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Health & Biotech
Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 26 years, gives his take on the ASX health care sector for the week and his Powerplay.
Speaking with Stockhead, Morgans analyst Scott Power said all eyes were on quarterly reporting season with a plethora of companies due to report their Q1 FY25 results in the final two weeks of October.
“All those results come with commentary so plenty of news flow,” he said.
At 3.15pm (AEDT) on Friday the S&P/ASX 200 Health Care index (ASX:XHJ) was up 1.7% for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) was up 0.91% for the same period.
Power said some of the majors were up for the week including CSL (ASX:CSL), Cochlear (ASX:COH) and ProMedicus (ASX:PME).
“Healthcare has had a fairly good week,” Power said.
Microba Life Sciences (ASX:MAP), which has technology for measuring the gut microbiome, is Power’s pick of the week after announcing it had transferred its non-core Research Services unit to Clinical Microbiomics A/S (CMC), a global contract research organisation (CRO) based in Denmark.
Power said the move enables MAP to focus entirely on its core diagnostic microbiome testing business plus their clinical trial program. MAP has successfully completed a Phase 1 trial for its lead drug candidate MAP 315 in inflammatory bowel disease (IBD) and is preparing for Phase 2 trial.
Under the transfer agreement MAP would receive retained revenue and commission payments from existing and new contracts assigned to CMC for up to four years along with potential milestone payments, which could generate up to $3m in earnings.
“We think that is a pretty smart move from Microba,” Power said.
“Microba has positioned itself well with some good technology and a growing revenue stream on its diagnostic side.
“On the clinical trial side not a lot of value has been placed on that by the market so there is potential upside if they can get some good results with their program.”
In their joint annual letter to shareholders chair Pasquale Rombola, deputy chair Professor Ian Fraser and CEO Dr Luke Reid said MAP had evolved into a medical diagnostics company delivering the clinical value of microbiome testing, and a clinical-stage drug developer at the forefront of microbiome-based therapeutic development.
“We remain steadfast in our belief that the human gut microbiome represents one of the biggest untapped opportunities to improve human health, and that microbiome testing and therapeutics will become a routine part of healthcare,” they said.
Morgans has a speculative buy rating and 12-month target price of 33cents/share on MAP.
Power said markets were moving into a seasonally stronger part of the year.
“October and in particularly November and December tend to be stronger,” he said.
“We’ve called a rotation into small caps and that is still pretty patchy at the moment, particularly when we look at some of our names in the health care space which are sitting on lows.”
Power said ImpediMed (ASX:IPD), Aroa Biosurgery (ASX:ARX), Micro-X (ASX:MX1) and Mach7 Technologies (ASX:M7T) are four companies sitting on 12 month lows.
“We are yet to see that momentum come into those names and operationally they are all doing well,” he said.
“There’s some potentially good upside in those four names between now and December.”
Percheron Therapeutics (ASX:PER) is expecting a readout from its Phase 2B trial of its lead program avicursen (ATL1102) into non-ambulant boys with Duchenne muscular dystrophy (DMD) before the end of CY24.
Avicursen is an antisense oligonucleotide targeting CD49d, a receptor involved in white blood cell activity and has shown effectiveness in multiple inflammatory conditions, including multiple sclerosis and DMD.
“This will be a key milestone for the business and if successful will see a rapid re-rating of the share price along with potential licensing deals,” Power said.
Morgans has a speculative buy on PER with a 12-month price target of 24 cents.
Some good news for women who enjoy their coffee and looking to have a baby. A University of Queensland-led study has failed to find any strong links between drinking coffee during pregnancy and neurodevelopmental difficulties in children.
However, researchers are advising expectant mothers to continue following medical guidelines on caffeine consumption.
UQ’s Institute for Molecular Bioscience (IMB) Dr Gunn-Helen Moen and PhD student Shannon D’Urso from led an in-depth genetic analysis of data from tens of thousands of families in Norway.
The researchers said physiological changes during pregnancy prevented caffeine breaking down easily and it could cross the placenta and reach the foetus, where there are no enzymes to metabolise it.
“Scandinavians are some of the biggest coffee consumers in the world, drinking at least 4 cups a day, with little stigma about drinking coffee during pregnancy,” Dr Moen said.
“Our study used genetic data from mothers, fathers and babies as well as questionnaires about the parents’ coffee consumption before and during pregnancy.
She said participants also answered questions about their child’s development until the age of eight, including their social, motor and language skills.
“Our analysis found no link between coffee consumption during pregnancy and children’s neurodevelopmental difficulties,” Dr Moen said.
You can read more about the research paper in Psychological Medicine.
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.
At Stockhead, we tell it like it is. While ImpediMed and Aroa Biosurgery are Stockhead advertisers, the company did not sponsor this article.
Disclosure: The journalist held shares in Mach 7 at the time of writing this article.
Health & Biotech
Health & Biotech
Health & Biotech
