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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 healthcare sector for the week and his ‘Powerplay’ stock pick.
Dual-listed (ASX and Nasdaq) regenerative medicine company Avita Medical (ASX:AVH) has had a tough start to 2025 falling ~19% on Wednesday and ~12% on Thursday before recovering ~1.64% on Friday after downgrading its earnings guidance. Avita also got sold down heavily in the US.
Avita said it now expects Q4 CY24 commercial revenue to be ~US$18.4 million, reflecting growth of around 30% over the same period in 2023.
The company previously provided fourth-quarter guidance in the range of US$22.3m-$24.3m.
Based on these quarterly results, Avita said it now expects full year 2024 commercial revenue to be ~US$64.3m, reflecting growth of about 29% over the full year in 2023.
Previously full year 2024 revenue guidance was in the range of US$68-$70m.
Avita is known for its Recell burns products, with the company announcing in December that the US Food and Drug Administration (FDA) had approved its Recell Go mini product, a device that helps treat smaller wounds.
Power said he thinks Avita got sold down on the back of investor concerns the company may need to raise capital to get to breakeven, which has now been pushed out to Q4 CY25 rather than Q3 CY25.
“Avita’s path to profitability has been delayed by a quarter and the market is assuming they’re going to have to raise capital to get there so has dealt with the company fairly harshly,” Power said.
Morgans maintains an add rating on Avita but has reduced its 12-month price target from $4.56 to $4.36.
Cardiac play EBR Systems (ASX:EBR) has announced that the FDA has scheduled the manufacturing pre-approval inspection (PAI) to start on January 14, after previously being expected to start the week of January 6.
The developer of the WiSE CRT (cardiac resynchronisation therapy) system said the updated PAI schedule won’t affect the expected FDA regulatory approval timing, which remains on track for Q1 2025, with commercial launch later in the year.
The purpose of the PAI is to confirm EBR’s manufacturing procedures are compliant with quality system regulations and to ensure EBR can consistently produce devices that meet approved specifications.
The WiSE CRT System holds the distinction of being the world’s first leadless pacemaker for the heart’s left ventricle.
“That’s really the last step and its really just a matter of when the FDA gets around to providing that approval which can come at any point but the expectation is it will be this quarter,” Power said.
“The share price is up around 40% since the start of the year, which is a real positive and we continue to expect the share price to strengthen into the approval.”
Morgans has a speculative buy rating on EBR and 12-month target price of $1.76.
At 12pm (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) rose 1.1% for the same period.
“We are moving into reporting season so quarterly reports will give us a good look at how the companies are shaping up for the second half of the year,” Power said.
“Most of these companies will be reporting second quarter cash flow reports and then in February half year results.”
New Zealand-headquartered wound-care company Aroa Biosurgery (ASX:ARX) is Scott Power’s pick of the week.
“In the case of Aroa it has a March year end so is due to report its third quarter cash flow result at the end of January,” Power said.
He said Q3 was expected to show positive operating cash flow and reconfirm FY25 guidance, which at the midpoint has ~25% revenue growth and positive EBITDA of NZ$2-$6 million.
“We’re positive on that name and think they’ve really turned corner over the past six months with good sales momentum” Power said.
Morgans has an add rating on Aroa with a 12-month target price of $1.05.
Australian researchers have been analysing how humanoid robots relate to people and believe that to get the best from them they must be taught to understand emotion.
James Cook University’s head of engineering, Professor Bouchra Senadji, is co-author of a study investigating the role of empathy in long-term human-robot interactions (HRI).
Senadji said robots were increasingly used to support childhood learning and development – including emotional skills – and in senior care to support older adults.
“But studies involving humans interacting with a social robot over several meetings have shown the robots can have difficulties in sustaining human engagement over time,” she said.
Senadji said that previous research seeking to improve the situation pointed to the important role of empathy in long-term HRI.
“While empathy involves both sharing in another person’s feelings and understanding how another person feels, it is particularly important that a robot understands the emotions of its user in order to respond appropriately,” said Professor Senadji.
She said that emotions expressed by the robot’s human partner are used as cues to evaluate the individual’s emotional state, which is then used to decide the robot’s response.
“We found that the robots studied used a variety of techniques, including measuring eye gaze, analysing vocal patterns and facial cues and posture to gauge how their interaction with humans was going,” she said.
“To get the best out of these tools we have to recognise that a robot’s behavioural response has to be based on the emotional state of the person it’s dealing with and optimise the machine’s abilities to judge this and respond appropriately.”
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Health & Biotech
Health & Biotech
Health & Biotech
