- Micro-X lifts more than 70% after being awarded lucrative US government contract to develop portable full body CT scanner
- Morgans upgrades Imricor after share price rises more than 125% YTD and runs through previous 12-month target price
- ASX health stocks fall 1.2% over past five days, while the broader market was fell slightly o.2%
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.
Micro-X’s (ASX:MX1) 70% climb this week showed momentum was returning to the ASX healthcare sector, said Scott Power.
The company’s US subsidiary Micro-X Inc was awarded a multi-million dollar development contract with the US Advanced Research Projects Agency for Health (ARPA-H) to develop a lightweight, portable full body CT scanner.
The Morgans analyst noted that positive news is now being rewarded.
The new scanner will leverage Micro-X’s core technology advancements made through both the US Department of Homeland Security Baggage CT and Australian Medical Research Futures Fund Head CT programs to enable a Full Body CT, equivalent to conventional diagnostic CT scanners.
The Adelaide-based cold cathode X-ray machine developer for health and security markets globally said the first phase over two years was fully committed with payments totalling US$8.2 million throughout.
At the end of the first phase the contract may be extended to subsequent phases, based on assessment of Micro-X’s ability to meet various technical objectives.
“Assuming they get successfully through phase one they’ll receive another US$8 million to get through phase two and ultimately FDA approval, so that contract announcement has been terrific for Micro-X and its share price has essentially doubled, albeit off all-time lows,” Power said.
“It takes the funding question off the table for Micro-X for the short term, which is also a positive.”
Morgans has a speculative buy rating on MX1 and a 12-month target price of 19 cents.
Power’s Powerplay: Countdown on to Percheron results
The countdown is on for a phase 2b trial readout for Percheron Therapeutics (ASX:PER) of its lead program avicursen (ATL1102) into non-ambulant boys (unable to walk unassisted) with Duchenne muscular dystrophy (DMD) before the end of CY24.
ATL1102 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.
A fatal and historically poorly treated disease, DMD is a genetic condition that affects about one in 10,000 males and results from a gene mutation, which affects production of the muscle protein dystrophin, causing movement-related muscle damage leading to chronic inflammation and progressive loss of function.
“That’s either going to be a hero or zero stock so we’ve been telling clients to understand it is a binary outcome and a positive result will see the share price rally and a negative result will see it come under a lot of pressure,” he said.
ASX healths stocks fall but signs confidence returning
At 1pm (AEDT) on Friday the S&P/ASX 200 Health Care index (ASX:XHJ) was down 1.2% for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) fell 0.2% for the same period.
However, Power is still confident of a strong run into Christmas.
“We’ve had a couple of capital raisings and IPOs recently,” Power said.
“Money is being deployed and particularly at the more growth or speculative end of the market which is an indication of confidence.”
Morgans upgrades Imricor
Morgans has upgraded its 12-month price target for Imricor to $1.51. Power emphasised Imricor was the only company in the world that provides MRI-compatible consumable devices, such as single-use ablation catheters, required to perform cardiac ablations in an iCMR lab.
The company has seen its share price rally more than 125% YTD, past Morgans’ previous target of $1.08.
Imricor recently announced it had conducted the first case for atrial flutter ablation in the interventional cardiac magnetic resonance (iCMR) lab at the Lausanne University Hospital (CHUV) in Switzerland, adding a third site to its VISABL-AFL clinical trial supporting US FDA approval of its products.
The company has also inked a licence agreement with ADIS, a Swiss-based software company, to integrate AI modules into Imricor’s NorthStar 3D mapping system.
Power said the NorthStar 3D mapping system was a valuable part of the IMR’s tool kit and a licensing transaction adds further AI capabilities to the system.
“The whole mapping system of the heart is very valuable and we’ve noted the big medical device companies are buying mapping systems or putting a lot of investment into their existing mapping systems for the whole ablation procedure,” Power said.
“Essentially, you map the heart first to get an idea of where you’re going to put the catheters to do the ablation, which is very important.
“This whole area of cardiac ablations is a growing part of these medical device companies’ revenue streams and on the back of that we’re very excited about what Imricor has to offer because they’re the only company that has equipment to perform these procedures in an MRI environment rather than X-ray.”
Furthermore, Power said there was potential for Imricor to expand in further applications outside of cardiology.
“We’ve seen the share price rally and want to stay on the front foot with Imricor and so have moved our price target up,” Power said.
Morgans maintains a speculative buy rating on Imricor.
Clever Culture secures further sales with AstraZeneca
Clever Culture Systems (ASX:CC5), formerly LBT Innovations, is up ~17% in the past five days after announcing it had received another order from big pharma AstraZeneca for four additional APAS (automated plate assessment system) Independence instruments (culture plate readers).
Clever Culture said delivery of the instruments was scheduled within FY25, resulting in 100% of the revenue associated with the instrument sales being recognised.
When including annual maintenance and support fees for each instrument, the order is expected to be worth ~$3.1 million, over seven years.
Power said typically each instrument generated~$1m in revenue including 50% hardware, 25% software licensing, 15% service and 10% implementation with contracts usually five to seven years.
It is the second order of CC5’s APAS Independence instruments by AstraZeneca. The first order of five instruments, announced in August, have now been delivered to multiple AstraZeneca facilities globally.
Based in Adelaide, CC5’s trademarked APAS Independence instruments using artificial intelligence and machine learning software to automate the imaging, analysis and interpretation of microbiology culture plates.
The company said its technology remains the only US FDA-cleared AI technology for automated culture plate reading and was being sold to microbiology laboratories in the pharmaceutical manufacturing sector for the reading of environmental monitoring culture plates.
“AztraZeneca manufacture drugs and have to constantly monitor there’s no contamination in their facilities and they do that by setting up culture plates and the technology of CC5 enables that to be done very efficiently,” Power said.
Clever Culture has made 12 sales to pharmaceutical customers since the product launch in March 2024, supporting a potential cash flow positive result for FY25.
Research Corner: AI for healthy lifestyle motivation
Artificial intelligence algorithms have shown potential benefits to improve engagement and health outcomes from digital health programs, according to a CSIRO study.
Published in The Journal of Medical Internet Research, the study used a CSIRO-developed algorithm that uses AI to predict when a person will drop out of an online weight-loss program.
The study of more than 59,000 participants from CSIRO’s Total Wellbeing Diet is a world first in analysing data from a large, online, commercial weight-loss program.
It found that by using machine learning, scientists can accurately predict from week three when a user is going to disengage from an online program.
Research scientist with CSIRO’s Australian e-Health Research Centre and lead author on the paper Dr Aida Brankovic said despite the growing application and adoption of technology in health interventions, one persistent challenge remains – engagement deterioration or non-usage attrition.
“The successful machine learning model used in the study predicted disengagement from the program on a weekly basis, based on the user’s total activity on the platform, including weight entries from the weeks prior,” Brankovic said.
“With this information, digital health interventions can become more tailored, supportive and offer users a greater chance of making long-term lifestyle changes.
“Importantly, the machine learning model used in this study can also be adjusted and applied to large cohorts of data in other online programs requiring engagement.”
CSIRO research scientist and co-author of the paper Dr Gilly Hendrie said effective engagement in a digital health program was vital to success and yet also challenged by the fact that it was open to the user’s discretion.
“Past habits really do predict future behaviour,” Hendrie said.
But if we can predict when that behaviour will kick in and adapt so we can re-engage someone – we’ve got a better change of helping them make long-lasting changes to their health and lifestyle.”
The CSIRO said with 67% of Australian adults overweight or obese, 8% of the burden of disease in Australians due to obesity and about 5% due to dietary risks, that supporting health intervention and lifestyle change was more important than ever.
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.
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