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Why did Mayne Pharma and Sonic Healthcare stock end ~5% higher today?

  • June 24, 2020 08:01 PM AEST
  • Kunal Sawhney
    CEO Kunal Sawhney
    2365 Posts

    Kunal Sawhney is founder & CEO at Kalkine and is a richly experienced and accomplished financial professional with a wealth of knowledge in the Australian Equities Market. Kunal obtained a Master of Business Administration degree from University of T...

Why did Mayne Pharma and Sonic Healthcare stock end ~5% higher today?

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  • Several ASX-listed healthcare companies are backed by numerous advanced technologies and looking at the current opportunities, countless momentous developments are anticipated in the sector.
  • Mayne Pharma’s oral contraceptive pill E4/DRSP accepted for FDA review; finalisation expected in the first half of CY21.
  • If approved, E4/DRSP contraceptive would be the first contraceptive pill containing E4, and the first novel estrogen launched in the US.
  • Sonic Healthcare provided a trading update highlighting a better-than-expected performance in May and June till date. Revenues are inching towards pre-COVID-19 figures.

Due to an effective regulatory structure and top-grade research capabilities in the country, the Australian healthcare sector has regularly been a sector that market participants track. Amid the ongoing COVID-19 crisis, many investors are keeping an eye on the ASX-listed healthcare sector companies as there are many momentous developments projected in the future.

The Australian healthcare industry includes several ASX-listed players with the potential for significant developments in the areas of drug development, digital health services, medical devices, and aged-care, among others, backed by technology advancements and encouraging tailwinds.

On 24 June 2020, S&P/ASX 200 Health Care Sector settled at 42,626.7, indicating a rise of 1.35% as compared to the last close. The sector performance was significantly better than the benchmark index S&P/ASX 200, which closed at 5,965.7, up 0.19%.

Now let us skim through two ASX-listed healthcare stocks which ended in the green zone today - MYX and SHL.

Mayne Pharma’s E4/DRSP Accepted for FDA Review

ASX-listed speciality pharmaceutical company Mayne Pharma Limited (ASX:MYX) is focused on using its drug delivery capability for commercialisation of branded as well as generic medicines, and on providing patients better and more accessible pharmaceuticals. The Company also offers manufacturing services and contract development of over 100 clients around the world.

With a track record of 40 years in innovation and success for developing new oral drug delivery systems, Mayne has successfully commercialised these technologies in several products that continue to be marketed worldwide.

On 24 June 2020, Mayne Pharma disclosed that the NDA (New Drug Application) for its oral contraceptive pill E4/DRSP to avoid pregnancy was accepted by the US Food and Drug Administration (FDA) for review. The agency anticipates finalising its review in the first half of CY 2021.

E4/DRSP is developed by Mithra Pharmaceuticals SA and is a new combined oral contraceptive comprising 15 mg E4 (estetrol) and 3 mg DRSP (drospirenone). Mithra is the development and manufacturing partner of Mayne and can produce E4 at large scale via its complex plant-based manufacturing procedure.

Moreover, the Company notified that NDA submission comprises two Phase 3 clinical trials outcomes which were conducted in over 3,725 women in the age bracket 16-50 years.

If approved by the US FDA, E4/DRSP contraceptive pill would be the first contraceptive comprising E4 and the first novel estrogen launched in the US as a contraceptive in nearly 50 years.

Mayne Pharma anticipates bringing its E4/DRSP oral contraceptive in the Australian market and in this calendar year it intends to file the product with the TGA (Therapeutic Goods Administration). For this, the Company has recently extended its strategic relationship with Mithra.

It is noteworthy to mention that if approved by FDA, Mayne Pharma will strive to launch E4/DRSP oral contraceptive in the first half of the calendar year 2021.

Stock Performance: On 24 June 2020, MYX stock ended the day’s trade at A$0.390, moving up 5.405% compared to the previous close. The market cap of MYX stood at approximately A$621.26 million, with nearly 1.68 billion shares trading on the ASX. In the last three months, Mayne has generated an impressive return of 60.87%.

Sonic Healthcare Provides Guidance Update, Anticipates Flat Earnings

Sydney, Australia-headquartered healthcare sector player Sonic Healthcare Limited (ASX:SHL) provides diagnostic services across the globe. The Company is engaged in offering primary care medical and laboratory radiology/diagnostic, medicine/pathology imaging services.

SHL has its operations in Australia, Switzerland, New Zealand, the UK, the US, Belgium, Germany, and Ireland.

On 24 June 2020, Sonic Healthcare disclosed that for the 8.5 months to mid-March 2020, trading results of the Company were in line with the earnings guidance provided earlier. However, in March second half, Sonic confronted a dramatic drop in the volume of patients and revenues across its global businesses due to COVID-19 pandemic and associated precautionary measures.

It is notable that in the last few weeks, most of the divisions of the Company have returned to pre-COVID-19 base volumes along with revenues.

The trading results of Sonic for March and April 2020 were well below estimates, while May 2020 results were stronger than anticipated. This positive trend has continued through June to date. Despite the prevailing uncertainty and volatility associated with the pandemic, Sonic believes it can share new earnings guidance for FY2020.

DO READ: Sonic Healthcare Playing Crucial Frontline Role amid Coronavirus Pandemic.

For FY 2019, Sonic reported statutory EBITDA of A$1.075 billion, and now Sonic anticipates reporting underlying EBITDA for FY20 at a similar level, without the impact of the new lease accounting standard AASB 16, that went into effect from 1 July 2019.

However, Sonic notified that given the current uncertainty associated with the COVID-19 crisis, at this time it is not in a place to offer any guidance for FY21. However, the Company will provide an update with the fiscal year 2020 results released in August 2020.

Stock Performance: On 24 June 2020, SHL stock ended the day’s trade at A$30.330, moving up 4.713% compared to the previous close. The market cap of SHL stood at approximately A$13.76 billion, with nearly 475.18 million shares trading on the ASX. In the last three months, Sonic Healthcare has generated a return of 25.39%.



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