ASX health stocks fall 0.19% in past five days as broader markets lift 0.79%
Morgans says capital raises remain a theme for 2024 among healthcare stocks
Pharmaceutical distributor EBOS increases stake in MedAdvisor to 9.8%
Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 27 years, explains what the movers and shakers have been doing in health and gives his ASX Powerplay.
Do you undertake resistance training? A new study has found that resistance training, which involves using weight to build muscle strength, helps with function and contributes to well-being in older adults.
Muscle function typically declines in older adults with recent research in BMJ Open Sport & Exercise Medicine exploring the long-term benefits of heavy resistance training for older adults.
The research involved an interim analysis of The Live active Successful Ageing (LISA) study, which was a parallel group randomised controlled trial in Denmark.
In the trial 451 older adults were divided into three groups. The first undertook one year of heavy resistance training, the second one year of moderate-intensity training, and the third group was a non-exercising control group.
The heavy resistance training group undertook sessions at a private fitness centre three times a week, while the moderate resistance group did one weekly training session at a hospital and two weekly exercise sessions at home.
Three years after the one-year intervention, researchers assessed participants’ visceral fat mass, isometric leg strength, and maximal isometric quadriceps torque.
The researchers also performed brain and thigh MRI scans and tracked daily steps, repeating the tests done at baseline, post-intervention, and one-year post-intervention. The heavy resistance training group showed the greatest benefits at the four-year mark.
The authors note, “In well-functioning older adults at retirement age, one year of HRT [heavy resistance training] may induce long-lasting beneficial effects by preserving muscle function.”
To markets…
And ASX healthcare stocks could do with some resistance training this week. At 12.20pm (AEDT) on Friday the S&P/ASX 200 healthcare index (ASX:XHJ) had fallen 0.19% in the first week of FY25, while the benchmark S&P/ASX 200 (ASX:XJO) rose 0.79% for the same period.
“The market has been pretty bumpy this week,” Power says.
He says at the large end of the market Australia’s biggest healthcare company blood products giant CSL (ASX:CSL) was up 1.41% for the week. Pathology and radiology provider Sonic Healthcare (ASX:SHL) and Hearing tech company Cochlear (ASX:COH) were down 1.14% and 3.24% respectively.
“Cochlear and Sonic have come under a bit of selling pressure with Cochlear coming off all-times highs,” he says.
“Sonic has been quite weak but has been recovering from the covid highs and they’ve made a couple of important acquisitions in Switzerland to take them to the number one player over there.
“Sonic’s outlook commentary looks quite conservative to us so we remain quite bullish on the stock.”
Power says while inflation remains a bit sticky in Australia, rising to 4.1% in May, there are signs it is moderating elsewhere.
“If you look at Canada, the UK, Europe in general, they’re starting to bring through some rate cuts – so that’s positive for the stock market going forward,” he says.
Power says there continues to be plenty of capital raisings in the healthcare sector with Reece (ASX:REH) raising $10 million via an institutional placement and share purchase plan.
IPP is focused on developing a new class of synthetic anti-infectives designed to address the urgent global health problems of antibiotic-resistant superbugs and emerging viral pathogens.
“Almost every week there are capital raisings coming through and that’s really been the same all year,” Power says.
EBOS buys stake in MedAdvisor
Pharmaceutical distributor EBOS Group (ASX:EBO) has increased its stake in software company MedAdvisor (ASX:MDR) to 9.8% after purchasing 27,527,196 shares.
EBO initially acquired a 14.1% interest in MDR in 2017, which it says has been diluted by subsequent share issuances.
MDR provides pharmacy-driven patient engagement solutions to help remove barriers of care. The company works with more than 33,500 pharmacies in the US to deliver programs to help patients take their medication safely and effectively.
In Australia, MDR has connected over 3.7 million patients through more than 95% of Australian pharmacies.
EBO says it regards its shareholding in MDR as an investment and “does not intend to make a change of control proposal in respect of MedAdvisor”.
In May MDR released its FY24 guidance for the upcoming full-year result, projecting revenue between $120-$123m and EBITDA of $6.8m-$7.6m.
“MedAdvisor is quite an interesting story in the pharmacy software space and they’re building quite a strong position,” Power says.
Overlooked ImpediMed close to 24-month lows
Power says ImpediMed (ASX:IPD) is a stock worth watching with its share price drifting back close to 24-months lows and investors seemingly overlooking a number of positives, including a complete refresh of the board and new appointments to the management team.
IPD is a world leader in the design and manufacture of medical devices employing bioimpedance spectroscopy (BIS) technologies for use in the noninvasive clinical assessment and monitoring of fluid status and tissue composition.
The company’s SOZO device is the only FDA-cleared BIS solution for the clinical assessment of lymphoedema.
“Our focus is on the growth of the US installed base (currently at 555 units), which since the technology has been included in the national guidelines in March 2023, has been below expectations,” Morgans says in a note to clients.
“Under the new team, we are now expecting to see the start of consistent and meaningful growth in the installed base, which will will be a key driver to moving the company to a break-even point within two years and improving investor sentiment.”
Power says Morgans’ view is that the new management has the business under control and costs are looking good.
“The market is really looking for an increase in the installed base in the US,” he says.
IPD is due to report its quarterly at the end of July. Morgans maintains a speculative buy recommendation on IPD with a 12-month price target of 20 cents.
Ansell finalises US$640m Kimberley-Clark deal
Ansell (ASX:ANN), which operates in the personal protective equipment space (PPE) space, has completed the acquisition of 100% of the assets of US giant Kimberly-Clark Corporation’s personal protective business.
ANN told the market on April 8 that it was buying Kimberly-Clark’s Personal Protective Equipment business (KCPPE) for US$640m in cash.
KCPPE designs and markets differentiated hand, body and eye protection products under well-known Kimtech and KleenGuard brands to customers in global scientific, including life sciences, and industrial segments.
The purchase was partially funded through a $400m placement and $75m share purchase plan.
Further details around the company’s funding profile including FY25 net interest cost guidance will be provided along FY24 results on August 20.
“We find ANN’s acquisition of Kimberly-Clark’s personal protective equipment business somewhat surprising, as the company already has a lot on its plate, coming off a long period of “market dislocation” associated with the pandemic,” Morgans says in a note to client.
ScoPo’s Powerplay – PharmAust
PharmAust (ASX:PAA), a clinical stage biotech focused on developing therapeutics for neurodegenerative diseases, is Power’s pick of the week.
PAA’s primary asset monepantel (MPL) is a drug currently approved as a sheep and cattle de-worming agent, but is being repurposed for treating human neurodegenerative conditions such as motor neurone disease (MND).
The company has successfully completed a Phase 1 trial of MPL in treating MND and is now preparing for a larger adaptive Phase 2/3 trial – the STRIKE study – in Europe, Australia and the US.
Power says the company is also actively patenting MPL for cancer and other diseases reliant on the mTOR pathway, as well as analogues with potentially greater potency.
“They have an amazing story in the motor neurone space and we’ve just raised some money for them,” Power says.
The market potential for MND is considered significant due to the lack of effective treatments with the drug potentially being able to be used as a standalone treatment or in combination with other therapies if successful.
PAA estimates a total addressable drug therapy market of ~US$3bn per annum, based on the incidence rate of MND and the pricing of existing treatments.
Power says over the past few months there has been a significant overhaul in PAA’s management and board, introducing substantial commercial expertise in drug development.
“They have plenty of catalysts coming up as well,” Power says.
PAA expects to find out in the coming months about acceptance into the HEALEY ALS Platform Trial inclusion, which is designed to accelerate the process of drug development.
Other upcoming catalysts include potential grant funding, IND (Investigational New Drug) submission, and HEALEY ALS Platform Trial acceptance.
Interim and full results from the Open Label Extension Study are also anticipated.
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.
At Stockhead, we tell it like it is. While PharmAust is a Stockhead advertiser, the company did not sponsor this article.
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