'Tide is turning for the healthcare sector' – ASX biotechs making strong gains in 2024 Part 2

Morgans says more money could flow into ASX healthcare sector in 2024 as higher interest rate cycle stabilises
Nyrada soars after lead drug candidate demonstrates strong efficacy in reducing secondary brain injury in animal study
Dimerix Phase 3 trial successful in the pre-specified interim analysis of proteinuria (efficacy) endpoint

After being out of favour for the past couple of years the ASX heath care sector is seeing renewed investor interest.

Morgans’s health care analyst Iain Wilkie told Stockhead with signs the higher interest rate cycle appear to be coming to an end, there is optimism of more money flowing into health care, which saw an end of year rally in the last months of 2023.

“On the macro-side, the potential end (or at least stabilisation) of the higher interest rate cycle could lead to more money flowing into healthcare.”

“This will be particularly beneficial for small to mid-end companies that have been largely overlooked in the past two years.

“The tide is turning for the healthcare sector.”

READ: ‘Tide is turning for the healthcare sector’ – ASX biotechs making strong gains in 2024 Part 1

Here’s part two of our special on ASX health care stocks which have caught the eye of investors in the early months of 2024.

Nyrada (ASX:NYR)

NYR has jumped by an impressive 400% YTD after investors piled into the company following news its lead drug candidate, NYR-BI03, had demonstrated strong efficacy in reducing secondary brain injury in a preclinical animal study.

The study was conducted in collaboration with UNSW Sydney and involved 16 test animals, which were treated with either NYR-BI03 or vehicle, 30 minutes following induced brain injury, with treatment conducted for 72 hours via continuous intravenous infusion.

The MRI brain imaging results showed that a statistically significant neuroprotection was achieved when animals received NYR-BI03 treatment.

On average, NYR-BI03 therapy rescued 42% of the brain injury in the penumbra region seen in animals receiving vehicle. NYR will now move on to Phase 1 clinical trial in humans, which is scheduled for the second half of CY24.

The results provided strong evidence that NYR-BI03 has the potential to protect the brain from secondary injury.

“I think where the market excitement comes from is not only the results we got, but also the potential for this drug, given its broad application in two particularly large indications – stroke and traumatic brain injury,” Nyrada’s CEO James Bonnar told Stockhead’s Eddy Sunarto recently.

Bonnar says there’s a very large unmet clinical need for stroke, given that a stroke occurs every 20 minutes in Australia with ~13 million stroke patients globally annually.

“And for traumatic brain injury, there are currently no FDA approved drugs to treat patients who sustained a traumatic brain injury, apart from supportive care and rehabilitation,” he says.

“So traumatic brain injury is an even larger market than stroke.

“That’s where the market excitement comes from, that our drug has first class potential in in two very large indications.”

Dimerix (ASX:DXB)

DXB this week announced its ACTION3 Phase 3 trial was successful in the pre-specified interim analysis of proteinuria (efficacy) endpoint from the first 72 randomised patients.

Titled Angiotensin II Type 1 Receptor (AT1R) & Chemokine Receptor 2 (CCR2) targets for Inflammatory Nephrosis, or ACTION3 for short the interim analysis showed DMX-200 is currently performing better than the placebo in reducing proteinuria (using a statistical measure) in patients with FSGS in a significantly larger cohort than its prior Phase 2 trial of eight patients.

DXB says passing the early interim analysis suggests a statistically significant and clinically meaningful result in reducing proteinuria at the end of the study may be possible.

The trial’s Independent Data Monitoring Committee (IDMC) also says it has no safety concerns relating to DMX-200, adding to the drug’s growing safety profile – and formally recommended the trial continue as planned.

The ACTION3 Phase 3 clinical trial will now formally expand into Part two, with new clinical sites to open in additional countries, including China, to further enhance recruitment.

FSGS is a rare condition that can occur in both adults and children affecting the kidney’s filtering units, where blood is purified, resulting in permanent kidney damage and eventual organ failure, necessitating either dialysis or a transplant.

For those who receive a transplant, around 60% get reoccurring FSGS in the transplanted kidney, and no one knows why.

DXB has secured orphan drug designation (ODD) for DMX-200 in both the US and Europe for the treatment of FSGS due to the absence of an effective therapy for this condition.

In 2023, DXB finalised an exclusive licensing agreement worth up to $230 million for Europe, Canada and Australia/New Zealand with multinational pharmaceutical company Advanz Pharma that includes tiered, escalating, mid-teen to twenty percentage royalties on net sales of DMX-200 if it is successfully commercialised.

The company is now focusing on licensing deals in oher jurisdictions including in the US and China.

DXB also announced this week it had received binding commitments from new and existing institutional and sophisticated investors (and other exempt investors) to raise $20 million.

“This placement was highly strategic as it provides sufficient funds to take Dimerix through the second interim analysis and, including eligible R&D rebates, the completion of the ACTION3 Phase 3 clinical trial,” managing director and CEO Dr Nina Webster says in an ASX announcement.

The DXB share price has rallied 40% YTD.

Neurotech (ASX:NTI)

NTI this week announced it had expanded its Phase 1/2 clinical trial of its leading compound NTI164 to treat female paediatric patients with Rett Syndrome.

NTI has obtained additional clearance from the the Human Research Ethics Committee (HREC) allowing patients to continue receiving NTI164 beyond the initial 12 weeks, extending the trial to 52 weeks under the supervision of lead investigator Professor Carolyn Ellaway at The Children’s Hospital at Westmead.

NTI164, derived from a unique cannabis strain with low THC, comprises cannabinoids such as CBDA, CBC, CBDP, CBDB, and CBN.

Executive director Dr Thomas Duthy says the Rett Syndrome trial is expected to report results in Q1 or early Q2 CY24.

“Investors have started to take significant interest in our Rett Syndrome clinical trial, given the spectacular success of Neuren Pharmaceuticals (ASX:NEU) , who with their billion dollar partner Acadia Pharmaceuticals received FDA approval for trofinetide in Rett in March 2023,” he says.

“We very recently announced all 14 girls on our trial have extended by a total of 52 weeks their treatment with NTI164 beyond the initial 12 weeks of the clinical trial.

“This has been a consistent theme for all our programs where patients on trial continue to receive treatment even through the trial has completed data collection for the primary analysis. Patients, parents and their treating doctors want to stay on this therapy.”

A rare genetic disorder Rett Syndrome predominantly stems from mutations in the MECP2 gene on the X chromosome, crucial for brain development.

The condition mainly affects females, occurring in approximately one in 10,000 female births, with around 15,000 cases in the US and 350,000 globally. The market size for Rett Syndrome treatments is estimated to be more than US$2 billion annually.

NTI164 has been exclusively licenced for neurological applications globally. NTI has also been undertaking multiple clinical trials in children with Autism Spectrum disorder (ASD), Spastic Cerebral Palsy, Paediatric Autoimmune Neuropsychiatric Disorders Associated with Streptococcal Infections and Paediatric Acute-onset Neuropsychiatric Syndrome (PANDAS/PANS).

“We reported clinically significant data in PANDAS/PANS in October 2023 once again highlighting the benefit of our proprietary broad spectrum cannabinoid therapy NTI164 in treating paediatric patients with neurological disorders associated with persistent or progressive neuroinflammation,” Duthy says.

“NTI164 has an excellent safety profile and our ASD kids have been on therapy for over 90 weeks now. ”

NTI has also received HREC clearance for a Phase 1/2 clinical trial in spastic cerebral palsy.

Duthy says NTI’s Phase 2/3 ASD trial is also due to report clinical data in the next few weeks. He says the trial is much larger but aims to confirm initial Phase 1/2trial results which showed a strong, durable benefit of NTI164 in Level 2 and Level 3 ASD patients.

“With the spiraling costs of the NDIS, driving by an explosion in ASD recipients, investors are eyeballing our intervention to see how beneficial it will be in reducing the clinical manifestations of ASD and improving adaptive behaviours, which allows children to return to school and parents to work,” he says.

The NTI share price is up 31% YTD.