• ASX health stocks fell 0.43% over the past week, while the broader market 2.51%
• ProMedicus has signed a seven-year, $40 million deal with leading US radiology provider LucidHealth
• Opthea falls following release of half-year results as it awaits countdown to topline phase III trial data 

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.

As Brisbane-based Scott Power and I brace for Cyclone Alfred, ASX-listed health stocks are navigating stormy conditions of their own, battered by geopolitical and economic headwinds.

ASX health stocks continue to be hit by broader market volatility, driven by global geopolitical tensions and macroeconomic headwinds including US president Donald Trump’s tariffs on his country’s biggest trading partners Canada, Mexico and China along with tense negotiations to end war in Ukraine.

At 2pm (AEDT) on Friday, the S&P/ASX 200 Health Care index (ASX:XHJ) was down 0.43% for the past five days, while the benchmark S&P/ASX 200 (ASX:XJO) fell 2.51% for the same period, with global geopolitical and macroeconomic factors continuing to play on the Aussie bourse.

“It’s the macro which is continuing to dominate with Trump tariffs and Ukraine war negotiations dominating the headlines and investor sentiment is becoming more risk-off over the last couple of weeks,” Power said.

‘What’s not to like’ about contract-winning Pro Medicus ?

Power said there had been some interesting ASX announcements during the week, with probably the most significant from health-imaging company Pro Medicus (ASX:PME), which has won another big contract.

Pro Medicus, which Morgans views as one of the highest quality businesses on the ASX,  rose 3% Monday after announcing it had signed a seven-year, $40 million deal with leading US radiology provider LucidHealth.

The contract will see the company’s cloud-based Visage 7 enterprise imaging platform, including Visage 7 Viewer, implemented throughout LucidHealth to provide a unified diagnostic imaging platform.

LucidHealth employs more than 300 radiologists across their network of 140 care sites.

“They are a contract-winning machine with very high margins,” Power said.

Morgans has had ProMedicus on hold for a while with a $250 12-month target price, which it pushed through currently trading ~$253.

“What’s not to like? Another demonstration of the applicability of the PME products across a range of radiology practices” Morgans healthcare analyst Iain Wilkie wrote in a note to clients.

“Another demonstration of the applicability of the PME products across a range of radiology practices.”

With ~9% of US market share, Wilkie believes there is clearly plenty of room for further growth.

“But cautious around peak share expectations given the difficulties for any major software provider to hold >20% market position,” he wrote.

Opthea falls ahead of phase III trial results

Power said Opthea (ASX:OPT) has fallen ~19% in the past week following release of its half year results as it awaits countdown to topline data from its Coast phase III trial investigating OPT-302, in combination with aflibercept for the treatment of wet-AMD, due early in Q2 CY25.

In a note to clients Morgans healthcare analyst Derek Jellinek wrote the retinal-diseases-focused biotech reported net a loss of US$132m, up 30%, greater than expectations of US$104m.

The loss was attributed mainly to US$27m of fair value investor options and US$12m interest expense associated with a development funding agreement, partially offset by a US$9m decline in operating expenses.

“Opthea reported a cash balance of US$132m, with a cash runway though to October 2025 at the current cash burn,” Jellinek wrote.

Opthea is awaiting two phase III trial results in CY25 with topline data from its Coast phase III trial investigating OPT-302, in combination with aflibercept for the treatment of wet-AMD, due around April.

Results for Opthea’s phase III Shore trial investigating OPT-302 in combination with Ranibizumab in wet AMD are due in mid CY25.

“The financials are not as important as how it will pan out with the clinical results,” Power said.

He noted that Opthea was a $1.3 billion company with the share price coming under pressure ahead of its Coast result readout.

“It’s an important result for the company but also sector, which needs a couple of wins.

“Things are risk off and the last thing you want is clinical results which are either ambivalent or not clear.

“We want a good clear result which hits the primary end points.

“We’re not suggesting that Opthea won’t have good results but it is important for the sector.”

Power’s Powerplay: Dimerix banks payment from Japanese deal

Dimerix (ASX:DXB) is Power’s pick of the week after receiving the initial payment for its licence agreement with FUSO Pharmaceutical Industries Ltd in Japan for development and commercialisation of its Action3 phase III drug candidate DMX-200 to treat focal segmental glomerulosclerosis (FSGS) kidney disease.

Under the deal, FUSO has been granted exclusive rights to commercialise DMX-200 for FSGS in Japan.  Dimerix now has three partners across multiple territories, providing strong support for advancing and commercialising DMX-200 as a potential new treatment for FSGS.

Planned blinded interim data collection from the Action3 trial is anticipated in August 2025, following 35 weeks of dosing of the first 144 patients.

“This is another larger market cap company that has a clinical readout in the middle of the year, which is also important for the sector,” Power said.

“It is well capitalised in terms of its cash position.”

Avecho signs licensing deal for phase III cannabidiol drug

Avecho (ASX:AVE) has signed an exclusive 10-year development and licensing agreement with Sandoz Group AG for the commercial rights to its phase III cannabidiol (CBD) capsule for insomnia in Australia.

Avecho said it would continue to fund and oversee the ongoing Phase III clinical trial. Upon successful completion, Avecho and Sandoz will collaborate to secure Therapeutic Goods Administration (TGA) approval.

Sandoz will purchase finished product from Avecho and assume responsibility for the product’s commercialisation, including marketing and distribution in Australia.

Under the deal Avecho is eligible for development milestone payments totalling US$16m prior to commercialisation and will receive tiered royalties ranging from 14% to 19% on net sales once on market.

Avecho retains the rights to commercialise the product in all other territories, with Sandoz granted a right of first refusal to exceed any commercial offers Avecho receives.

“They’re running a major trial with around 250 people in Australia,” Power said.

Research Corner: Creatine may protect brains of babies

Creatine may be beneficial as a pregnancy supplement with new research from the Hudson Institute of Medical Research suggesting it could protect the brain when a baby is starved of oxygen.

Hypoxic ischemic encephalopathy (HIE) is a brain injury that occurs when a baby’s brain doesn’t get enough oxygen or blood flow and can happen before, during, or after birth.

The latest research published in Annals of Neurology, extends previous findings, showing that creatine is not just beneficial in restoring brain function, but also in minimising damage in the first place.

Dr Nhi Tran, from the Bioenergetics in Reproduction research group, used a pre-clinical model to record the electrical activity in the brain of foetuses that had suffered oxygen starvation, some of which had received continuous creatine supplementation during late pregnancy.

“We know that creatine plays a role in healthy pregnancy progression and in utero development, and our latest research shows that it is also beneficial to the baby before birth, especially in compromised pregnancies,” Dr Tran said, who recently gave birth to her first child.

The results showed improvements in neuronal function and reductions in seizures, neuroinflammation and brain cell death among the cohort that received creatine.

“Our results suggest that in pregnancies where the foetus is deprived of oxygen, creatine could be beneficial,” Perinatal Inflammation and Neurophysiology Research Group head Dr Robert Galinsky said.

Dr Stacey Ellery heads Hudson Institute’s world-leading creatine research with her team researching how much creatine gets from the mother’s system to the baby’s to optimise supplementation in pregnancy.

She believes there is great potential for creatine supplementation, especially in low-middle income regions, where compromised pregnancies are both more common and less identified, and access to healthcare limited.

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.