ScoPo’s Powerplays: ASX health stocks rise, Immutep surges 46pc on trial results
Health & Biotech
Health & Biotech
Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 26 years, is back after a holiday to explain what the movers and shakers have been doing in health and gives his ASX Powerplay.
Are you getting enough vitamin D? A recent study by researchers at the German Cancer Research Center shows consuming vitamin D on a daily basis could potentially reduce the risk of cancer-related deaths by 12%.
The study further indicated that individuals aged 70 and above derive greater benefits from regular vitamin D intake compared to younger individuals.
Moreover, those who started taking vitamin D preventively before being diagnosed with cancer experienced even more pronounced advantages.
The findings of this research were recently published in the journal Ageing Research Reviews.
The significance of vitamin D lies in its crucial role in maintaining overall health. It contributes to various aspects such as facilitating the absorption of calcium for stronger bones, ensuring proper functioning of the immune system, reducing inflammation within the body, supporting muscle growth and performance, and maintaining a healthy nervous system.
Typically, people acquire vitamin D through consumption of foods rich in the vitamin, by taking dietary supplements, or through exposure to sunlight, which triggers the production of vitamin D in the body.
Presently, the average recommended daily intake of vitamin D for most individuals ranges from 400 to 800 IU (10 to 20 micrograms). The recommended dosage varies primarily based on age, with 400 IU suggested for young babies and 800 IU for adults aged 71 or older.
And ASX health stocks are looking like they’ve been having their vitamins this week. At 12pm (AEST) on Friday the S&P/ASX 200 healthcare index (ASX:XHJ) was modestly up 0.40% for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) rose 0.20% for the same period.
“We are in this period where share prices are moving around a fair bit coming up to tax year end and the macro picture is still not helping,” Power said.
“But as we’ve spoken about companies that have near term catalysts and if they hit them the share price is re-rating pretty quickly,” Power said.
“It’s a pretty flat ocean but so much happening beneath the surface.”
One company with a catalyst due on Monday is medical device company EBR Systems (ASX:EBR), which is due to release results of its pivotal SOLVE-CRT (SOLVE) trial at Heart Rhythm 2023.
EBR is developing the world’s first and only inside-the-heart system for heart failure. It is due to release results of its pivotal SOLVE-CRT (SOLVE) trial at the event in New Orleans on Monday (AEST).
“We will either be popping the champagne cork or consoling ourselves but I am very optimistic,” Power said.
Immuno-oncology biotech Immutep (ASX:IMM) has seen its share price rise this week after confirmed that its lead drug efti, when combined with Merck’s drug Keytruda, achieved robust initial Overall Survival (OS) in first line non-small cell lung cancer (1L NSCLC) patients in the Phase 2 trial.
Results showed initial median overall survival of 25 months in patients with >1% PD-L1 expression, a key area of focus for future development of efti. Lung cancer is the second most common cancer.
These results are above previous reported rates of anti-PD-1 monotherapy and various other immune checkpoint combinations with and without chemotherapy.
The new data adds to the body of evidence that efti provides a powerful boost to the immune system.
“It is positive news in terms of improving the overall survival rates,” Power said.
Regenerative medicine and wound care company Avita Medical (ASX:AVH) has seen its share price tumble 28% this week despite reporting what Power described as a “solid Q1 results” in line with guidance at the end of last week.
Power said the key short-term catalyst he is focused on is the US Food and Drug Administration’s breakthrough device designation for the RECELL System for application in soft tissue repair, with an estimated market size US$1 billion, and vitiligo, with an estimated market size US$5.2 billion.
The designation is expected in June 2023 with the RECELL system currently used to treat burns.
He said another significant growth driver for AVH is the development of an automated RECELL device, to be known as RECELL-GO, which will automate the cell disaggregation reducing the time of the procedure.
AVH anticipates a FDA submission as a supplementary PMA for RECELL-GO by June 30, 2023 with FDA approval expected Q1 FY24.
“The results were in line with guidance and they re-confirmed their full-year guidance and the share price fell ~18% on the day which really surprised us but the backdrop to that is it was up 40% for the quarter so had a big run,” he said.
“We think it’s a great buying opportunity because they are expecting the FDA to approve an indication expansion.
“We can see major near-term catalysts which if successful will see the share price re-rate and we won’t have to wait long.”
Power said Audeara (ASX:AUA), which makes headphones designed to complement hearing aids and help people with entertainment experiences, is gaining traction not only in Australia but globally.
“They’re selling basically a set of headphones tuned directly to your level of hearing,” he said.
“The person has a properly validated hearing test with an audiologist and that set of headphones becomes individualised to you so whether you are talking on the phone or watching TV it is perfectly tuned to your hearing.
“That product is gaining traction in Australia and around the world but it is a microcap so not a lot of interest, but under the surface a lot of really interesting things are happening at Audeara.”
In terms of wholesale audiology Power said AUA is finalising launch preparations throughout EMEA for 11 countries with first purchase orders expected in Q4 FY23 and ramping through FY24.
He said six countries are flagged to launch in CY23 alone.
“Commentary suggests the launches are across Amplifon, WSA, and Demant clinics with final negotiations.
“No guidance at this stage on initial targeted clinics but we note each partner’s network is ~10x larger than Australia operations.”
AUA is also working on third party incorporation of technology into a musical instrument company. First purchase orders are expected in H1 FY24 with first product sales into consumer market by H2 FY24.
Furthermore, it has developed a strategic partnership with Taiwan-based Clinico, who are a 19.5% shareholder, to develop AUA branded healthy hearing ear-buds exclusively for Taiwan and China. The ear-buds will be a priority product for AUA with an ~18-month development timeframe.
Volpara Health Technologies (ASX:VHT) is Power’s stock of the week with the medical imaging stock due to report its FY23 results on May 25.
VHT specialises in the early detection of breast cancer. Over the past 12 months, under the guidance of its new CEO Teri Thomas, it has increased larger ‘elephant’ clients from 10 to 20, increasing average revenue per account in line with its revised strategy to target higher value, and more profitable products and clients.
“Teri Thomas, who started last April, has done a terrific job coming in as the new CEO,” Power said.
“It was a very smooth transition from previous CEO Ralph Highnam, who was the company founder, and is now the chief scientific officer maintaining a very scientific approach to the business while Terri gets on and builds the sales and commercial side really nicely.
“That has been reflected in a reasonably strong share price so we get the full year results because they have a March year end and likely we will get some guidance about what will happen in FY24.”
Morgans has made no changes to its VHT forecasts, Add rating or 12-month target price of $1.21.
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