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Summary
- Businesses had to make modifications to their strategies to manage through the pandemic, and with no signs of the COVID-19 storm abating, the situation has become the new normal.
- Healthcare companies also felt the impact of the virus, but the opportunities that arose helped the sector sail through.
- With things more settled now compared to the chaos in the first one, it seems the healthcare stocks have lost a bit of momentum.
- Australian pharmaceutical Company Pharmaxis’ revenue from sales of goods increased by A$1.3 million for FY20. However, total revenue from ordinary activities was down A$51,000.
- The Company faced challenges in transporting products to international markets due to limited international flights amid lockdown and border restrictions.
Healthcare sector of Australia offers several services and products through its constituent companies, such as healthcare services providers, medical device companies, along with biotechnology & pharma players, among others. Healthcare service providers are the vanguard for delivering patient care and providing appropriate healthcare services to patients.
SARS-CoV-2 outbreak has led to worldwide chaos, and there are still no signs of the threat diminishing. While the number of cases continues to rise, some regions have been able to control the spread of the virus.
During this period, demand for hygiene products such as masks, sanitisers and gloves, and services such as telehealth were sought after. However, the spike in demand for these products and services witnessed around the onset of the pandemic has slowed down. Still, personal hygiene products and medical services are expected to grow, albeit at a slower pace than witnessed earlier.
For recent developments around COVID-19 vaccines and treatments, do read: COVID-19 Vaccine Race Continuing at War Time Speed, Who will Pull Off?
It is worth noting that medical service providers are positioned to benefit from encouraging trends, which comprises of new drug approvals, innovation, drug launches, the growing importance of biosimilars, cost-cutting implementations, increasing ageing population, escalating insurance coverage, increasing demand for new drugs, and ever-mounting healthcare expenditure.
While some healthcare stocks may lose some fizz momentarily, it could never be long-lasting as there is always a need for an excellent medical system. Looking at the growing ageing demographics, the prevalence of various diseases & infections, and the incidence of COVID-19, we can assume that the demand for healthcare products and services will grow in the future.
Let us now discuss one ASX-listed healthcare sector player- Pharmaxis
An Australian pharmaceutical research Company Pharmaxis Ltd is a global leader in drug development for inflammation as well as fibrotic diseases. Pharmaxis has a highly productive drug discovery engine, drug candidates in clinical trials and significant future cash flows from partnering deals.
Pharmaxis has two approved drug products that include Bronchitol® and Aridol®. The Company manufactures these two products in Australia.
On 13 August 2020, Pharmaxis disclosed its preliminary final report for the financial year 2020 (ended 30 June 2020). Key highlights include:
- The revenue from sales of good increased by A$1.351 million to A$7.027 million while revenue from ordinary activities dropped by A$1.402 million.
- The Company reported approximately A$13.943 million loss from ordinary activities after tax.
The corporate objectives Pharmaxis for 2020 Business plan:
- Commercial partnering for LOXL2 program.
- Development of the systemic LOX inhibitor program towards initiation of clinical proof of concept studies.
- Development of topical LOX inhibitor program for initiation of clinical proof of concept studies.
- Progressing the remaining amine oxidase pipeline assets of the Company for clinical proof of concept.
- Identifying additional early-stage drug discovery programs for expanding the developmental pipeline of the Company.
COVID?19 Impact
Like many other businesses, Pharmaxis has re-organised the way it operates in response to the ongoing COVID-19 pandemic. The Company moved to work from home measures broadly across the Company and continues to manufacture its pharmaceutical products needed by cystic fibrosis (CF) community.
In several countries, where Pharmaxis markets Aridol, respiratory specialists were advised to limit the lung function testing to more severe cases because of health risk arising from patients exhaling multiple times with force as part of the test.
Moreover, the considerable reduction in international flights amid COVID-19 induced lockdown measures made it more difficult to secure the transport of products of Pharmaxis to global markets in suitable temperature-controlled aircraft.
Various clinical studies conducted by Pharmaxis and its partners were not affected significantly-
- Pharmaxis completed both of its Phase 1b trial for systemic pan-LOX inhibitor.
- Chiesi completed the Bronchitol human factor study in early March.
- Boehringer entirely recruited its Phase 2a clinical trial with the AOC3 inhibitor acquired from Pharmaxis in diabetic retinopathy and final dosing competed in February 2020.
ALSO READ: Healthcare Sector Defying the Norms: COVID-19 Vaccines Under Development and Related Stocks
Payment of US$7 million brought forward for Bronchitol launch milestone in the US
On 5 August 2020, Pharmaxis disclosed an accelerated timeline on the payment related to initial tranche of approximately US$10 million Bronchitol launch milestone after negotiation with its US licensee Chiesi Farmaceutici S.p.A.
The Company disclosed that US$7 million of the milestone will now be payable by Chiesi upon US approval of Bronchitol by the FDA. The body has advised a Goal Action Date of 1 November 2020.
Remaining US$3 million will be payable on the shipment of commercial launch stock by Pharmaxis in 1Q 2021.
Pharmaxis CEO Gary Phillips stated-
Bronchitol is an inhaled dry powder use for the treatment of cystic fibrosis and has been the subject of 3-large scale international clinical trials conducted by Pharmaxis.
Bronchitol is approved and marketed in Australia, Russia, Europe, and some other countries.
Stock Information: On 13 August 2020, PXS stock ended the day’s trade at A$0.105, in line with the previous close. With a market capitalisation of approximately A$41.5 million, PXS has almost 395.25 million shares trading on the ASX.
