2 Health Care Stocks Beating The Trends: AVH and CUV

  • Dec 19, 2019 AEDT
  • Team Kalkine
2 Health Care Stocks Beating The Trends: AVH and CUV

Being the most dynamic industry, in the health care sector, there is always a need for innovation to develop new therapies, medical devices as well as diagnostic solutions for patients. Medical device and pharma & biotech companies are distinct, but they are also closely related, as there is a strong inter-dependency between both the segments.

On a year to date basis (from 2 January 2019 to 18 December 2019), S&P/ASX 200 Health Care (Sector) grew by approximately 46%. Let us zoom our lens on two ASX-listed health care stocks, respiratory and regenerative products developer AVITA Medical and drug developer CLINUVEL PHARMACEUTICALS, which have delivered a return of 672.15% and 61.11% on a year to date basis, as on 18 December 2019, respectively, thereby surpassing their index.

AVITA Medical (ASX: AVH)

ASX listed regenerative medicine company, AVITA Medical (ASX: AVH) is engaged in delivering innovative treatment solutions to tackle the unmet medical needs in chronic wounds, burns and aesthetics indications. The company owns a patented technology, which provides new treatment options originated from the regenerative properties of the skin of a patient.

AVITA’s medical devices work by preparing a REGENERATIVE EPIDERMAL SUSPENSION™, which is an autologous suspension consisting of the skin cells of the patient that are required for the regeneration of natural healthy epidermis.

RECELL® System is the medical device of AVITA, which was approved in September 2018. By making use of a patient’s skin sample, the device allows medical professionals to create a suspension of Spray-On Skin™ Cells.

Preclinical Research Collaboration

AVH and scientists at a multi-institutional centre (Gates Center for Regenerative Medicine at the University of Colorado School of Medicine) have recently teamed up. As part of their collaboration, the partners would perform preclinical research to determine proof-of-concept, while discovering new developments for a spray-on treatment of genetically modified cells for people suffering from EB (epidermolysis bullosa). EB is a group of skin problems that are rare and incurable and are due to mutations in genes encoding structural proteins that lead to fragile and blistering skin, which results in chronic wounds. Moreover, in few sub-types, there is further risk of squamous cell carcinoma or death.

This preclinical research collaboration would combine the patented Spray-On Skin™ Cells technology of AVITA Medical with the new, patent pending combined reprogramming and gene-editing technology of the Gates Center to allow the proper functioning of cells. AVITA Medical holds the option to license (exclusively) the upcoming technologies from the collaboration for further development and commercialisation, as part of the Sponsored Research Agreement.

Institutional Placement of $120.0 Million

During mid-November 2019, the company via an ASX announcement updated the market regarding an institutional placement of $ 120.0 million, targeted towards funding the pipeline development of new indications, including optimising support for development projects and clinical trials. Moreover, the company plans to direct the funds raised towards its commercial growth strategy in the United States.

The placement involved an issue price of $ 0.59 each fully paid ordinary share, with the issue of approximately 203.39 million shares to international and Australian sophisticated investors. The funds from this placement would allow AVITA Medical to speed up its broader commercialisation approach and to accelerate the progression of clinical development programs.

Major initiatives have been listed below.

  • Commencing the United States pivotal trials to determine the efficacy and safety of the RECELL System in traumatic wounds and soft tissue reconstruction and also for early intervention for the treatment of paediatric scald wound.
  • Further development and submission of a next-generation RECELL System to the US Food and Drug Administration (FDA) for facilitating access to the large outpatient market.
  • Augmentation the existing IP portfolio by conducting research and preclinical studies.
  • In Japan, AVITA Medical would secure approval for marketing and reimbursement of the RECELL System in collaboration with COSMOTEC;
  • Early phase research into cell and cell-based gene therapy for skin regeneration that either corrects the inborn genetic defects or contributes materially to rejuvenation.

Stock Performance

On 19 December 2019 (AEDT 02:55 PM), the stock of AVH was trading at $0.627, up by 2.787% from its previous closing price, with outstanding market shares of approximately 2.12 billion. The company has a market cap of nearly $ 1.29 billion, while the 52 weeks high and low price of the stock is $0.740 and $0.077. The stock has delivered an excellent return of 62.67% in the last six months and 3.39% in the last three months.

CLINUVEL PHARMACEUTICALS LTD (ASX: CUV)

ASX listed global biopharmaceutical player, CLINUVEL PHARMACEUTICALS LTD (ASX: CUV) is dedicated towards the development of therapeutic drugs targeted to treat various severe skin disorders. CLINUVEL PHARMACEUTICALS is pioneer in the field of photomedicine and understanding human biology and light interaction. SCENESSE®, which is a lead compound of CLINUVEL, was approved for the prevention of phototoxicity in adult erythropoietic protoporphyria (EPP) patients, by the European Commission (in 2014) as well as by the FDA (in 2019).

Priority Registration Process for SCENESSE®

Late in the month of October 2019, the company announced to have secured the TGA (Therapeutic Goods Administration) grant to file its SCENESSE® under the priority registration process. The timeframe for the priority review is 150 working days after the application submission. CLINUVEL plans the submission of scientific dossier in the first quarter of 2020.

CLINUVEL’s SCENESSE® was granted orphan drug designation from the Therapeutic Good Administration in 2010.

Financial Summary for FY2019 (year ended 30 June 2019)

On a consolidated basis, the company reported following financial figures for the past year.

  • CLINUVEL Group generated total revenues and other income of approximately $ 32.5 million in the fiscal year 2019, which was up by 24% on the prior corresponding year.
  • The company reported a net profit before income tax of approximately $18.11 million, representing an increase of 40% year on year.
  • Basic earnings per share also went up by 36 per cent when compared with the year ago period (FY18).
  • In Europe, commercial sales of SCENESSE® totalled nearly $ 26.489 million for the financial year 2019 as compared to $ 21.359 million for FY18.

Stock Performance

On 19 December 2019 (AEDT 03:11 PM), the stock of CUV was trading at $ 28.980, down by 0.069% from its previous closing price, with outstanding market shares of approximately 49.41 million. The company has a market capitalisation of nearly $ 1.43 billion, while the stock has a 52 weeks high and low price of $ 45.880 and $ 17.610. The last one-month return of the stock stands at 13.15%. The P/E ratio of CUV’s stock stands at 77.13x, with an annual dividend yield of 0.09%.


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