, selling for around $500k each.

In addition to the initial purchase, AstraZeneca will also receive annual maintenance and support services for seven years.

“AstraZeneca completed a successful period of validation and that triggered them to put the purchase order in for five of the units, which is great,” Power says.

“LBT says there’s potential for further orders from AstraZeneca and they’re also negotiating with other large pharmaceutical companies for similar purchase orders.”

MedAdvisor shows strong growth

Software company MedAdvisor (ASX:MDR) has reported a solid Q4 FY24 result, which Power says showed strong growth in its core markets of US and ANZ.

Q4 FY24 operating revenue was up 32% on pcp to $22.3m with the US up 34.2% to $15.3m and ANZ up 27.3% to $7m.

Power says the company’s full year FY24 results came in with guidance, including revenue of $122.1m, up 24.6% on pcp. FY24 gross profit is up 25.1% on pcp to $74.2m.

“They posted a profitable year and the outlook for FY25 is looking very positive and they’ve mentioned momentum in the first quarter has given them confidence,” he says.

MDR provides pharmacy-driven, patient-engagement solutions to help remove barriers of care. The company works with more than 33,500 pharmacies in the US to deliver programs to help patients take their medication safely and effectively.

In Australia, MDR has connected over 3.7 million patients through more than 95% of Australian pharmacies.

ScoPo’s Powerplay – CSL to report FY24 results next week

Australia’s biggest healthcare company, blood products giant CSL (ASX:CSL), is Power’s pick of the week and is also among the big names due to report its full year FY24 results next week.

“With CSL we have a positive stance and think from an operational point of view it is recovering from Covid-19 impacts and think they will hit their guidance,” Power says.

“It’s large and it’s liquid and we are comfortable that they will post a good result.”

Power says CSL’s FY24 guidance looks achievable with NPATA US$2.9-3bn, up 12-15% on pcp mostly on improving fundamentals in its Behring’s Plasma division.

“From an operation perspective they are also showing signs of improvement,” Power says.

Morgans has an add rating for CSL and 12-month target price of $315.35.

At Stockhead, we tell it like it is. While Imricor is a Stockhead advertiser, the company did not sponsor this article.

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.

Disclosure: The author held shares in CSL at the time of writing this article.