Here it is
Regulatory approvalsAmong the companies Mr Power expects will release clinical trial results or announce news of regulatory approvals before the end of 2019 are Antisense Therapeutics, Volpara Health Technologies, ResApp and Novita Healthcare.Despite trading at just 10¢ and having a market capitalisation of only $42 million, Antisense already has big institutional investors such as Australian Ethical and Platinum Asset Management on its register, as well as biotech doyen Leon Serry.The company was established by Circadian Technologies (now Opthea) in 2000 and spun out and listed in late 2001. It is developing two drugs, ATL1102 and ATL1103. The latter has already completed a phase two trial for a disease called acromegaly, while a phase two trial in patients with relapsing-remitting multiple sclerosis has also been completed for ATL1102.By the year-end, the company is expected to release results of another phase two trial for the use of ATL1102 to treat a rare genetic disorder called Duchenne Muscular Dystrophy. The life expectancy of those suffering from this is only the mid-20s.
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Healthcare stocks tipped for strong 2020 as clinical trial results pour in
Yolanda Redrup
Yolanda RedrupReporter
Nov 4, 2019 — 3.38pm
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Momentum among stocks in the healthcare sector is tipped to continue in 2020 as a range of small and mid-sized biotech and medical device companies hope for clinical trial results before the year's end.
The healthcare vertical has been the best performer – up 34 per cent – of the ASX 200 indices this calendar year, and the bulk of the gains have come in the second half.
The rise has been led by stocks such as CSL, Cochlear and Nanosonics, putting the sector ahead of other top performers such as IT and consumer discretionary stocks.
Filtering down
Morgans senior analyst Scott Power said the rise in the big stocks was filtering down into the mid and small-cap segment, as investors took a renewed interest in the life sciences space.
"In this low growth world, if you can deliver good growth, you're being rewarded. The sector is definitely positioned very well for 2020," Mr Power said.
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"The smaller end of town is very speculative and it tends to come in cycles. There was a lot of interest in resources 24 months ago, then it moved to technology and anything software-as-a-service (SaaS). Now we're seeing money flowing into these life sciences names.
"We're seeing interest in e-health, anything digital and anything to do with artificial intelligence or medical applications with an SaaS model. Then, companies with near-term catalysts are also being closely watched ... catalysts will attract eyeballs and if they're successful, multiples will go up immediately; if not, they come down pretty quick."
Businesses that have already been re-rated on account of strong clinical trial results or sales growth include Polynovo, Paradigm Biopharmaceuticals, Nanosonics and Opthea.
Regulatory approvals
Among the companies Mr Power expects will release clinical trial results or announce news of regulatory approvals before the end of 2019 are Antisense Therapeutics, Volpara Health Technologies, ResApp and Novita Healthcare.
Despite trading at just 10¢ and having a market capitalisation of only $42 million, Antisense already has big institutional investors such as Australian Ethical and Platinum Asset Management on its register, as well as biotech doyen Leon Serry.
The company was established by Circadian Technologies (now Opthea) in 2000 and spun out and listed in late 2001. It is developing two drugs, ATL1102 and ATL1103. The latter has already completed a phase two trial for a disease called acromegaly, while a phase two trial in patients with relapsing-remitting multiple sclerosis has also been completed for ATL1102.
By the year-end, the company is expected to release results of another phase two trial for the use of ATL1102 to treat a rare genetic disorder called Duchenne Muscular Dystrophy. The life expectancy of those suffering from this is only the mid-20s.
If the trial results are positive, Mr Power believes the business will become a takeover target for US pharmaceutical company Sarepta Therapeutics, which manufactures the world's first drug to treat the disease.
"It's treating a disease with very little products out there. Sarepta's product is only effective in 13 per cent of patients and for everyone else, there's virtually no treatments," he said.
"Its share register is very strong, looking at its board they're highly experienced internationally ... and its path to market is pretty clear assuming the clinical results are positive."
Mr Power's other picks for takeover targets in the sector include recent investor favourite Opthea, radiation treatment firm Telix Pharmaceuticals, Volpara and Neuren Pharmaceuticals, which is developing therapies for neurodevelopmental disorders.
He believes the safest bets for investors among small-cap healthcare stocks are companies offering an exit mechanism.
"Companies don't necessarily need to be taking multiple shots on goal, but we prefer to see ones that can hit a clinical milestone that triggers a licensing or partnership deal, or some sort of exit," he said.
"The sector is so cyclical money comes in and out, so unless you can deliver something to investors over a shorter time frame, investors drift away."
(20min delay)