Scott Power: Telix achieves sustained growth; Pro Medicus wins another contract

Radiopharmaceuticals company Telix reports sustained revenue growth in Q4 FY24
ASX health stocks fall about 2.8% over past week
Neuren’s partner Acadia submits marketing authorisation application in Europe for trofinetide to treat Rett syndrome

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.

This week, Scott Power told Stockhead the major JP Morgan conference in San Francisco (Jan 13-16) has driven a lot of announcements from major global healthcare companies across pharmaceuticals, medical devices and diagnostics.

“That conference runs all of this week and several Australian companies are over there presenting,” he said.

Among those presenting was radiopharmaceuticals company Telix Pharmaceuticals (ASX:TLX), which provided its Q4 FY24 trading update, showing sustained revenue growth.

The dual Nasdaq-listed Telix reported unaudited revenue for the quarter of ~US$142 million (A$218m), representing an increase of 46% on the previous corresponding period (pcp) and a 5% uptick on Q3 FY24.

Power said Telix’s revenue is currently predominantly generated from sales of Illuccix, its diagnostic radiopharmaceutical for prostate cancer PET imaging.

Total FY24 unaudited revenue of ~US$517m (~A$783m) exceeded previous guidance of US$490-$510m (A$745-$776m), representing a 55% increase over FY23.

Telix intends to provide FY25 guidance when it reports audited FY24 annual results on February 20.

During the week Telix also announced it was acquiring a pipeline of next-generation therapeutic candidates, a proprietary novel biologics technology platform, and a protein engineering and discovery research facility from antibody engineering company ImaginAb.

“The radiopharmaceutical space is still very topical with lots of activity,” Power said.

“They’re doing really well and are one of the leading biopharmaceutical stocks in Australia.”

Power also noted that Telix has today (Friday) announced it’s received a positive decision on the Marketing Authorization Application for Illuccix, which was submitted in Europe via a decentralised procedure.

Pro Medicus continues lucrative contract wins

Health imaging stock Pro Medicus (ASX:PME) has announced its wholly-owned US subsidiary Visage Imaging has inked a $33 million, nine-year deal with the University of Kentucky (UK HealthCare).

Pro Medicus said UK HealthCare is a comprehensive healthcare system that includes a network of hospitals, clinics, and specialised medical services.

Based on a transactional licensing model, the contract will see Pro Medicus’s Visage 7 cloud-based platform replace UK HealthCare PACS and vendor-neutral archive systems.

The Visage 7 system includes the Viewer, Open Archive, and Workflow modules. Pro Medicus said Visage 7 would also provide enterprise distribution of images integrated to UK’s electronic health record (EHR).

Planning for the rollout is set to start immediately with go-live targeted for Q2 CY25.

UK Healthcare joins a growing list of academic clients for Pro Medicus, which also announced in December that Visage Imaging had secured a five-year $15m contract with Duke University Health System.

“The cadence of deals from Pro Medicus was quite solid over 2024 and it looks set to continue this year,” Power said.

“Its share price is above $250 per share and it was one of the standout performers in 2024 and in reality over the past 10 years.”

Morgans has a hold rating on Pro Medicus, which has run through its 12-month target price of $225.

Power’s Powerplay:

Power has chosen another wound-care company, PolyNovo (ASX:PNV), as his pick for this week after last week backing Aroa Biosurgery (ASX:ARX).

PolyNovo is due to report its H1 FY25 result in mid-February.

“We think PolyNovo looks pretty interesting at the moment and is setting itself up for strong growth into the second half of the year,” Power said.

“They provided a trading update in December for the first five months to the end of November and had unaudited revenue of just under $50 million.

“When you look at consensus for the full year sits at $133 million and we would be confident they can get very close and expect positive commentary to that effect and their 25% plus revenue growth is continuing.”

Morgans has an add rating on Polynovo and 12-month target price of $2.85.

ASX healths stocks fall, catalysts coming up

On Friday morning the S&P/ASX 200 Health Care index (ASX:XHJ) was down 2.77% for the past week, while the benchmark S&P/ASX 200 (ASX:XJO) was flat for the same period.

Power said there were upcoming catalysts in the sector with US-based cardiac play EBR Systems (ASX:EBR) expecting US Food and Drug Administration (FDA) approval for the WiSE CRT (cardiac resynchronisation therapy) system in Q1 CY25.

The EBR share price is up 30% YTD with Morgans having a speculative buy rating and 12-month target price of $1.76 on the stock.

“There is a lot more interest coming into the name ahead of approval and management will be in Australia during a series of investor presentations in late January,” Power said.

Pharmaceutical distributor Sigma Healthcare (ASX:SIG) will hold a shareholder vote on January 29 to vote on its merger with privately owned discount pharmacy chain Chemist Warehouse.

“The merger is due to complete assuming the shareholder vote is successful on February 13, which is a major milestone for the company.”

Euro market expansion for Neuren’s Rett syndrome drug

Neuren Pharmaceuticals (ASX:NEU) has seen its partner, Nasdaq-listed Acadia Pharmaceuticals, submit a marketing authorisation application to the European Medicines Agency (EMA) for trofinetide for the treatment of Rett syndrome in adults and paediatric patients two years of age and older.

Trofinetide has already been approved in the US and Canada for Rett syndrome and is marketed under the name Daybue. Acadia anticipates approval in Europe in Q1 CY26.

Under its worldwide licence agreement with Acadia, NEU is eligible to receive milestone payments and royalties related to development and commercialisation of trofinetide outside North America.

However, news of the planned European expansion failed to move the dial on the share price upwards when it was announced on Wednesday.

“It’s hard to know what is happening with that share price with Wednesday it being down $1 and then Thursday being back up $1,” Power said, adding that the consensus valuation for Neuren sits in the high $20s.

“There is plenty of upside between the current share price and what the analysts are thinking,” he noted.

“To be honest I’m not sure why the share price is so volatile.”

Power said Neuren also presented at the JP Morgan conference this week and the business was continuing to move forward.

“What we are looking for is some further details how they will structure and cost their phase III trial of NNZ-2591 for Phelan-McDermid syndrome,” he said.

“They’ve told the market they have some additional indications for NNZ-2591, which we are also waiting to get some information on.”

Research Corner: Shaking off your holiday brain

Feeling sluggish and uninspired after the summer break? RMIT’s senior lecturer in business administration Dr Melissa Wheeler, who works at the nexus of business and psychology, said returning to work after the holidays can be tough, especially when your brain is still on holiday mode.

“What I like to call holiday mode is that sluggish or foggy state, where it seems to take longer to process things or to pay attention,” she said.

Wheeler said the feeling can be caused by the break from our routines and habits, which eliminate the need to make lots of micro decisions, allowing your brain to smoothly ‘go with the flow’.

Wheeler offers three actionable tips to switch from holiday to productivity mode.

1. Scrutinise your routines – Reflect on your daily work routine, particularly on what worked and didn’t work for you in 2024.

Wheeler said when resetting your routines, one common error is to try to fit as much into one day as humanly possible. However, she said leaving a little room to breathe, think and explore will cushion you from potential burnout and allow for greater creativity with a more sustainable routine for the long term.

2. Find your flow state – If you’re feeling bored and distracted, you need to find your flow state.

Wheeler said flow state or being ‘in the zone’ is where distractions seem to disappear, time flies, you have a sense of progress, and even hard tasks feel effortless.

She suggests avoiding multitasking and trying strategies like time-blocking or completing the most daunting task at the start of your day.

3. Get excited – Identify something you’ve been looking forward to and add it to your immediate to do list.

“You can also make a plan to avoid doing the things you don’t like,” Wheeler said.

“For example, if you hate public speaking but have a colleague who loves it, consider which tasks you could swap.”

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