Scott Power: ASX health stocks show a strong pulse as investors pile back in

• The ASX health sector moved up 1.30% for the week, while the broader market inched up 0.12%
• Aroa recorded fourth consecutive quarter of positive net cash flow with Myriad breaking records
• Orthocell raised $30 million in oversubscribed placement as capital raisings increase in positive sign for sector

Health stocks get a pulse as investors pile back in

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.

The ASX healthcare sector has enjoyed a spring in its step this week, continuing renewed momentum seen so far in October.  The S&P/ASX Health Care Index (XHJ) was up 2.9% for the week, ahead of the broader S&P/ASX 200 (XJO), rising 1.1% at the time of writing.

Morgans senior healthcare analyst Scott Power said all signs were pointing to a solid end to 2025 for the sector, in what is generally a stronger time of the year for markets.

“There’s a lot of capital raisings going on so it is risk-on again which is good for some of these emerging names,” he said.

Orthocell (ASX:OCC) announced on Friday it was raising $30 million in an oversubscribed placement, attracting strong support from institutional and sophisticated investors, including several new US funds.

The company will use funds raised to expand manufacturing capacity at its WA facility, speed up the US launch of its flagship nerve repair product Remplir, and advance clinical studies exploring its use in prostate cancer surgery. It will also commercialise further regenerative medicine applications in tendon, ligament and bone repair.

Court rules US giant can’t terminate Mayne Pharma takeover

Mayne Pharma (ASX:MYX) rose 11% to $6.30 on Thursday after the NSW Supreme Court ruled US pharmaceuticals giant Cosette Pharmaceuticals could not terminate its $672 million takeover.

Cosette had tried to withdraw from the scheme of arrangement, arguing a “material adverse change” in Mayne’s performance, however the court dismissed Cosette’s claims.

“Mayne Pharma will now take all steps within its power to implement the scheme,” Mayne said in an ASX announcement.

“The scheme remains subject to certain conditions precedent, including receipt of Foreign Investment Review Board (FIRB) approval and the approval of the NSW Supreme Court at the second court hearing.”

This hearing is scheduled for next Wednesday and Mayne expects the scheme to become effective the next day with the company maintaining shareholders would be paid on November 3.

Cosette launched its $7.40 a share cash offer on February 21 with the stock plunging as low as $4.35 in mid May after it sought to terminated the deal.

“There’s a few more steps to go but it appears to be heading to the point where Mayne will be taken over,” Power said.

Cogstate services gaining traction

Neuroscience tech company Cogstate (ASX:CGS) held its AGM on Thursday, with demand for the company’s services continuing to grow.

Power said Cogstate’s momentum reflected both growth in the market for R&D in central nervous system diseases as well as market share by the company.

Cogstate’s technology delivers fast, reliable, and sensitive computerised cognitive tests across a growing range of areas.  The company’s clinical trial services combine innovative operations, advanced analytics, and scientific consulting to ensure high-quality study endpoints.

Based on sales contracts secured through to December 31, 2025, and the associated revenue expected to be recognised in H1 FY26, the company anticipates revenue for the half to be ~18–20% higher than the previous corresponding period.

“Cogstate’s business is continuing to grow and importantly across a number of their different indications so it is in very good shape and the share price is responding positively,” Power said.

Tetratherix reports positive results from Tutela trial

Tetratherix (ASX:TTX)  has reported positive results from stage one of its Tutela clinical trial, marking the successful first-in-human use of the Tutelix hydrogel spacer at Gold Coast University Hospital.

Tetratherix has developed a proprietary polymer platform enabling the targeted delivery of cells, drugs and biologics, to treat a range of conditions across tissue spacing, bone regenerative and tissue healing.

Tetratherix reported its hydrogel spacer was safely implanted in prostate radiotherapy patients, with no product-related or procedural adverse events.

The hydrogel formed instantly, provided clear ultrasound visibility, and maintained structural stability through 20 radiation sessions, effectively shielding the rectum from high-dose exposure. The Safety Review Committee confirmed its safety after 28 days.

Stage two of the trial has now started with patient recruitment underway across multiple Australian sites. The company plans to initiate pivotal trials in Australia and the US in Q1/Q2CY26.

“This milestone supports TTX’s strategic pathway toward commercialisation of the Tutelix spacer for prostate cancer radiotherapy, ” Power said.

“They continue to tick off milestones listed in their prospectus.”

He said upcoming key catalysts include a Q1 FY26 cash flow report to be released this month. An update is also expected on recruitment for cohort two of its TetraDerm trial, focused on tissue healing in facial and neck surgical incisions, with results expected in H1 CY26.

Meanwhile, FDA 510(k) clearance for its dental product Tegenix is anticipated in H2 CY26.

“They have a licensing agreement with a big dental group called Henry Schein,” he said.

Tetratherix is up more than 75% since its IPO on June 30, for which Barrenjoey Markets and Morgans Financial were joint lead managers and underwriters.

Morgans has a speculative buy rating on the stock and a 12-month target price of $5.76.

Power’s Powerplay: Aroa reports another positive quarter

New Zealand-based soft tissue repair company Aroa Biosurgery (ASX:ARX) is Power’s pick of the week after reporting its fourth consecutive quarter of positive net cash flow with its highest quarter on record for high-margin Myriad products.

Aroa reported cash flow from operations of NZ$2.1 million, supported by strong cash receipts of NZ$23.5m during the quarter. The company had the highest quarter on record for its high-margin Myriad product range, with NZ$10.2m in sales.

Aroa also reaffirmed its full-year FY26 total revenue guidance of NZ$92-100m, representing growth of 10-20% compared with FY25 on a constant currency basis.

Normalised EBITDA guidance for FY26 of NZ$5-8m represents growth of 19-90% on FY25.

“It’s a real feather in their cap,” Power said.

Power said the key catalyst for Aroa was potential changes coming through the US medicare system in relation to capping skin substitutes reimbursement.

“The changes could see more expensive products leave the market, opening a path for the company to accelerate market share of its Symphony product.”

Morgans has an accumulate rating on Aroa, upgrading its 12-month target price from 77 cents to 80 cents.

“We’re sitting at the top of their guidance range and happy to be there – and it certainly feels like if we get another strong quarter it will be upgraded.”

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