Good morning, Armchair Army,
Welcome to today's edition of The Armchair Analyst, a 5-minute daily update on the ASX life-sciences sector.
Sentiment is a funny thing.
When things are going bad…
The world’s crumbling.
When things are going well…
FOMO kicks in.
But really, what changed in that period of time between “everything's crumbling” and “I can’t miss out”?
Sentiment.
… and I’m not talking about the small, speculative end of the market.
Where the bets are risky, and the swings are big.
(up or down).
I’m talking about the big end of the market.
The “stable” end of the market.
Where, in the last 24 hours, the big healthcare stocks have gone from radioactive to undeniable.
Of course I’m talking about…
CSL, Cochlear and Pro Medicus.
A big thick green candlestick for the healthcare sector yesterday:
Just like in the original Harry Potter and the Philosopher’s Stone… the three heads of the healthcare industry couldn’t stay asleep for much longer.
The healthcare Cerberus woke up.
CSL up 17% yesterday. Up 76% in six months.
COH up 7.5% yesterday. Up 60% in six months.
PME up 12% yesterday. Up 82% in six months.
Six months ago, each of these companies published their half-year results…
And the market punished them.
CSL and COH both downgraded forecasts (COH downgraded further in April).
PME was on track for a good year… but the market was pricing in an exceptional year.
So they fell as well.
But yesterday all three companies published their full-year results.
And while nothing new came out overall, it gave the market a chance to reset expectations.
I wrote earlier in the week that annual reports shouldn’t have any surprises in the headline numbers.
But what the market does do in reporting season is reset expectations for the next financial year.
(Source: The Armchair Analyst, Monday)
I think that is what happened here.
While CSL missed on its profit guidance last year, the market had already “priced this in”.
What it didn’t price in was the new profit guidance.
Underlying NPAT growth of 5%, with revenues flat.
That’s why the stock was up 17% yesterday…
(and I think a little bit of FOMO buying too).
The market knows that these are great companies; it just wants to see that the issues that caused the fall over the last 12 months are behind them.
For CSL, it wrote off $7.1 billion in assets, and the CEO called this a reset year.
(It was actually the first time since the company listed in 1994 that it made a loss).
So THAT’s what the market is pricing.
That CSL has taken its medicine and is back on the way up.
CSL hasn’t proven anything yet… but the market is forward-looking, so it is pricing improvement into the stock.
The blue line of expectations is moving up.
Similar stories for Cochlear and Pro Medicus.
Yesterday's move wasn’t about rewarding CSL, Cochlear, and Pro Medicus for what they did.
It was about pricing what they’ll do next.
Expectations changed.
Sentiment followed.
And suddenly, the healthcare Cerberus was awake.
Let’s dive in…
The Pulse Check
Chimeric Therapeutics (ASX: CHM) halts CHM CDH17 Phase 1 trial due to dose-limiting toxicities. (CHM, held)
🪑 That’s probably curtains for CHM’s CDH17 product.
Will be capped at <$2M now, probably a decent shell play.
LEO Pharma has acquired a rare disease drug for erythropoietic protoporphyria (EPP) from Tanabe Pharma for US$435 million. (Biospace)
🪑 This acquisition stood out to me because Tanabe's drug is the closest competitor to CLINUVEL’s (ASX: CUV) SCENESSE for the same condition.
FIRST, this provides some peer comps for the CUV product. CUV is trading at a market cap of $522M with a cash balance of $220M, meaning that the market is underpricing CUV’s EPP asset based on this transaction.
BUT…
As the article says, the FDA submission for the drug's approval was done last month, and “LEO plans to launch the drug in 2027”.
This means that the monopoly on EPP that CUV enjoyed for the last several years could be at risk.
However, there is no guarantee the FDA will approve LEO Pharma’s drug.
Watch this space…
ImpediMed (ASX: IPD) receives FDA clearance to market its SOZO Digital Health Platform for sarcopenia risk assessment. (IPD)
Atomo Diagnostics (ASX: AT1) announces the resignation of CEO John Kelly, appointing US-based Dr. Cheri Walker as interim CEO. (AT1)
Alcidion (ASX: ALC) FY26 revenue of $51.6M (up 27% on pcp), annual recurring revenue of $38.3M (up 34% on pcp). Underlying EBITDA of $6.8M (up 34% on pcp). (ALC)
🪑 Strong year, but known numbers.
On the guidance front, the company says that Alcidion “expects FY27 revenue and underlying EBITDA to outperform FY26.
So a conservative “we’ll beat last year’s numbers”. The classic: underpromise and overdeliver.
AVITA Medical (ASX: AVH) achieved the primary endpoint in its PermeaDerm® study, showing a 70% cost advantage over allograft and similar clinical outcomes. (AVH)
🪑 Nice result, and data surgeons will consider when deciding to switch to the PermeaDerm wound care product.
Entropy Neurodynamics (ASX: ENP) secures a strategic manufacturing agreement with BioCina to GMP manufacture TRP-8803, supporting international trials. (ENP)
Talius Group Limited (ASX: TAL) appoints Marcus Riley as Strategic Adviser to enhance its growth strategy across the aged care sector. (TAL)
EBOS (ASX: EBO) reports FY26 revenue of NZ$13.5B, up 10%, and EBITDA of NZ$600M (up 7.8%). (EBO)
GSK takes full rights to Chugai's experimental anti-dengue virus antibody. (FirstWorld Pharma)
🪑 This deal shows big pharma's interest in antiviral drugs. ASX-listed Island Pharmaceuticals has its own anti-dengue virus that has completed a Phase 2 clinical trial.
Invion Limited (ASX: IVX) appoints Paul Field as an Independent Non-Executive Director with the retirement of Alistair Bennallack. (IVX)
🪑 I always found it interesting that the CFO of Village Roadshow was on a biotech microcap.
See you all tomorrow,
The Armchair Analyst.
