Healthcare Stocks in Red Zone- RAP plunges down by ~52%, PNV down by ~7%

Healthcare Stocks in Red Zone- RAP plunges down by ~52%, PNV down by ~7%

What? Down by half?

Yes, you read it correctly, the stock price of RAP and PNV fell by ~52 per cent and ~7 per cent, respectively, on 11 March 2020. The economic trauma prompted by the Coronavirus pandemic continues to influence the share markets across the globe.

Interesting Read: Opportunities to be Tapped in the Healthcare Sector Amid Coronavirus

World Health Organization (WHO) has categorised this outbreak as a public health emergency of global concern and has called on all countries to step up their attempts to slow down the spread of Coronavirus (COVID-19).

As the new Coronavirus spreads around speedily, WHO mentioned that many health systems are not prepared to curb infections if the disease strikes. For mitigating the risk of this pandemic, WHO warned that countries need to have proactive surveillance, quick detection/diagnosis and urgent quarantine. Addition to this, WHO advices to run the campaign for making public aware of the proper hygiene and what to do if they become infected with this deadly virus.

Despite the Coronavirus outbreak, the stock price of a few health care companies is in the red zone, the stock price of ASX listed digital health care player ResApp declined by more than 50%, by the end of the trading session, on 11 March 2020, after the company unveiled its De Novo Classification Request is not approved by the US Food and Drug Administration (FDA).

Another ASX listed health care sector player PNV mentioned the little impact of Coronavirus outbreak on the business or sales of the Company; however, the stock price of PolyNovo fell by approximately 7 per cent, by the close of the market, on 11 March 2020 .

Let us now zoom lens and find out why these two ASX listed health care stocks under discussion are in red zone today-RAP and PNV

Stock that is down by 52%- ResApp Health Limited (ASX:RAP)

Stock Performance

On 11 March 2020, RAP stock settled the day’s trade at $0.081 going down by 52.353% from its last close. The market capitalisation of the stock was noted at approximately $123.42 million. The stock has nearly 726.03 million shares outstanding with the 52-weeks low and 52-weeks high price of nearly $ 0.055 and $ 0.415, respectively. The company generated a negative return of nearly 27.66% on a year to date basis.

About the Company

An ASX listed digital health care player ResApp Health Limited offers smartphone applications for management and diagnosis of diseases related to the respiratory system. The machine learning algorithms of ResApp diagnose and measure the severity of the condition by the cough sound of the patient with no requirement of any additional hardware.

ResAppDx-EU, acute respiratory disease diagnostic test of ResApp is Therapeutic Goods Administration (TGA) approved in Australia and CE Marked in the European Union.

De Novo Classification Request update

On 11 March 2020, the Company unveiled that the US FDA has advised that, on the basis of the data submitted, ResApp’s De Novo classification request for ResAppDx-US has not been approved.

The Company mentioned that FDA notified that an additional information is required for determination of probable benefits of the device be more significant than its probable consequences.

Moreover, the Company and its regulatory consultants, Experien Group, are planning to request an in-person meeting with the review team of FDA for determining the next steps in the United States, which might include a resubmission.

Update on Direct-to-Consumer Product Development

On 11 March 2020, ResApp update the market with the development of direct-to-consumer product under the Startup Creasphere program. In this Startup program, the Company collaborated with the Sanofi’s customer healthcare business unit on building a consumer health-focused product by using the novel respiratory disease diagnostic algorithms of ResApp.

Good Read: ResApp Unlocks The Last Step To Commercialize Its Diagnostic Mobile Application In Europe

Stock that is down by ~7% - PolyNovo Limited (ASX:PNV)

Stock Performance

On 11 March 2020, PNV stock settled the day’s trade at $1.900 going down by 7.767%. The market capitalisation of the stock was noted approximately $ 1.36 billion. The stock has nearly 661.09 million shares outstanding with the 52-weeks low and 52-weeks high price of nearly $0.700 and $3.285, respectively. The company generated a positive return of nearly 11.05% on a year to date basis.

About the Company

An ASX listed global medical device company PolyNovo Limited is involved in the development of a dermal regeneration solution known as NovoSorb BTM. PolyNovo manufactures this solution by employing its patented polymer technology known as NovoSorb biodegradable technology. The developmental program of the Company offers solutions for Breast Sling, Hernia, as well as for Orthopaedic applications.

NovoSorb BTM is registered for use in the United States, Australia, Malaysia, Saudi Arabia, South Africa, New Zealand, India and Israel.

Impact of Coronavirus

PolyNovo updated the market about the impact of Coronavirus on the Company’s business or sales going forward.

  • PolyNovo mentioned that the Company does not source raw materials from China, and it has numerous supplier redundancy built into its supply chain;
  • The Company does not foresee any considerable disruption in the supply chain;
  • PolyNovo has enough raw materials to run two shifts of production and the company expect running two shifts April 2020 onwards. The inventory build that will result from this is in response to the anticipated demand of product for the rest of the year;
  • The Company has sufficient inventory of finished product on shelf in the United States and Melbourne, New Zealand, and adequate stocks in the UK/EU to meet the projected sales for a significant time;
  • Moreover, PolyNovo also notified that the Company does not sell into China, and the primarily customers are based in Australia, the United States, Western Europe, the UK and New Zealand.
  • PolyNovo disclosed that the Company expects surgeries will continue in a virus challenged world as most of the procedures are not elective surgery. BTM is majorly used in emergency, trauma or extensive surgery applications.

In addition to this, PolyNovo disclosed that the Company is developing a comprehensive digital marketing program to maintain surgeon reach. This digital marketing program would also help to alleviate any conference cancellations or if hospitals impose restrictions on the access to marketing/sales representative.

PolyNovo CEO, Paul Brennan, commented that-

Also read: How to Prepare for Coronavirus: Protective Measures and Myths

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