ScoPo’s Powerplays: Mesoblast sinks Health sector, and how to live 24 years longer
Health & Biotech
Health & Biotech
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Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 26 years, explains what the movers and shakers have been doing in health and gives his ASX Powerplay.
What are your healthy daily habits? An observational study has identified eight lifestyle habits that, if adopted during midlife, may potentially prolong an individual’s lifespan.
The researchers conducted the study using data from medical records and questionnaires of 719,147 participants enrolled in the Veterans Affairs Million Veteran Program (MVP).
MVP aims to investigate how genes, lifestyles, military experiences, and exposures impact health and well-being in more than a million US veterans.
Presented by Xuan-Mai T Nguyen, a health science specialist at the Department of Veterans Affairs and a fourth-year medical student at Carle Illinois College of Medicine, the study was unveiled at Nutrition 2023, the annual meeting of the American Society for Nutrition.
The eight identified habits that may contribute to a significant increase in lifespan are:
The study’s data, collected between 2011 and 2019, focused on US veterans aged between 40 and 99 years, with more 30,000 participants passing away during the follow-up period.
The researchers analysed all-cause mortality using cox proportional hazard regression models and longevity using a multi-lifetable method, calculating the predicted longevity separately for male and female veterans.
Veterans who adopted all eight habits experienced a 13% reduction in overall mortality compared to those who adopted none of these habits.
The study revealed that men who embraced all eight habits at the age of 40 were predicted to live, on average, 24 years longer than men who did not adopt any of these habits.
Women who adopted all eight habits by age 40 would live, on average, 23 years longer compared to those who adopted none of them.
The study revealed that lifespan was significantly influenced by low physical activity, opioid use, and smoking with these behaviours linked to a 30% to 45% increase in the risk of death during the research period.
And ASX health stocks look like they could do with adopting a few healthy habits this week. At 11.30am (AEST) on Friday the S&P/ASX 200 Healthcare index (ASX:XHJ) had fallen 2.4% for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) was down 1.9% for the same period.
Power says the downgrade of US debt from the highest AAA rating to AA+ by rating company Fitch “took the wind out of the sail of the market this week”.
Mesoblast (ASX:MSB) returned from a trading halt to drop more than 50% on Friday after failing to receive US FDA approval for its stem cell treatment, remestemcel-L.
In its ASX announcement MSB says the US FDA had provided a complete response to its Biologics License Application (BLA) resubmission for remestemcel-L for the treatment of paediatric steroid-refractory acute graft versus host disease (SR-aGVHD) and will require more data to support marketing approval.
MSB CEO Silviu Itescu is remaining optimistic about getting the therapy to market for paediatric patients, despite it being the second time it has been knocked back.
“FDA’s inspection of our manufacturing process resulted in no observed concerns, the agency raised no safety issues across more than 1300 patients who have received remestemcel-L to date, and acknowledged improvements to our potency assay.
“We remain steadfast in making remestemcel-L available to both children and adults suffering from this devastating disease, and have received substantial clarity in how to bring this much-needed product to these patients”.
MSB says it intends to enrol adult patients at highest mortality risk with SR-aGVHD where existing therapy has not improved outcomes and 90-day survival remains as low as 20-30%.
The biotech has generated pilot data through its emergency IND program in adults showing a survival benefit with remestemcel-L in this target population.
“This is one of their key products, hence the big drop in share price with $500 million wiped off the market cap,” Power says.
“It’s disappointing for Mesoblast and it doesn’t help with sentiment across the sector but as we have been saying we still expect a strong year.
“There’s always going to be blips in the road and Mesoblast is a disappointing outcome but they remain confident they can ultimately get it through.”
Imaging company Mach 7 Tech (ASX:M7T) has dropped ~12% this week after releasing its Q4 FY23 results but Power reckons the market may have reacted to what really was not too bad a result.
Key metrics of Q4 FY23 include:
“Everything is going really well for the company but I think there was a timing issue with a receipt that came in at the end of the financial year so because the market is a bit skittish at the moment that just sent it down a bit but it’s recovered a touch,” Power says.
“We’re really positive on Mach 7 and think it is a good not only medium but long term story.
“They’re hitting their straps and winning good contracts so we’re telling everyone to get in and buy it.”
However, Morgans has reduced its 12-month target for M7T to $1.65 from $1.67 but maintains an Add rating.
Brisbane-based medical software technology company ImpediMed (ASX:IPD) is down this week after calls for a potential board spill.
In an announcement on Thursday, IPD says in accordance with ASX listing rules it had received notice from shareholders holding at least 5% of the votes that directors hold a general meeting of the company to remove four of the existing directors and replace them.
• Four resolutions are proposed for the removal of Don Williams, Amit Patel, David Anderson and Daniel Sharp as directors of the company; and
• Four resolutions are proposed for the appointment of each of McGregor Grant, Christine Emmanuel-Donnelly, Andrew Grant and Janelle Delaney as directors of the company.
IPD says it has also received a members’ statement under the Corporations Act which will be circulated to shareholders in accordance with the company’s requirements.
“The members’ statement outlines the rationale of the requisition, being a perceived disconnect between the Australian shareholders and the present board relating to the company’s recent capital raising and perceived risks to shareholder wealth,” the ASX announcement says.
Power says he remains positive on the long-term outlook for IPD, which Morgans recently upgraded to speculative buy with a 12-month target price of 25.3 cents after a solid Q4 Fy23 result.
Power’s pick for last week, soft tissue regeneration Aroa Biosurgery (ASX:ARX), has posted its Q1 Fy24 quarterly report with slightly higher than expected cash outflow for the quarter while cash receipts were solid.
ARX reported cash receipts of NZ$15.2 million, net operating cash outflow for operations of NZ$4.8 million and investing cash outflow of NZ$1.9 million, due largely to increased investment in manufacturing plant and equipment.
Power says investment in working capital, raw inventory, and payment of short-term incentives to sales employees also fell in the first quarter.
ARX finished the period with NZ$38.5 million cash as at June 30, 2023 down from $44.7 million at the end of March 2023.
ARX also reiterated its guidance for FY24 revenue growth of 25-30% and normalised EBITDA of NZ$1-2 million, likely skewed to H2 FY24.
Morgans have made no changes to its forecasts and maintain an Add recommendation with a 12-month $1.50 price target.
Power says in a down week health imaging company ProMedicus (ASX:PME) has been the star of the show, up ~3% .
While PME has had no news in recent days, last week week it announced it had inked a $24 million, 7-year deal with Memorial Sloan Kettering Cancer Center (MSKCC), one of the world’s most respected comprehensive cancer centres.
“Pro Medicus is a good quality growth company and it’s a got a big valuation but is a company that keeps delivering each reporting season,” Power says.
Under the deal, PME will provide its cloud-engineered Visage 7 Enterprise Imaging device to be implemented throughout MSKCC.
Actinogen Medical (ASX:ACW) is continuing the capital raising train.
ACW is undertaking a non-renounceable rights issue offer to eligible shareholders to subscribe for one new share for every 4.54 shares held as at the record date of August 14, 2023 at an offer price of 2.5 cents/ per new share plus one option for every two new shares issued under the offer.
The company is looking to raise up to ~$10 million through the issue of ~400 million new shares. ACW is focused on developing a therapy for neurological and neuropsychiatric diseases associated with dysregulated brain cortisol.
It’s lead compound Xanamem is being developed for Alzheimer’s Disease and depression, while ACW hopes to also study Fragile X Syndrome and other neurological and psychiatric diseases.
“We’ve said previous weeks the capital window is opening up and a lot of companies are topping up their cash positions,” Power says.
“Alzheimers is a very big market – if they’re successful the company will be worth a significant amount of money but it’s proven an area difficult to find an adequate treatment.”
Good news for Immutep (ASX:IMM) which this week announced it had received positive scientific advice from the Committee for Medicinal Products for Human Use of the European Medicines Agency (EMA) for the continued development of eftilagimod alpha (efti).
In May 2023, IMM requested scientific advice from the EMA regarding future development of efti, its soluble LAG-3 protein and first-in-class MHC Class II agonist.
IMM particularly wanted to know whether further toxicity studies would be required before it could seek marketing authorisation for efti in Europe.
Based on the available clinical data and acknowledgement that additional studies in animal models are unlikely to provide relevant information, the CHMP advised that further toxicology studies are not needed for a future Marketing Authorisation Application.
IMM has received similar advice was received from the US FDA as it relates to a potential future Biologics License Application.
Regenerative medicine and dual US listed company Avita Medical (ASX:AVH) (NASDAQ: RCEL) is Power’s pick of the week.
The company has recently announced successful US FDA approval for its RECELL device in expanded indications (soft tissue repair and Vitiligo).
The RECELL System was first approved in the US for treatment of severe burns in 2018. The company has run through Morgan’s 12-month price target of $5.41 but Power thinks it is still a good buy.
“They’ve given full year guidance of $50 million in revenue for CY23 but we expect there’s a possibility that will be upgraded with their half year result due on August 11,” Power says.
“It’s one we have certainly got an eye on and should know more next week.”
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