Scott Power: ASX health stocks rise with capital raisings in full swing

News.com.au

23-05-2025

ASX health stocks up 0.57% over past week, while the broader market is up 0.35%
Wave of capital raisings as ASX-listed healthcare firms seek to strengthen their balance sheets
Monash IVF's woes continue with company downgrading FY25 blaming softer market
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.
Power said there had been a plethora of capital raisings over the past couple of months as ASX healthcare companies look to replenish their cash reserves.
In the latest capital raise announcements, EBR Systems (ASX:EBR) is boosting its balance sheet with firm commitments to raise $55.9 million through an institutional placement.
EBR is also set to undertake a $6m share purchase plan to eligible shareholders. Together, the company will raise nearly $62m to progress commercialisation of its WiSE CRT system, the world's first and only wireless solution for pacing the left side of the heart.
The raise follows US Food and Drug Administration (FDA) approval for WiSE in April.
Oncology focused biotech Chimeric Therapeutics (ASX:CHM) has received firm commitments to raise $6.6m through a two-tranche placement to institutional, sophisticated and professional investors with cornerstone support from a US-based family office.
Funding will focus on progressing CHM CDH17, a pioneering third-generation CAR T-cell therapy that targets the CDH17 protein as well as advancing its CORE-NK clinical trials.
Developer of a new class of synthetic anti-infectives Recce Pharmaceuticals (ASX:RCE) has raised $8.4m raised across an entitlement offer and placement to support phase III registrational trials, which it said was the catalyst for revenue in CY26.
And Island Pharmaceuticals (ASX:ILA) has raised $3.6m through a placement, including $100,000 subscribed for by directors subject to shareholder approval.
Island said funding would provide flexibility to advance its lead asset ISLA-101 pending results from the phase 2a/b PROTECT trial in dengue fever. This includes potential progression to a larger phase II trial in key international regions where the mosquito-borne infection is highly prevalent.
Mayne Pharma takeover wobbles as ASX healthcare rises
Mayne Pharma (ASX:MYX) has sold off this week amid concerns its takeover deal could collapse. US-based Cosette Pharmaceuticals initiated a review of its ~$672m acquisition, citing a "material adverse change" in the Australian firm's business and finances.
Mayne shareholders were due to vote on the court-approved scheme of arrangement on June 18.
"I am presuming the vote will go ahead but there are a few issues to contend with," Power said.
Meanwhile, the ASX healthcare sector is up for the week as the Reserve Bank of Australia (RBA) cut the cash rate by by 25bps to 3.85%.
At 12.45pm (AEST) on Friday the S&P/ASX 200 Health Care index was up 0.57%% for the past three days, while the benchmark ASX 200 rose 0.35% for the same period.
"It's been a more positive week and the lower interest rates does help move money back into the growth stocks and are better for equity markets generally," Power said.
Monash downgrades FY25 profit guidance
After confirming in April it had mistakenly implanted a woman with the wrong embryo resulting in the birth of a child, the woes for Monash IVF Group (ASX:MVF) continue with the company downgrading its FY25 guidance.
Underlying NPAT is now expected to be $27.5 million from previous guidance of $30-31m.
The downgrade was attributed to a softer market and operating conditions across all geographic markets in March, that worsened in April. Monash said May improved but not enough to offset weakness in the previous two months.
"We suspect a number of factors were at play in April, including lower consumer sentiment (macro factors), impact of timing of Easter/ Anzac Day holidays and the lead-up to the election," Morgans' lead analyst on Monash Emily Porter wrote in a note to clients.
"We also suspect Victoria continues to be the troublesome state, driven by weaker industry cycles (down ~10% taking a 4-month average to March) and we suspect possible market share loss in the region."
Monash said it continued to monitor movements in new patient registrations, returning IVF patients, transfers to alternative providers (across Queensland and Australia) noting that performance since news of the Brisbane incident broke in April had been consistent with the months leading up to this date.
"We see this as positive but think these will be important metrics to track in the coming 3-6 months," Porter wrote.
"Interestingly, MVF did not provide an update on the findings of the independent report by Fiona McLeod AO SC into the incident.
"Without clarity on the outcome of this review, we continue to see this as a likely overhang on the stock.
Morgans have downgraded its NPAT forecasts for FY25 by 11% from $30.6m to $27.5m in line with updated guidance and have also lowered its NPAT forecasts for FY26/27 by 15%/16% respectively.
"We have reduced our domestic cycle volumes driven by lower industry cycles and some loss of market share in FY26/27," Porter wrote.
Morgans has upgraded its rating to a speculative buy but based on downward revisions to earnings reduced its 12-month target price from $1.34 to $1.
Power's Powerplay: EMVision advances AI-driven stroke diagnostics
Neurodiagnostics medical devices company EMvision Medical Devices (ASX:EMV) is Power's stock of the week after announcing it had advanced its AI-driven stroke diagnostics.
Promising new data showing enhanced performance of its 'ischemia or not' algorithm was this week presented at the 11th European Stroke Organisation Conference (ESOC 2025) in Helsinki, Finland.
EMVision said the emu RF-based model missed only one case in a limited sensitivity analysis of 20 ischemic test cases, compared to nine missed using first-line Non-Contrast Computed Tomography (NCCT).
"They're basically adding AI to improve the learning of their emu product," Power said.
EMVision have improved the sensitivity – the ability of the device to diagnose a disease – and the specificity, which is the ability to rule out false positives.
"Previously the sensitivity was 85% and specificity 78%," Power said.
"In the updated dataset the algorithm's performance has improved to 95% sensitivity and 80% specificity."
EMVision said the recently started pivotal trial of its emu bedside brain scanner for diagnosing stroke to support US Food and Drug Administration (FDA) de novo (new device) clearance had been designed to also validate algorithm performance.
Clarity kicks off phase III trial for prostate cancer test
Clarity Pharmaceuticals (ASX:CU6) has kicked off its second registrational phase III trial AMPLIFY for their diagnostic test for prostate cancer.
AMPLIFY is a study of 64Cu-SAR-bisPSMA Positron Emission Tomography, a phase III trial of participants with biochemical recurrence (BCR) of prostate cancer.
The trial aims to investigate the ability of 64Cu-SAR-bisPSMA PET/computed tomography (CT) to detect recurrence of prostate cancer and will enrol ~220 participants at multiple clinical sites across the US and Australia.
As a pivotal trial, the final results are intended to provide sufficient evidence to support an application to the US Food and Drug Administration (FDA) for approval of 64Cu-SAR-bisPSMA as a new diagnostic imaging agent in BCR of prostate cancer.
"It's another good news story for the sector this week," Power said.
Oral OSA drug not a 'major disruptor' to ResMed's CPAP tech
ResMed (ASX:RMD) saw its share price retreat on Tuesday but recover the next day after privately held US pharma company Apnimed released top-line results from a phase III trial (SynAIRgy) evaluating lead candidate AD109 targeting obstructive sleep apnoea (OSA).
AD109 is an oral drug that targets neurological pathways that contribute to airway collapse during sleep, in adults living with mild, moderate and severe OSA.
The trial met its primary endpoint, which was mean change from baseline in the apnoea-hypopnea index (AHI) at 26 weeks.
AD109 also demonstrated improvements in other secondary and exploratory endpoints. In a note to clients Morgans' healthcare analyst Derek Jellinek wrote that he was not too concerned about the effects of the trial on leader in sleep-related respiratory disorders ResMed.
"While the study demonstrates AD109 is having an impact on OSA, consistent with prior trials, only top-line results were reported, so there is inadequate detail to determine extent of improvement on a per patient basis," he wrote.
"It remains unknown in which patients the drug was most effective and best tolerated and how long the effect lasts."
Although AD109 offers a non-invasive, oral alternative to OSA and continues to show promise in trials, Jellinek wrote Morgans have never viewed the drug as a "major disruptor to gold standard CPAP" (continuous positive airway pressure) therapy, especially for patients with moderate to severe cases.
He said it may more likely be an option for those who cannot tolerate CPAP or with mild to moderate OSA, so unlikely to be a substitute for CPAP entirely.
"We continue to view RMD in a strong competitive position, with technological offerings driving greater adoption of its products, along with its US tariff exemption status and added benefits from favourable trends in wearables and weight loss drugs," he wrote.
Morgans has an add rating on Resmed and a 12-month target price of $44.07.
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