From yesterday
There are more than 150 healthcare shares listed on the ASX, varying from pharmaceutical manufacturers, to medical software developers to facility operators. So where should you start if you want to add ASX healthcare shares to your portfolio this year?
To help you narrow it down, we take a look at 3 ASX healthcare shares to watch in 2020.
Paradigm Biopharmaceuticals Ltd (ASX: PAR)
Paradigm shares increased 195% in 2019 and today are currently trading at $2.85. Paradigm is an Australian biopharmaceutical company focused on repurposing the drug pentosan polysulphate sodium (PPS) for the treatment of osteoarthritis. PPS is an FDA-approved drug, with a long track record of treating inflammation over 60 years.
Paradigm’s drug
Paradigm has developed an injectable form of PPS, called Zilosul, which is registered in 4 of 7 major global pharmaceutical markets. Zilosul is intended to treat osteoarthritis, which is the most common joint disorder in the United States (US). Symptomatic knee osteoarthritis occurs in around 10% of men and 13% of women aged 60 years or older. This number is likely to increase due to the ageing population and obesity epidemic. There are more than 100 million osteoarthritis sufferers in the US, Europe, and Japan.
Positive clinical testing results
Paradigm’s Phase 2b trial successfully met primary, secondary, and exploratory endpoints. After 53 days, nearly half of patients given Zilosul reported >50% reduction in pain, compared to around 20% of patients given a placebo. Competing treatments have not demonstrated the same combination of safety, efficacy, regression of disease and reduction of key biomarkers.
The Australian market
Paradigm met with the Therapeutic Goods Administration (TGA) in November to present its case for provisional approval of Zilosul as a treatment for knee osteoarthritis. Based on feedback received from the TGA, Paradigm is proceeding with the provisional assessment process. If provisional approval is successful Paradigm could be generating revenue in Australia as early as the third quarter of 2020. With 3 million sufferers, the revenue potential in Australia at 20% market share is as much as $1.5 billion per annum.
Europe and the United States
In the first quarter of 2020, Paradigm will be meeting with the United States’ FDA and Europe’s EMA to determine the clinical trial design that will support regulatory approval in Europe and the United States. Paradigm expects the Phase 3 trial to begin in mid 2020, with the potential for a regulatory submission in the US as early as 2021.
The revenue potential in the US at 10% market share is as much as $9 billion per annum. Zilosul has been granted FDA approval under the Expanded Access Program to treat 10 patients, all ex-NFL players suffering osteoarthritis. The players were treated at the end of 2019 and results from their treatment are expected in mid 2020.
Funding
Paradigm had $75 million in cash on the balance sheet at September 2019 and was fully funded for all major clinical trials and regulatory approvals in osteoarthritis. The company holds patents on Zilosul in all key markets from 2030 to 2039. A secure scalable manufacturing supply agreement is in place with an FDA approved facility.
Pro Medicus Limited (ASX: PME)
Pro Medicus provides radiology information and image management systems to hospitals and imaging centers across Australia, Europe, and North America. The Pro Medicus share price increased over 96% in 2019 and shares are currently trading at $22.35.
Results
In FY19, Pro Medicus reported an 83.1% increase in underlying net profit after tax, up from $12.24 million in FY18 to $22.74 million. Dividends in FY19 were increased 75% to 10.5 cents per share, fully franked. This gives a payout ratio of approximately 50%. It is anticipated that future dividends will be fully franked.
Index inclusion
In June 2019, Pro Medicus was included in theS&P/ASX 200 Index(INDEXASX: XJO), which has increased the volume of shares traded, but also the volatility of the share price. As a result, the Board commenced buying back shares in an effort to mitigate volatility. In September 2019 the founders of Pro Medicus sold approximately 1 million shares each. Post-sale, the founders remain the majority shareholders of Pro Medicus with a combined stake of approximately 54%.
https://au.finance.yahoo.com/news/3-asx-healthcare-shares-watch-004430402.html
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