• The ASX Health sector has again fallen this week in line with broader markets and is down 1.69% for the week
  • Avita Medical submits a PMA supplement application to the US FDA for its burn treatment RECELL system
  • Proteomics International announces its ProMarkerD has been selected for a briefing to UK clinicians

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.

Researchers from the University of Tsukuba in Japan have revealed a signaling pathway within brain cells that regulates the length and depth of sleep.

Senior author of the study into sleep Professor Hiromasa Funato said researchers identified a mutation that led to mice sleeping much longer and more deeply than usual.

The researchers found that this was caused by low levels of an enzyme called histone deacetylase 4 (HDAC4), which is known to suppress the expression of target genes.

Previous studies on HDAC4 have shown that it is greatly affected by the attachment of phosphate molecules in a process known as phosphorylation.

When this occurs, HDAC4 tends to move away from the cell nucleus, and the suppression of certain proteins is reduced.

The researchers were interested in whether this phosphorylation of HDAC4 would affect sleep.

“We focused on a protein called salt-inducible kinase 3, otherwise known as SIK3, which phosphorylates HDAC4,” Professor Funato said.

Researchers found when there was a lack of SIK3 or when HDAC4 was modified to prevent phosphorylation, the mice slept less. When the mice had a more active version of SIK3, which increased the phosphorylation of HDAC4, they slept a lot more.

They also identified a further protein, LKB1, which phosphorylates SIK3, and has similar sleep-suppressing effects when deficient.

Study co-senior author, Professor Masashi Yanagisawa said findings indicate a signalling pathway within brain cells from LKB1 to SIK3 and then to HDAC4.

“This pathway leads to the phosphorylation of HDAC4, which promotes sleep, most probably because it affects the expression of sleep-promoting genes.”

Thee results provide an insight into how sleep is regulated, which could lead to a greater understanding of sleep disorders as well as development of new treatments.


To markets….

And ASX health stocks are looking a little tired at the end of a tough 2022.  By 1.30pm AEDT on Friday the S&P/ASX 200 healthcare index (ASX:XHJ) was down 1.69% in the past five days, while the S&P/ASX 200 (ASX:XJO) was fairly flat, up 0.07%.

“The healthcare market has been fairly flat along with the ASX this week with a bit of up and down,” Power said.

“But overall it has been a fairly tough year for the ASX health stocks.”

The XHJ is currently down more than 7% year to date.


Avita up ~6% after US FDA submission

Wound care company Avita Medical (ASX:AVH) has seen its share price rise 6.33% in the past five days after announcing the submission of a premarket approval (PMA) supplement application to the US Food and Drug Administration (FDA) for its burn treatment RECELL system.

The supplement, if approved, will expand the indication of RECELL to include soft tissue repair.

“The submission is a significant milestone in our effort to expand the label of RECELL into the soft tissue repair market opportunity,” said Avita Medical CEO Jim Corbett.

“If they get that it is a real positive tick,” Power said.

Chairman Lou Panaccio told shareholders at the Avita AGM this week the company had more than $88 million in cash reserves as at September 30.

“Whether the topic is the company’s sales, financial position, growth into new markets, or corporate health, AVITA Medical continues to be in a strong position,” he said.


Further good news for Proteomics International Laboratories

Proteomics International (ASX:PIQ) has announced that the National Institute for Health and Care Excellence (NICE) has selected its ProMarkerD for a briefing to UK clinicians, managers and procurement professionals.

The Medtech Innovation Briefing, also known as NICE advice, advise that the PromarkerD is effective at predicting renal function decline in people with type 2 diabetes.

The independent experts appointed by NICE advised that the technology is novel and could lead to a decrease in the number of people developing end-stage renal disease, reducing hospitalisation and the need for dialysis.

“This provides PIQ with some good sales upside in the next 12 months,” Power said.

PIQ is a global leader in proteomics, which is the industrial scale study of the structure and function of proteins. The company has a core analytical services business, which provides specialist contract research, a commercial ready diagnostic for diabetic kidney disease, and another two tests in the pipeline with clinical readout over the next 12 months.

PIQ is expecting to also announce a major deal with Sonic before the end of 2022.


ScoPo’s Powerplay:

Nanosonics (ASX:NAN) is Power’s pick for this week.

He said Nanosonics share price continues to be volatile and around the $4.40 mark is good buying heading into H1 FY23 reporting season.

“We have at A$4.91 target price and believe following a recent trading update Nanosonics will deliver a strong H1 result aided in part by the currency and a successful transition to a direct sales model (transitioning away from GE),” he said.

“Since its AGM in November, the NAN share price has fallen ~20% and is now trading ~23% below Morgans’ target price and provides an opportunity to upgrade our recommendation to add from hold.

“The positive trading update provided at the AGM noted revenue up 42% for the four months to the end of October and a successful transition to a direct sales model in the US.”

Nanosonics has developed and commercialised the trophon EPR device, a unique automated disinfection technology, which was the first major innovation in disinfection for ultrasound probes in more than 20 years.

The trademarked CORIS device is attempting to solve a complex disinfection problem in removing the biofilm from the flexible endoscope.

Power said management remains confident of a commercial launch into selected regions subject to regulatory approvals in CY23.

“We believe the CORIS will become a big contributor to revenue and profit in the medium term, however we remain cautious on regulatory approval timing and at this stage only contribute a modest revenue contribution from FY24,” he said.


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