ASX-listed Life Science companies capitalised at >A$200m |
Market capitalisations greater than A$1bn
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Company: Mayne Pharma
ASX Code: MYX Main business: Generic drugs Location: Adelaide Market capitalisation*: A$2.9bn Liquidity**: A$5m per day |
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Comment, 21 September 2016: One reason I'm bullish on Australia's pharmaceutical industry is that we now have two established companies with global scale headquartered right here that can be great training grounds for new talent. One is CSL. The other, less well known even though it's now a ~A$3bn company, is Mayne Pharma. That Adelaide-based company in its present incarnation - it's been around in one form or another since 1845 - got started in 2009 when America's Hospira sold the oral pharmaceutical division of the former Mayne Pharma to an ASX-listed drug reformulator called Halcygen. The 'new' Mayne Pharma has since hustled itself via numerous acquisitions into a significant player in generic drugs, where companies seek to make and sell off-patent products as cheaply as possible. Last month Mayne completed a transformative $652m acquisition of 42 products from Teva, which was selling to avoid antitrust issues related to its merger with Allergan's generic business. M&A is the aim of the game in generics right now, and the Teva deal suggests that Mayne Pharma knows how to play that game.
* 20 September 2016 ** Twelve months prior to 20 September 2016
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Company: Sirtex Medical
ASX Code: SRX Main business: Brachytherapy for liver cancer Location: Sydney Market capitalisation*: A$1.8bn Liquidity**: A$11m per day |
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Comment, 21 September 2016: Sirtex, whose SIR-Spheres product treats liver cancer through localised radiotherapy, had a good FY16, with revenue of A$232m (up 32%) and EBITDA of $70m (up 40%). In constant currency terms revenue rose 17%, in line with dose unit growth and in line with the experience of the last few years. There's potentially much more growth to come because Sirtex has only penetrated about 2% of its addressable market opportunity. At the moment SIR-Spheres are mostly used for 'salvage therapy' of liver cancer patients, for whom everything else has failed. However a succession of large clinical studies aims to show that SIR-Spheres are useful at an earlier stage of treatment. The first of these, called SIRFLOX, has generated early data showing that SIR-Spheres can keep tumours in the liver from growing (called 'Progression-Free Survival') for a median 20.5 months versus only 12.6 months for untreated patients. There's more data from SIRFLOX to come, and three other large studies read out data in 2017. If the results are good then Sirtex can reasonably go 'mainstream'.
* 20 September 2016 ** Twelve months prior to 20 September 2016
Market capitalisations A$200m to A$1bn
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Company: AFT Pharmaceuticals
ASX Code: AFP Main business: OTC pain and allergy relief pharmaceuticals Location: Auckland, NZ Market capitalisation*: NZ$298m Liquidity**: NZ$16,000 per day |
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Comment, 21 September 2016: Have you seen that ad on television lately showing a guy with longish grey hair and a soft voice with a noticeable Kiwi accent pitching an OTC painkiller called Maxigesic? That's Dr Hartley Atkinson, founder of the Auckland-based AFT Pharmaceuticals, who invented the product - it was the first in the world to combine paracetamol and ibuprofen in one formulation. AFT, which specialises in pain and allergy relief products and which listed on the ASX and NZX last December, is in rapid expansion mode. CAGR for revenue has been 19% p.a. since 2005, reaching NZ$64m in the year to March 2016. The best may be yet to come given that in that year AFT sold 21 million tablets whereas next year it expects to sell 72 million. Not bad when the competition is giants like Reckitt Benckiser, owner of Neurofen, and GlaxoSmithKline, the company behind Panadol. How does Hartley do it? Strong R&D to come up with differentiated products, hard work on building distribution partners globally, and some clever marketing. That's made AFT a ~A$300m company, albeit virtually unknown to investors here in Australia.
* 20 September 2016 ** Twelve months prior to 20 September 2016
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Company: AirXpanders
ASX Code: AXP Main business: Breast reconstruction Location: Palo Alto, Ca. Market capitalisation*: A$326m Liquidity**: A$100,000 per day |
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Comment, 21 September 2016: Some of the greatest healthcare plays I know involve a new product that is not only safe and effective but replace a current treatment modality best described as 'brutal'. AirXpanders, which went public on the ASX in 2015, is a great example. This company's AeroForm technology is a needle-free, wireless tissue expander system for women undergoing reconstructive surgery following a mastectomy. Frankly, it's the best thing to have happened in the field since the 1960s. Up until now women getting ready for reconstructive surgery have had to endure regular painful injections of saline over a 4-6 month period. With AeroForm, which uses a gradual release of compressed gas, it takes a mere 17 days. Unlike saline, there are no needles, it's patient-controlled, requires minimal doctor visits and even achieves the right anatomical shape ahead of the surgery. >100,000 breast reconstruction procedures are performed annually in the US alone so the market opportunity is significant. Australian and European approvals have been achieved. FDA approval is pending. A big step forward for patients, potentially big money for investors.
* 20 September 2016 ** Twelve months prior to 20 September 2016
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Company: Bionomics
ASX Code: BNO Main business: Cancer and CNS drugs Location: Adelaide Market capitalisation*: A$206.9m Liquidity**: A$204,000 per day |
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Comment, 13 October: The Australian Life Sciences sector took a big step forward in September 2016 when Bionomics, a drug developer renowned for ground-breaking science, announced positive results with BNC210. Bionomics thinks this compound can be the Next Big Thing in depression and anxiety because it has a nifty way of targeting a particularly brain receptor know to be relevant in a range of mental health issues. The good news from September 2016 that BNC210 seems to work in Generalised Anxiety Disorder (GAD), which may hit 2-5% of us in any one year. At the moment the best doctors can do with GAD is prescribe short-acting benzodiazepines such as Ativan or Xanax, which can cause drowsiness and may be addictive. BNC210 doesn't seem to have those problems, and in the 24 patients in Bionomics' Phase II, it achieved both primary endpoints in the trial with high statistical significance. Big Pharma has wanted a drug like BNC210 for a long time. Bionomics now has a shot at going after a licensing deal. Good for Bionomics. Good for the image of Australia as a Life Sciences leader.
* 12 October 2016 ** Twelve months prior to 12 October 2016
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Company: Clinuvel Pharmaceuticals
ASX Code: CUV Main business: Orphan skin disorders Location: Melbourne Market capitalisation*: A$306m Liquidity**: A$94,000 per day |
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Comment, 21 September 2016: If anyone suggests to me that Australia may be a good place for medical device development, but not so good at medicines, I point them to Clinuvel Pharmaceuticals. Clinuvel started out years ago with a peptide called Alpha-Melanocyte Stimulating Hormone that was demonstrated to darken skin. When I first started looking at Clinuvel, then called Epitan, the company was talking about indications like tanning. Then, under current CEO Dr Philippe Wolgen, Clinuvel got really smart and realised that the big money would be in 'Orphan' skin disorders most of us had never heard of like vitiligo and erythropoietic protoporphyria (EPP). Orphan drugs, that is, drugs for small patient populations, are big business in medicine these days because of good pricing and a faster regulatory pathway. For Clinuvel, being an Orphan drug company has worked well. In December 2014 the company gained European approval for its lead compound, SCENESSE, in adult patients with EPP. The company has filed for FDA approval of SCENESSE and as of July 2016 is on the Agency's 'Fast Track' for review.
* 20 September 2016 ** Twelve months prior to 20 September 2016
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Company: Impedimed
ASX Code: IPD Main business: Diagnostic for lymphedema Location: Brisbane and Carlsbad, Ca. Market capitalisation*: A$618m Liquidity**: A$642000 per day |
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Comment,9 October 2016: If you want to know why ASX-listed Life Sciences companies are worth taking a look at in 2016, consider ImpediMed (ASX: IPD), now a >A$600m company. When I had lunch with CEO Rick Carreon and CFO CFO Morten Vigeland in mid-2013 their company was capitalised at a mere $20m or so. ImpediMed was arguably the world leader in medical devices using bioimpedance spectroscopy to noninvasively monitor the fluid status of patients. The company had gained FDA approval for L-Dex, a new generation diagnostic for lymphoedema, which can hit up to one in five women after breast cancer surgery. But before Rick Carreon, previously a successful Medtronic executive, ImpediMed hadn't figured out how to get paid for L-Dex. Rick and Morten shared with me their plans for fixing that problem and, sure enough, by September 2014, L-Dex had the needed reimbursement, not just for breast cancer but for all cancer-related lymphoedema. Every time our Life Sciences sector attracts a Rick Carreon to help it out - and he has been a generous supporter - we move to a higher level. Click here for a September 2016 interview I gave to Livewire regarding Impedimed.
* 19 October 2016 ** Twelve months prior to 19 October 2016
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Company: Medical Developments
ASX Code: MVP Main business: Emergency pain medicine Location: Melbourne Market capitalisation*: A$308m Liquidity**: A$414,000 per day |
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Comment, 21 September 2016: Ever had a bad accident where the ambulance arrived and the medics gave you the ‘the green whistle’? After a few puffs, you got rapid pain relief. What they gave you was methoxyflurane. It isn't one of those dangerous opioids, simply a 'halogenated ether' that has been around for decades, but isn't available in America because the FDA has historic concerns about its potential for kidney damage. That, however, may be about to change. Melbourne-based Medical Developments has grown into a ~A$300m company selling methoxyflurane, brand name Penthrox, globally. For many applications the drug is safe, and a Phase III from January 2013 confirmed that methoxyflurane inhalation is safe for acute pain where the pain reduction is clinically significant. Medical Developments, now working for US approval, reported last month that the FDA is asking for another Phase III in acute trauma pain, a study that the company will use to evaluate methoxyflurane's effects in ethnically diverse patients. That study will be very worthwhile. Medical Developments reckons Penthrox is a $2bn global opportunity, half of which is in the US.
* 20 September 2016 ** Twelve months prior to 20 September 2016
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Company: Mesoblast
ASX Code: MSB Main business: Regenerative medicine Location: Melbourne Market capitalisation*: A$433m Liquidity**: A$1.8m per day |
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Comment, 21 September 2016: A big theme in 21st Century healthcare is regenerative medicine - the use of stem cells from a patient or donor to rebuild damaged tissue or modulate harmful inflammation. Which is why I pay attention to Mesoblast. This company, led by Silviu Itescu, is the world leader in stem cells. I've tracked Mesoblast since 2009 when the first human data on its Mesenchymal Precursor Cells came out, and the company has yet to put a foot wrong clinically. In 2016 it has three programs in Phase III (the late stage of development), and has had one approval in Japan. Next year it may gain its first FDA approval. The market doesn't like Mesoblast at the moment, and the shorters have had a field day, because in June its Big Pharma licensee, Teva, handed back a key program. I actually think this was great news because Mesoblast can now relicense to a more likeminded partner. Mesoblast had US$80.9m cash as at 30 June and is funded to complete the Phase III in advanced chronic heart failure which Teva started.
* 20 September 2016 ** Twelve months prior to 20 September 2016
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Company: Nanosonics
ASX Code: NAN Main business: Disinfection systems for ultrasound probes Location: Sydney Market capitalisation*: A$941m Liquidity**: A$1.5m per day |
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Comment, 19 October 2016: FY16 was a great year for Nanosonics. The Sydney-based company, now with a market capitalisation of >A$1bn, had been on the US market for five years with its Trophon EPR product and it finally recorded a maiden profit. Mind you, it was only $0.1m, off $42.8m in operating revenue. However, that $42.8m was about double FY15's revenue. This is a company in strong growth mode because of the uniqueness of its lead product. Trophon EPR is a groundbreaking disinfection system for ultrasound probes. Unlike older systems, it works quickly, doesn't damage the probes, is able to achieve high-level disinfection and avoids exposing hospital workers to hazardous chemicals. All that contributes to reducing hospital-acquired infections, which is a costly issue in healthcare systems everywhere, and potentially will make Trophon the global standard-of-care. Nanosonics reckons its growth curve remains steep. Most sales to date have been in the US, but other regions are now delivering. There are now around 10,000 Trophon systems installed globally, earning revenue on a ‘cartridges and blades’ model. Nanosonics reckons there is an addressable market of 120,000.
* 19 October 2016 ** Twelve months prior to 19 October 2016
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Company: ResApp Health
ASX Code: RAP Main business: Digital respiratory diagnostics Location: Brisbane and Perth Market capitalisation*: A$276m Liquidity**: A$1.4m per day |
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Comment, 21 September 2016: Everyone complains that with Life Sciences companies it takes at least ten years of your life and hundreds of millions of dollars to get to a marketable product. In many cases, however, that claim is no longer true, thanks in good measure to smartphones and the Internet. Consider the case of ResApp Health, a Perth-based company developing a smartphone-based diagnostic for respiratory disease. The technology, originally developed at the University of Queensland, can detect, through the measurement of coughs and breathing sounds, a range of respiratory disorders including pneumonia, asthma, and COPD with sensitivities and specificities greater than 90% and improving all the time thanks to machine learning. The technology works on existing smartphones with no extra specialised hardware required, making rapid deployment post-regulatory approval a relatively straightforward and highly scalable proposition. ResApp Health is now preparing for a registration study of the technology, ahead of a filing for FDA approval before year-end, and, hoped for approval in early 2017. That's right - around six months from now we could be talking about ResApp having a product to sell. To read NDF Research's 25 July 2016 research report on ResApp click here.
* 20 September 2016 ** Twelve months prior to 20 September 2016
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Company: Reva Medical
ASX Code: RVA Main business: Bioresorbable scaffolds Location: San Diego, Ca. Market capitalisation*: A$534m Liquidity**: A$119,000 per day |
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Comment, 21 September 2016: One of the reasons Life Sciences companies are in favour right now is the resilience of many companies in the sector. Take Reva Medical (ASX: RVA) as a good example. Two years ago it looked like Reva was finished. Its focus was stents - the scaffolds that prop open blood vessels - made not out of metal but from a bioresorbable polymer that would disappear after doing its job. Reva's ASX IPO was at $1.10, but after the company had abandoned its ReZolve2 stent, dissatisfied with the efficacy profile, in favour of a better, thinner stent called Fantom, the stock had dropped to 11 cents. Then Reva announced that Goldman Sachs and the Hong Kong-based Senrigan Capital would be providing convertible note funding. Reva got to work on Fantom and by May 2016 the good news was in - this stent worked as well as or better than a regular metal stent. Reva filed for CE Mark approval of Fantom last month. The company is now up markedly on its 2014 lows.
* 20 September 2016 ** Twelve months prior to 20 September 2016
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Company: SomnoMed
ASX Code: SOM Main business: Supplier of oral devices for the treatment of sleep apnea. Location: Sydney Market capitalisation*: A$227m Liquidity**: A$190,000 per day |
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Comment, 19 October 2016: In 2009 ResMed, the pioneer of CPAP therapy for Obstructive Sleep Apnea, recorded US$921m in revenue and US$146m in NPAT. Business was booming, and it still is. FY16's revenue and NPAT were US$1.8bn and US$352m respectively. However seven years ago someone influential at ResMed must have read Clayton Christensen's masterpiece The Innovator's Dilemma, and suggested buying a tiny French outfit called Laboratoires Narval. The reason was Narval's mouthguard-like 'mandibular repositioning device' which, by pushing the tongue and jaw forward, can also treat sleep apnea. In his book Christensen preaches the importance of established companies investing in smaller companies who may one day severely disrupt their old business. Narval was a potential disruptor because mandibular repositioning is low cost compared to CPAP and highly effective through greater patient compliance. The Sydney-based SomnoMed is another company in this space and it's now growing very strongly, with revenue up 29% in FY16 to A$44m. 10-15% of the population may suffer sleep-disordered breathing, much of it yet to be diagnosed, so there's plenty of growth to come, some of it potentially at ResMed's expense.
* 18 October 2016 ** Twelve months prior to 18 October 2016
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Company: Starpharma
ASX Code: SPL Main business: Dendrimers Location: Melbourne Market capitalisation*: A$248m Liquidity**: A$42,000 per day |
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Comment, 21 September 2016: If you've looked at the Life Sciences sector in Australia any time in the last ten years you would likely have come across Starpharma (ASX: SPL). That's because of Starpharma's 'VivaGel'. As an anti-microbial polymer coating for condoms VivaGel is genius - the statistics on condom slippage and breakage suggest it can be 2-3%. Starpharma also has evidence that VivaGel can treat a common female health condition called bacterial vaginosis. However VivaGel isn't necessarily where the really big money is. I think Starpharma's biggest news yet was a year ago when AstraZeneca licensed the company's 'dendrimers' for use in cancer drugs. Dendrimers are complicated but powerful molecules that are Starpharma's technology platform. This innovative company has a large body of knowledge on how drugs can change their properties for the better when you formulate them with dendrimers. For example, you can improve a drug's solubility with a dendrimer. Big Pharma is now paying up to use this know-how - for the first product AstraZeneca develops using dendrimers, that company will pay up to US$124m in milestones. It will pay up to US$93m for each subsequent product.
* 20 September 2016 ** Twelve months prior to 20 September 2016
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Company: Viralytics
ASX Code: VLA Main business: Oncolytic viruses Location: Sydney Market capitalisation*: A$223m Liquidity**: A$170,000 per day |
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Comment, 21 September 2016: Many experts believe that cancer is gradually transitioning from a death sentence to a manageable disease condition and that 'immuno-oncology', in which the patient's immune system is harnessed to attack the cancer, will be pivotal to the transition. If you read about Melbourne businessman Ron Walker's life being saved by a new drug called Keytruda you will have heard of immuno-oncology. Viralytics is one of a number of companies around the world working on new immuno-oncology-based treatments. The company, which originated from the University of Newcastle, NSW, is trialling a virus that not only attacks the tumour directly but also prompts the patient's immune system to get involved. Viralytics is now a >A$200m company because this virus, called CAVATAK, first showed, in September 2013 in a Phase II study, that it could hold tumours in check for longer in patients with advanced melanoma. The data since then has been good as well. In January 2011 the major American pharma Amgen paid US$425m upfront and committed to US$575m in milestones to acquire a company similar to Viralytics called BioVex.
* 20 September 2016 ** Twelve months prior to 20 September 2016
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