- ASX health stock fall in past five days in line with broader markets as economic and geopolitical factors weigh heavily
- ResMed falls as Eli Lily reports positive Phase 3 results of weight-loss drug in obese people with obstructive sleep apnoea
- ImpediMed introduces measures to grow sales, reduce operating costs and boosts leadership team
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.
A new study from the University of South Australia (USA) is putting common experiences of pelvic pain at the front of pain education to develop better pain management strategies and improved outcomes.
USA says persistent pelvic pain is an umbrella term for pain in the pelvic area (below the belly button) which may be accompanied by symptoms suggestive of gynaecological, lower urinary tract, bowel, sexual, and pelvic floor dysfunction.
In Australia, one in two women report that pelvic pain affects their ability to undertake daily activities such as work, study, or exercise.
Using semi-structured interviews, the consumer-centric, qualitative study captures experiences of 20 females with pelvic pain who had engaged in pain science education and seen improvements.
The study identified four important pain concepts that females say can help with pain management including:
- A sensitised nervous system can lead to overprotective pain – providing a biological explanation for pelvic pain and validating that pain is real, and not ‘in your head’.
- Pain doesn’t always mean my pelvis is damaged (although sometimes it does) – provides reassurance that not every flare up means your pelvis is damaged or getting worse and that tissue pathology (like endometriosis lesions) is one piece of the pelvic pain puzzle.
- How I think, feel, and ‘see’ my pain can make it worse – this concept speaks of how there are many factors that can influence pelvic pain and many ways to manage pain beyond medication or surgery.
- I can change my pain… slowly – Providing hope and empowerment to pursue pain improvement as a viable goal.
The study follows the recent announcement of the South Australian Inquiry into endometriosis, and the Australian Government’s 2022-23 Budget commitment of $58.3 million commitment to improving women’s health, in particular endometriosis and pelvic pain.
UniSA researcher and PhD candidate Amelia Mardon says learning how pain works is pivotal to managing persistent pain.
“But while preliminary evidence suggests that pain science education can help women with persistent pelvic pain, there has been little information about what these consumers value learning,” Mardon says.
“This study addresses this gap by capturing people’s experiences of persistent pelvic pain and identifying what knowledge could help others.”
Senior researcher, UniSA’s Professor Lorimer Moseley says validating pain may be particularly poignant for women with pelvic pain because of the extensive history of prejudice and dismissal of their pain, especially by healthcare professionals.
“When you’re told that your pain is ‘all in your head’, it’s incredibly disempowering which can have significant effects on physical and mental health,” Prof Moseley says.
The researchers say while further research is needed with more diverse samples, including expert clinicians, the study hopes to provide clinicians with better support to help women with persistent pelvic pain.
To markets…
And ASX health stocks are feeling the pain this week. At 1pm (AEDT) on Friday the S&P/ASX 200 healthcare index (ASX:XHJ) was down 4.45% for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) fell 3.28% for the same period.
“Higher bond rates and Middle East tensions are weighing on the markets,” Power says.
“The US Fed has also basically pushed back expectations of interest rate cuts to the end of the year and I think we are in a similar position in Australia so that has taken the shine off markets as well.”
However, Power says the current quarterly earnings season in the US is reason to still feel optimistic.
“The earnings profile of many of the larger healthcare companies is still looking pretty good heading to the end of the year so we are staying bullish,” he says.
Australia’s biggest healthcare name, blood products giant CSL (ASX:CSL) hav fallen more than 3%, while other big names including pathology and radiology provider Sonic Healthcare (ASX:SHL) and leader in obstructive sleep apnoea (OSA) and other sleep-related respiratory disorders ResMed (ASX:RMD) also had strong falls this week.
RMD fell ~5% in the past five days after US drug developer Eli Lilly reported much-anticipated headline results from its Phase 3 study (SURMOUNT-OSA).
The study investigated use of Eli Lily’s weight loss drug Tirzepatide (branded Zepbound in the US, Mounjaro ex-US) in obese people with OSA who are unwilling or unable to use continuous positive airway pressure (CPAP) devices as well as in combination with those who are currently on CPAP therapy.
Morgans healthcare analyst Derek Jellinek says the study met its primary endpoints. Tirzepatide was shown to significantly reduce the apnoea-hypopnea index (AHI) measuring the severity of sleep apnoea by the average number of times per hour someone has an apnoea (stopped breathing) or hypopnea (a 30% or greater reduction in airflow)) compared to placebo.
“Specifically, in participants not on CPAP therapy the drug led to a mean AHI reduction from baseline of 27.4 events per hour compared to a mean AHI reduction from baseline of 4.8 events per hour for placebo,” he says.
“In key secondary outcomes, tirzepatide led to a mean AHI reduction from baseline of 55% compared to 5% from baseline for placebo and also led to a mean body weight reduction of 18.1% from baseline, compared to 1.3% from baseline for placebo.”
In participants on CPAP therapy, tirzepatide led to a mean AHI reduction from baseline of 30.4 events per hour compared to a mean AHI reduction from baseline of 6 events per hour for placebo, with a mean AHI reduction from baseline of 62.8% (-6.4% from baseline for placebo) and a mean body weight reduction of 20.1% from baseline (2.3% from baseline for placebo).
“Given there is a well-known and established linear correlation between obesity and OSA, we had previously flagged the likelihood of the trial being positive,” Jellinek says.
However, Morgans do not see Eli Lily’s results as a major competitive threat to CPAP given with Jellinek sighting several reasons including:
- The study was not designed to compare tirzepatide directly to CPAP therapy or aimed at establishing a combination therapy
- The study shows that many patients will still have clinically relevant AHI even after following treatment with tirzepatide, which indicates they should continue treating their OSA with other forms of therapy, such as CPAP.
- Previous studies have shown CPAP can decrease AHI by up to 73%
- Epidemiological data from 529k OSA patients prescribed GLP-1s showed 10% are more likely to start CPAP therapy than patients not prescribed GLP-1s, along with higher CPAP re-supply rates 1 year (+300bp) and 2 years (+500bp) post set-up with CPAP.
RMD is due to report their quarterly result next week.
“It’s possibly going to be a tough quarter for them,” Power says.
“The long-term fundamental story hasn’t changed but the short volatility is still there so you just have to take that long-term view with your portfolio.”
ImpediMed moves to grow sales
Power says ImpediMed (ASX:IPD) has been introducing measures to grow sales and more tightly manage cashflow and establish greater cost discipline in the business with the aim of reducing annualised operating costs by 10%-15% by the end of FY24.
IPD focuses on secondary lymphoedema, which is predominantly caused by damage to lymph nodes due to cancer or treatment for cancer with the condition causing swelling of certain parts of the body, usually arms or legs.
The company’s SOZO device, incorporating its trademarked L-Dex technology and bioimpedance spectroscopy (BIS), non-invasively, accurately, and quickly measures and monitors fluid status.
BIS for prevention of breast cancer-related lymphoedema is now included in the globally referenced National Comprehensive Care Network (NCCN) guidelines and the Multinational Association of Supportive Care in Cancer (MASCC) guidelines.
The SOZO device is the only US FDA-cleared and clinically validated BIS solution for the early assessment and prevention of lymphoedema.
The company this week announced the appointment of Tim Benkovic to the role of senior vice president sales and customer success, based in the US and other organisational changes.
Benkovic has more than 30 years experiences in the healthcare sector including most recently at Nanosonics (ASX:NAN), where IPD says he led a large team of sales professionals organised in a pod structure across North America, which achieved significant growth.
“There’s been a fair bit of change with Impedimed at the board level with a new CEO and more management changes coming through,” Power says.
“Importantly, the new team has got in and reviewed the cost base and said it’s going to be between 10-15% lower on a $30m cost base by the end of FY24, which is a good metric to look at and each quarter we should start to see the sales momentum pick up.”
Morgans has a speculative buy rating on IPD and 12-month target price of 20.4 cents.
Imricor keeps up positive news
Focused on improving safety in cardiac catheter ablation, Power says Imricor Medical Systems (ASX:IMR) continues to have positive announcements.
Following the recent $15m capital raising competed in March, Power says IMR has had three positive announcements relating to procedures recommencing at a major European hospital, first orders from another European hospital and another site is ready to participate in the clinical trial to obtain US FDA approval in atrial flutter.
“We expect more newsflow over the next six to nine months around sales orders,clinical trial updates and additional approvals which will continue to attract investors into the name,” Power says.
IMR is at the forefront in advancing MRI-compatible products within the $8 billion cardiac catheter ablation market, aiming to enhance effectiveness and safety for patients and medical staff alike.
Morgans has a speculative buy rating on IMR with a 12-month target price of 96 cents.
Telix up by 9% after strong Q1 results
In some good news for the market Telix Pharmaceuticals (ASX:TLX) is up ~9% in the past five days after announcing its Q1 2024 financial performance, including unaudited total revenue of US$114.9m, an increase of 18% on the prior quarter.
Revenue was primarily generated from sales of Telix’s prostate cancer imaging product Illuccix. US revenue grew by 18% to US$111.8m, compared to 11% growth between Q3 2023 and Q4 2023.
“It’s a strong quarterly result from Telix which has been rewarded by the market,” Power says.
“The radiopharmaceutical space is attracting a lot of investor attention globally and we expect this to continue.”
The CSL, RMD, IPD, IMR & TLX share price today:
ScoPo’s Powerplay – Sonic Healthcare good value
Sonic Healthcare is Power’s pick of the week with the internationally renowned healthcare provider sitting second behind CSL on the the ASX’s biggest healthcare stocks list presenting what he sees as good value following weakness.
SHL specialist operations in laboratory pathology, radiology, general practice medicine and corporate medical services.
“At around $26 we feel that is compelling and it’s a very solid company with lots of good tailwinds in terms of more testing in populations, continuing spend on healthcare and preventative medicine, so it ticks all those boxes,” Power says.
“Yet it has underperformed the broader market for quite a while now and we feel like that has been overdone.”
Morgans has a 12-month target price of $34.94 on SHL with an add rating.
“Sonic is one of our key picks in the large cap healthcare space,” Power says.
The SHL share price today:
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 Sonic Healthcare and CSL at the time of writing this article.