Can’t catch a break: Healthcare stocks remain under pressure as geopolitical tensions keep investors in risk-off mode. Pic: Getty Images
ASX health sector flat for the week, while the S&P/ASX 200 falls xx% as Middle East conflict takes a toll on global markets
LTR Pharma completes recruitment for a phase II pharmacokinetic clinical study of erectile dysfunction treatment Spontan
Neuren’s marketing partner Acadia Pharmaceuticals to challenge decision by European regulators to reject its Rett syndrome drug trofinetide
Healthcare and life sciences expert Scott Power, who has been a senior analyst with Morgans Financial for 27 years, gives his take on the ASX healthcare sector for the week and his ‘Powerplay’ stock pick.
A tough reporting season saw the S&P/ASX 200 Healthcare Index (ASX:XHJ) fall 13.31% in February – making it the biggest laggard among the Aussie bourse’s 11 sectors. Now it has to contend with investor jitters from the US-Israel-Iran conflict.
Around 3pm (AEDT) on Friday, the S&P/ASX 200 Health Care Index (ASX:XHJ) was pretty flat over the past five trading days (+0.05%, at least that’s something, right?), while the benchmark S&P/ASX 200 (ASX:XJO) had slipped 3.04%.
“The Middle East conflict has investors in risk-off mode which is affecting the sector,” Morgans’ senior healthcare analyst Scott Power told Stockhead.
“Investors are in a risk-off mode and favouring the safety of resources and the banking sector along with defensive names like supermarkets and stable businesses.”
Power said how the Middle East conflict unfolds could impact markets and the healthcare sector.
“If it’s going to be a drawn-out conflict that might take some time for the risk appetite to come back,” he said.
“Having said all that I would suggest the life science sector, particularly those with near-term catalysts are catching a bit of a bid at the moment as not directly related to geopolitical or economic conditions.”
LTR Pharma completes recruitment in Phase II ED trial
LTR Pharma (ASX:LTP) has completed recruitment for the Phase II pharmacokinetic clinical study of Spontan, its rapid-acting intranasal spray for the treatment of erectile dysfunction (ED).
LTP said all 27 participants have been enrolled across three cohorts. The final cohort of eight participants are now residing at the clinical research facility for the 15-day dosing period.
In line with US Food and Drug Administration (FDA) guidance for geriatric-use assessments, approximately half of all participants are aged 65 years or older.
The data will generate clinical data for a key demographic often underserved by oral ED therapies.
Dosing is underway, with participants undertaking a 15-day residential period receiving single and multiple doses of Spontan and a control vardenafil tablet. The study was designed in accordance with FDA pre-IND guidance with initial data expected in Q2 CY26.
Neuren partner to challenge European rejection of Rett Syndrome drug
Neuren Pharmaceuticals (ASX:NEU) says its global marketing partner Nasdaq-listed Acadia Pharmaceuticals will challenge a surprise decision by European regulators to reject its Rett syndrome drug, trofinetide.
In early February, Neuren reported that the Committee for Medicinal Products for Human Use (CHMP) advised against approving trofinetide for patients aged two years and older. Neuren shares dropped 14% on the news.
The European Medicines Agency (EMA) has now formally aligned with the CHMP’s position. Trofinetide is already approved in the US, Canada, and Israel, where it is the first and only treatment for Rett syndrome. Its pivotal LAVENDERTM trial met co-primary and key secondary endpoints.
The CHMP’s refusal cited several concerns including:
The treatment effect after 12 weeks was seen as limited,
The trial did not capture all core Rett syndrome symptoms
Longer-term outcomes were affected by patient discontinuations.
Acadia has confirmed it will request a re-examination of the CHMP’s opinion, noting that the feedback provided important information for the process.
“Acadia has 60 days to request the re-examination and provide information and then the CHMP has up to 60 days after receipt of that to re-examine its opinion,” Power said.
Island advances Galidesivir with US military research collaboration
Island Pharmaceuticals (ASX:ILA) has inked a Cooperative Research and Development Agreement (CRADA) with the US Army Medical Research Institute of Infectious Diseases (USAMRIID) and The Geneva Foundation to progress Galidesivir toward FDA Animal Rule approval for treating Marburg Virus Disease (MVD).
USAMRIID, the US Army’s premier infectious disease research institute, has spent more than 50 years developing advanced medical capabilities to prevent and counter biological threats.
It is the only Department of Defense laboratory equipped to safely study highly hazardous viruses at Biosafety Level 4, conducting research that supports vaccines, drugs, diagnostics, and training programs for both military personnel and civilians.
The Geneva Foundation, a leading US non-profit established in 1993, works to accelerate the development of critical medical countermeasures for high-consequence health threats.
It partners with the Department of Defense, federal agencies, academia, and industry to advance military medical research that safeguards force health and national security.
The news further de-risks Island’s Galidesivir program and moves Island closer to potential US government stockpile orders and a Priority Review Voucher.
“Island is making good progress and is another example of company-specific opportunities where there are some near-term milestones,” Power said.
Power’s Powerplay: Sigma heavily sold despite solid first half
Sigma Healthcare (ASX:SIG) is Power’s pick of the week with the retail pharmacy franchisor and pharmaceutical wholesale distributor down ~8% since posting H1 FY26 results last Monday, which Power described as “very surprising”.
The results underscored Sigma’s merger with Chemist Warehouse last year. Sigma reported underlying EBIT rising 18.7% to $582.9m, broadly in line with consensus expectations with
continued expansion and performance of the Chemist Warehouse network.
Australian Chemist Warehouse‐branded store sales grew 17.2% to $5.1bn, supported by 13 new stores.
“In our opinion Sigma released a solid first half result,” Power said.
“The key things we pulled out were that Chemist Warehouse like-for-like sales were up 15% for the first six months and their revenue was up 15% but costs were only up 10.4%, which is a nice gap between cost-base growth and revenue-base growth.”
Morgans has an accumulate rating on Sigma but has reduced its 12-month price target from $3.39 to $3.36.
Power said Morgans had underestimated depreciation and interest charges, so they’ve adjusted them to more accurately reflect the company’s financials, resulting in a slight lowering of the 12‑month price target.
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