Health stocks were in much better form this week. Pic via Getty Images
Health & Biotech
Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 27 years, gives his take on the ASX healthcare sector for the week and his ‘Powerplay’ stock pick.
The ASX healthcare sector has shrugged off global geopolitical and macroeconomic concerns to record its first week in the green for a month.
At 3.05pm (AEDT) on Friday, the S&P/ASX 200 Health Care index (ASX:XHJ) was up 1.78% for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) rose 2.01% for the same period.
“We have had a bit of reprieve,” Power said.
“We were certainly feeling crestfallen and now we have a bit of a skip in our step.”
In some further good news for the ASX healthcare sector, infection prevention company Nanosonics (ASX:NAN) was up more than 13% on Thursday after announcing it had received US Food and Drug Administration (FDA) De Novo clearance for its flexible endoscope cleaning system Coris.
Nanosonics said it was continuing preparations for commercial launch in FY26 including obtaining the necessary approvals in the UK, Europe and Australia, which were expected during Q1 FY26.
The company said the device was initially approved for colonoscopes, and it was currently preparing follow-up predicate device approvals (510(k) submissions) to expand its use to cover other categories of flexible endoscopes. The company’s intent is to cover all major categories of flexible endoscopes over time.
Nanosonics has one other device on the market with Trophon for ultrasound decontamination becoming standard of care in several countries, including the US, Australia and UK.
In a note to client analyst Iain Wilkie said the approval of Coris marked a significant derisking event and evolution of Nanosonics away from a single asset company and expansion into another significant high-level disinfection needs category.
“The flexible endoscope market presents a significant opportunity, and we view Coris as having strong potential given its advantages over current standards,” Wilkie wrote.
“However, adoption rates are typically not linear so further updates over the coming 12 months will aid the shaping of market expectations.”
Morgans has an add rating on Nanosonics and has upgraded its 12-month target price from $4.50 to $5.50.
“The approval has been a long time coming and it will provide the next growth phase for the company so they’re in a pretty good position now,” Power said.
Power’s pick for last week, Sigma Healthcare (ASX:SIG), has released its full-year FY25 results as a stand alone company, before its official merger Chemist Warehouse on February 12.
Power said results were line with guidance, including underlying EBIT of $68m and revenue $4.8 billion.
EBITDA of $93.8m was up 79.3%, above Morgans forecast of $90m.
“There were no surprises in the result given the recent guidance provided, which they came in at the top end,” Power said.
“Given this is result is Sigma as a standalone business there is little commentary around the performance of the merged group.”
Power said the FY25 result of the merged group is due to be reported in August 2025 consisting of 12 months of Chemist Warehouse and four and a half months of Sigma.
Sigma is set to become an S&P/ASX 50 company following the March rebalance of ASX indices.
“We’re looking forward to Sigma be included in other global indices driving additional passive buying from index funds.
“The growth for the company going forward revolves around not only growth domestically but their plans internationally.
“Chemist Warehouse is already in Ireland, Dubai, China and New Zealand and they’re looking to expand in those regions but also into new regions.”
Power added that Sigma should be part of a client’s portfolio, given the strong Chemist Warehouse brand and growth prospects.
The broker has an add rating on Sigma and 12-month target price of $3.
Neurizon Therapeutics (ASX:NUZ) is planning to start two animal pharmacokinetic (PK) studies to lift a clinical hold on its Investigational New Drug (IND) application with the US Food and Drug Administration (FDA) for its lead drug candidate NUZ-001.
The FDA requested additional animal exposure data be provided to assess adequacy of systemic exposure to NUZ-001 during the relevant studies that have been undertaken.
The drug is being developed to treat amyotrophic lateral sclerosis (ALS), the most common form of motor neurone disease (MND), and potentially other neurodegenerative diseases.
Neurizon said it had submitted a formal request to the regulator for clarification on two short-term, low-cost PK studies necessary to lift a clinical hold.
In a sign of confidence, the biotech has decided to initiate these studies in advance of a formal response from the FDA following “extensive engagement between the board, management, and the company’s scientific and regulatory advisors”.
The company said the studies were expected to take approximately four months from start to completion.
“Positive data here is required to remove the roadblock currently in the way on its entry into the Healey ALS Platform trial,” Wilkie wrote in a note to clients.
“The delays push timelines to trial commencement by about 6 months, and to the end of the 12-month buffer we originally placed on the program for unforeseen delays.”
Despite the delays, Morgans maintains a speculative buy on Neurizon and 12-month target price of 42 cents.
Dual-listed (ASX and Nasdaq) wound care company Avita Medical (ASX:AVH) has entered into a new contract manufacturing deal for its PermeaDerm biosynthetic wound matrix along with an amendment to its existing exclusive distribution agreement with Stedical Scientific, Inc as they work towards being cash flow positive in late CY25.
PermeaDerm is an FDA-cleared biosynthetic matrix for wound healing, which is reimbursable across US inpatient and outpatient settings, which can be used with Avita’s Recell devices and Spray-On Skin Cells for various wound types.
Under terms of the new contract manufacturing agreement Avita said it will manufacture PermeaDerm at its state-of-the-art manufacturing facility in Ventura, California.
The company said the deal ensures continued availability of PermeaDerm while optimising Avita’s production capabilities to meet growing market demand.
An exclusive distribution agreement with Stedical Scientific, originally executed in January 2024, has been amended to align with the new manufacturing arrangement and modifies revenue-sharing terms, establishes performance-based milestones, and extends the contract term.
Under these new terms, Avita will retain 60% of the average sales price from PermeaDerm sales while remitting 40% to Stedical after deducting manufacturing costs.
Prior to the amendment, each party retained 50% of the average sales price from the sale of PermeaDerm.
“They have their approvals in place and it’s now about building the sales of each of their products,” Power said.
Avita has forecasted commercial revenue for the full-year 2025 to be in the range of $100m to $106m, reflecting
growth of approximately 55% to 65% over the full-year 2024.
Morgans has an add rating on Avita and a 12-month target price of $4.36.
EMVision Medical Devices (ASX:EMV) has announced its portable First Responder proof-of-concept device to detect strokes and traumatic brain injury (TBI) has taken to the skies in a series of volunteer scans in collaboration with the Royal Flying Doctors Service (RFDS) and Australian Stroke Alliance (ASA).
The RFDS staff received preliminary training in the operation of First Responder and the scans were successfully completed under an existing ethics approval.
First Responder demonstrated an ability to withstand the physical stress, environmental conditions and operational constraints unique to aeromedical retrieval.
The backpack-sized First Responder is a lighter version of EMVision’s Emu, which is designed for the hospital setting, and is itself much less heavy than traditional computed tomography or MRI scanners.
In treatment of stroke and TBI, medics say ‘time is brain’, meaning rapid triage and treatment is critical. Each minute of delay can lead to irreversible brain damage, which makes First Responder a valuable tool.
EMVision has applied for ethics approval for a study in which the RFDS will enrol at least 30 patients for an eight-week “usability and workflow implementation study”.
A further ethics application is also progressing in which the Melbourne Mobile Stroke Unit will using the device for scans in acute suspected stroke cases.
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Health & Biotech
Health & Biotech
Health & Biotech
