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Health & Biotech
The remainder of 2024 looks like being a busy one for the ASX biotech sector with analysts and fund managers saying there are plenty of upcoming catalysts and company-specific developments on the horizon.
Bell Potter healthcare analyst John Hester told Stockhead biotech stocks are primarily influenced by company-specific developments rather than broader economic factors.
“Biotech is very much a non-cyclical performer driven by catalysts including data from clinical trials and regulatory announcements from the likes of the FDA,” Hester says.
“You get a positive clinical readout and that can lead to a significant appreciation in the share price and conversely if the data is poor the share price can collapse.”
READ Top ASX biotechs catching the eye of analysts and fund managers in 2024 – Part 1
WAM Capital (ASX:WAM) analyst Will Thompson told Stockhead says the biotech sector is interesting at the moment.
“There has been some recent successes on the ASX like Neuren Pharmaceuticals (ASX:NEU) so investors are looking at what could be the next 10 bagger,” he says.
“You generally get more generalists looking at the space when there are concerns about the economy because biotechs can still grow in weaker economic conditions as they’re not as cyclical.”
So, what are some of the ASX biotech stocks standing out to analysts and fund managers in 2024?
Focused on improving safety and first-time success rates in cardiac catheter ablation, focus is on the imminent start of IMR’s pivotal US trial Vision-MR Ablation of Atrial Flutter, or VISABL-AFL for short, and its pivotal European ventricular tachycardia (VT) trial VISABL-VT.
The VISABL-VT trial is set to have global implications for IMR, even before completion of the trial. The company says the medical community says that MRI guidance would add maximum value to complex ablation procedures, like VT, which require the doctor to access the left side of the heart via puncturing through the septum.
Catheter ablation is performed by an electrophysiologist who will make an incision in a patient’s groin and guide a catheter through the vein up to the heart.
The procedure is currently done under X-ray guidance, known as X-ray fluoroscopy, with the problem being X-ray is good at showing hard structures like ribs and the catheter itself but can’t visualise soft tissue like the heart. This makes it hard for physicians to know they’ve done the ablation completely in the area which is causing the arrhythmia.
The long-term first-time success rates can be as low as 50% with patients often require 2-3 procedures to permanently fix the arrhythmia with X-ray fluoroscopy also exposing patients and medical staff to radiation throughout the procedure.
IMR is succeeding in the long desire of clinicians to do cardiac ablations under the superior imaging capabilities of magnetic resonance imaging (MRI). Protected by more than 70 patents, its equipment looks and feels the same as what physicians currently use for the procedure but are safe and effective for use inside the strong magnetic fields created by an MRI scanner.
“We like Imricor because the studies they have completed so far suggest their technology has a superior outcomes for patients than the incumbent,” Thompson says.
“This is important for patients and critical if they want to get FDA approval.”
“We’re looking forward to seeing what comes from their first VT procedure planned for June as it has the potential to de-risk the future growth.
Thompson says VT is a huge market so any success should be received well by the market given the sales potential.
BOT is focused on the regulatory approval and commercialisation of its lead dermatology product Sofdra, a drug for the treatment of primary axillary hyperhidrosis, which is medical condition where excessive sweating occurs in the armpits.
Thompson says BOT, which is up ~54% YTD, has resubmitted a New Drug Application (NDA) for US regulatory approval with the United States Food and Drug Administration (FDA) with the green light expected in late June.
The resubmission of the Sofdra NDA was in response to an FDA complete response letter announced in September 2023.
The only deficiency identified in that letter was the paper insert in the product carton that instructs the patient how to use the product safely and effectively.
BOT says it revised the instructions for use for Sofdra in accordance with feedback provided by FDA prior to the resubmission and has undertaken the required human factors validation study that assessed those instructions.
“Unfortunately they got one part of their application wrong with the FDA so we now expect approval by the end of June,” Thompson says.
Thompson says BOT has a proven management team and the drug has been approved in Japan with strong sales since launch.
“The management team has previously had success in getting dermatology drugs to market, so they will emulate that success with the Sofdra launch,” he says.
“You only need to get a small percent of market share to earn strong revenues which we expect will turn into good earnings pretty quickly because it is a high margin product.
“In FY25 we hope to see revenue growth.”
PAR’s primary focus is the development of injectable pentosan polysulfate sodium (iPPS/Zilosul), for the treatment of osteoarthritis (OA).
An ability to provide a safe an effective treatment for OA is a major market opportunity as there are limited therapeutic solutions available.
“They’ve had some outstanding clinical data over recent years which indicates the drug is very safe and effective in management of osteoarthritis pain so we really like it,” Hester says.
A Phase 2 trial demonstrated one course of subcutaneous iPPS can provide 12-month pain relief and improved function in knee OA sufferers.
The same clinical trial also demonstrated improvement in cartilage volume and thickness at six months following treatment compared to placebo.
PAR announced in April it had submitted key documents to the US Food and Drug Administration (FDA) for review, aiming to advance its pivotal Phase 3 clinical trial.
“We believe the upcoming Phase 3 trials that will be conducted in the US and other jurisdictions are likely to be successful,” he says.
Bell Potter has a speculative buy rating on PAR with a valuation of 47 cents.
At Stockhead, we tell it like it is. While Imricor and Paradigm are Stockhead advertisers, the companies did not sponsor this article.
Disclosure: WAM Microcap holds shares in Imricor Medical Systems and Botanix Pharmaceuticals.
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