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The Australian healthcare sector remains one of the best performers on the Australian Securities Exchange (ASX) in terms of returns generated. In the current reporting season, companies have posted mixed earnings update due to the impact of COVID-19 pandemic on their respective business performances.
The reporting season is the time when investors closely monitor the financial performance of companies as well as the business outlook for the stocks in their portfolio. Due to the recent coronavirus outbreak, the healthcare sector has come under the spotlight given the fact that several biotech companies across the globe are engaged in initiating/conducting clinical trials and developing new technologies to contain the rapid spread of the virus.
In this article, we will highlight two ASX-listed healthcare stocks and their performance in the past 12 months - ZNO and PNV.
Headquartered in New Zealand, healthcare player Zoono Group Limited is primarily engaged in developing and delivering antimicrobial formulations that are suitable for skincare, disinfecting surfaces, skincare and mould remediation therapies.
Zoono’s verified antimicrobials comprise surface and hand sanitisers which have shown inhibiting activity against coronavirus and are based on unique antimicrobial molecule called the ‘zoono molecule’.
Revenues growth in the current quarter:
The Company is delighted to inform that in response to the unprecedented level of interest in Zoono and its products, the unaudited revenues are NZ$11.0 million to date in the current quarter (11 weeks as at 17 March 2020).
Moreover, ZNO is also pleased to report decent progress on several crucial markets and business development plans concentrating on driving the long-term profitability and sustainability of the Company:
- The company disclosed that since 01 March 2020, on-line sales had averaged NZ$150,000 per day. With on-line sales providing solid margins, ZNO’s ability to build its on-line sales channels is significant to the long term future profitability.
- Along with the revenue growth from sales, helped especially by the increased on-line sales, Zoono has been able to increase its gross sales margin substantially, up by more than 18 per cent as compared to the half-year ended 31 December 2019.
- Moreover, the company mentioned that the negotiations are in progress on further significant distribution and/or supply arrangements which, if successfully implemented, will have the immediate effect of introducing the Company's products and technology to new areas of the globe.
It is noteworthy that with the global financial impact of the coronavirus outbreak, Zoono is delighted to be in a stronger financial position, with a rise in the available cash resources of the Company around NZ$2.0 million since 31 December 2019.
Positive outcomes from Z-71 Microbe Shield Against COVID-19
On 28 February 2020, the Company disclosed a report on the laboratory-based tests performed against coronavirus. The outcomes from the study suggested that Z-71 Microbe Shield of ZNO was more than 99.99 per cent effective in deactivating the virus.
Moreover, ZNO is thrilled with the outcomes, which further demonstrates Zoono technology’s ability to play a role in developing a solution for the prevention of coronavirus spread.
Let us now discuss the stock performance of ZNO. On 20 March 2020, the stock of ZNO ended at $1.420 going up by 12.253 per cent. The Company has a market capitalisation of ~$206.59 million, and the 52-weeks high price and low price were noted at $2.440 and $0.063, respectively.
The stock has generated a return of approximately 84.67 per cent on a YTD basis and an exceptional return of 1000 per cent in the past 12 months.
PolyNovo Limited (ASX:PNV)
Headquartered in Melbourne, Victoria, the Australian medical device company PolyNovo Limited is engaged in the business of dermal regeneration solutions (NovoSorb BTM). The Company designs, develops, and manufactures NovoSorb BTM by using its patented NovoSorb biodegradable polymer technology, and it provides solutions for Breast Sling, Hernia, and Orthopaedic applications.
NovoSorb® Biodegradable Temporizing Matrix (BTM) Feasibility Study Results:
PolyNovo has announced the completion of its NovoSorb® BTM feasibility study (CP-002) with results to be submitted to the US Food and Drugs Administration (FDA) in April along with the Company’s Pivotal IDE package.
The feasibility study assessed the effectiveness and safety of the NovoSorb® BTM for the treatment of full-thickness burn injuries.
The co-primary effectiveness endpoints were:
- After integration as well as at the time of sealing membrane removal BTM ‘take’ rate assessed.
- Split-thickness skin graft ‘take’ rate at 7–10 days after application.
Moreover, the Company also mentioned that data analysis for this study has been completed and will be submitted for review by the US FDA as part of the approval for its IDE to conduct a larger pivotal study of NovoSorb® BTM.
PolyNovo Chief Executive Officer, Paul Brennan commented:
Impact of Coronavirus:
The Company updates the market about the modest impact COVID-19 is predicted to have on its 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 adequate raw materials to operate two production groups, and the Company expects running two shifts from April 2020. The inventory build that will result from this is in response to the anticipated demand of product for the rest of the year.
- Moreover, PolyNovo also informed that it does not sell in China, and mainly customers are based in Australia, the US, Western Europe, the UK and New Zealand.
- PolyNovo disclosed that it 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 highlighted that it 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.
BTM sales grew 129 per cent during first half of FY20
The Company stated its half-year results for FY 2020 (period ended 31 December 2019) and underlined the milestones achieved and provided the updates on clinical trial during the period.
Financial highlights of half-year 2020:
- PolyNovo disclosed that the revenue from NovoSorb BTM sales was nearly $8.57 million, an increase of 129 per cent compared to H1 FY2019.
- The cash on hand was ~$8.14 million.
- R&D and New Capex stood at $3.22 million.
Looking at the stock performance of PNV, on 20 March 2020, the stock of PNV closed the day’s trade at $1.540, up by 3.704 per cent compared to its previous close. PNV’s market capitalisation was ~$981.72 million, the 52-weeks high price and low price was noted at $3.285 and $0.705, respectively. The stock has delivered a positive return of approximately 106.25 per cent in the last 12 months.
