ScoPo’s Powerplays: ASX health stocks show signs of jittery recovery
Health & Biotech
Health & Biotech
Link copied to
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 ASX health stocks.
Ever wondered about the secrets of ageing? Well, we may just learn one or two from ageing in reptiles and amphibians. At 190 years old, Jonathan the Seychelles giant tortoise is considered to be the oldest known living land animal in the world.
An international team of 114 scientists, led by Penn State and Northeastern Illinois University, reports the most comprehensive study of ageing and longevity to date of reptiles and amphibians comprising data collected in the wild from 107 populations of 77 species worldwide.
Reported in the journal Science, the researchers found that protective phenotypes, such as the hard shells of most turtle species, contribute to slower ageing, and in some cases even ‘negligible ageing’ or lack of biological ageing.
Senior author and associate professor of wildlife population ecology at Penn State David Miller said anecdotal evidence exists that some reptiles and amphibians age slowly and have long lifespans, but until now no one had actually studied this on a large scale across numerous species in the wild.
“If we can understand what allows some animals to age more slowly, we can better understand ageing in humans, and we can also inform conservation strategies for reptiles and amphibians, many of which are threatened or endangered,” he said.
While the study is complex and looks at a range of factors being warm-blooded versus cold-blooded, didn’t make much difference – but having some protective mechanism did help reduce the impact of time.
Animals with certain protections such as armour, spines, shells or venom, do have lower ageing and greater longevity. Exactly why requires more research.
And we could all still do with a little protection in what was the final week of the 2022 financial year in Australia. June is a traditional time when Australian investors crystalise losses for the financial year, while equity markets have also felt pressure from economic forces.
By 12.30pm on Friday the S&P/ASX 200 healthcare index (ASX:XHJ) was cautiously up 0.27% for the past five days, passing the S&P/ASX 200 (ASX:XJO) index which was down 0.03%.
“There’s been a lot of volatility and people are talking about recession and we are well and truly in correction phase,” Power said.
“But our index here is only down about 8% for the 12 months and held up better than most.”
Morgans’ house view is more positive and it forecasts there will not being a recession either in the US or Australia in the near future. Remember a recession is two consecutive quarters of negative GDP.
“Our view is the RBA and Fed will be able to get interest rates to a point where inflation gets under control and while growth is expected to slow not to the point of a recession,” Power said.
“That gives us a reason to be optimistic particularly when you look at health care and life sciences which at the speculative end come under a lot of selling pressure for most of this year.”
Immuno-oncology clinical group Imugene (ASX:IMU) has seen its share price rise ~37% to 19 cents this week after reporting a win in the war against advanced gastric cancer.
Imugene’s Phase 2 study of HER-Vaxx in Her-2/Neu overexpressing advanced/metastatic gastric/GEJ cancer has shown a 41.5% survival benefit for patients treated with HER-Vaxx plus SOC chemotherapy compared to SOC chemotherapy alone.
The median overall survival (OS) for patients receiving HER-Vaxx plus chemotherapy was 13.9 months, compared to 8.3 months in patients treated with chemotherapy alone.
“Imugene is positive news and jumped significantly this week at one stage up around 50%,” Power said.
It hasn’t been as good news for Melbourne-based clinical stage biotech Hexima (ASX:HXL), which as Stockhead’s Gregor Stronach reported, saw its share price implode on news its Phase 2 trial of its lead product, pezadeftide for the treatment of onychomycosis (fungal nail infection), was a bust.
Pezadeftide is water-soluble plant-derived peptide and showed promising signs it could rapidly penetrate the nail bed to fight fungal infection.
In a statement to the ASX the company said its “Phase 2 clinical study of pezadeftide for the treatment of onychomycosis (HXP124-ONY-002) are inconclusive and will require further detailed investigation and evaluation”.
“The results seen in this study do not appear to correlate with results observed in its prior Phase 1 study (HXP124-ONY-001) and do not support moving directly into a Phase 3 program,” the statement said.
Hexima said it intends to conduct a detailed review of the complete clinical trial data set and study conduct and expects to report its findings when complete.
In its review following the news, Morgans said top-line readouts are typically a strong guide as to the broad pass/failure criteria and in its experience unlikely that the subsequent review will yield a reversal of fortunes, at least not in the broad catch-all population as intended.
The share price has fallen ~88% in the past five days to 0.03 cents.
Lumos Diagnostics (ASX:LDX) has announced completion of the retail component of its capital raise. Lumos has raised $3.3 million in the retail component of the cap raise and together with the institutional part, a total of $11.2 million.
Lumos specialises in rapid, cost-effective and complete point-of-care (POC) diagnostic test solutions to help healthcare professionals more accurately diagnose and manage medical conditions.
The company listed at $1.25 and its share price is now at 14 cents. The company said funds from the cap raise will be used for working capital.
“Lumos has been disappointing and they have shored up their balance sheet with a small capital raise,” Power said.
Morgans has substantially reduced its 12-month target price for biotech Antisense Therapeutics (ASX:ANP) from 58 cents to 27 cents. In its research note Morgans said “rising interest rates and inflation concerns continue to curb investor appetite for many of these long-dated names, particularly ones with potential funding shortfalls to reach major catalyst events”.
ANP in June announced a successful study into a new muscle disease indication for its lead drug, ATL1102. LGMDR2, also referred to as dysferlinopathy, is a rare genetic disease caused by mutations in the dysferlin gene which leads to significant reduction or absence of dysferlin protein levels in muscle fibres.
Morgans said while ANP is currently well funded ($21.7m as at 3Q22), fully-costed trial expectations through to futility analysis remain at $36.8m.
“While we believe there is potential to streamline costs (i.e. higher weighting to lower-cost jurisdictions in EU) and potential to raise non-dilutive funding via grants or partnerships, these are typically long-lead time projects with unknown timing and unlikely be flagged ahead of time due to commercial sensitivities,” the Morgans note said.
“We like Antisense long term but felt it was appropriate to bring back its price target to something more sensible,” Power said.
The company’s share price has fallen ~7% in the past five days to 7.5 cents.
Power has chosen health imaging company Mach 7 (ASX:M7T) as his stock of the week, believing it represents value having fallen 54% in the past year to 49 cents. Power said the company continues to win contracts and is moving into a growth phase.
“We can see it bouncing in July and their last release indicated a growing sales book,” Power said.
Morgans has a 12-month price target of $1.55 on Mach 7.
“I could have mentioned multiple companies that have been beaten down approaching June 30 and will probably pop in July but let’s try and call one name out,” he said.
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.