Scott Power: ASX healthcare edges higher in mixed week for sector

There’s been a lot to process for ASX healthcare investors this week. Pic: Getty Images

ASX healthcare outperformed the market this week despite ongoing macro headwinds
Cynata Therapeutics falls 93% on Friday after two trials fail to meet endpoints 
Island Pharma secured FDA orphan drug status for Galidesivir as catalysts stack up elsewhere

 

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.

The ASX healthcare sector has stayed in the green for a second consecutive week, continuing its recovery story after a bruising start to 2026 that still leaves it down more than 26%.

At close on Friday, the XHJ was up a solid 3.99% over the past five days, outperforming the benchmark S&P/ASX 200 (ASX:XJO) which fell 0.88% over the same period.

Morgans senior healthcare analyst Scott Power said the sector continued to be dominated by broader geopolitical and macroeconomic factors.

The Reserve Bank of Australia (RBA) left interest rates unchanged at 4.35% on Tuesday,  after three rate rises in 2026 but maintained a hawkish tone as inflation remains above its 2-3% target.

US President Donald Trump’s pick for Fed chair was widely tipped to lower rates, but Kevin Warsh instead shook markets by keeping them steady and warning they may rise if inflation stays above the central bank’s 2% target.

“The commentary coming from the new Fed chairman is a turnaround from previous commentary and higher rates pulls the risk appetite down for growth stocks,” Power said.

“Obviously the resolution to the Middle East conflict will keep oil prices down and help bring inflation under control.”

 

Cynata drops 93% as trials fall short

Shares in stem cell and regenerative medicine player Cynata Therapeutics (ASX:CYP) plunged more than 93% on Friday after two clinical trials failed to meet their primary endpoints.

Cynata had been in a trading halt since late last week before moving into voluntary suspension on Tuesday pending the release of results from both studies.

Results were released on Wednesday of a phase II trial of CYP-001 in patients with high-risk acute graft-versus-host disease (HR-aGvHD), a serious complication that can occur following donor stem cell or bone marrow transplantation.

The trial found no significant differences between patients treated with CYP-001 plus steroids and those receiving placebo plus steroids (control group) across either the primary or key secondary endpoints.

CYP-001 is Cynata’s Cymerus induced pluripotent stem cell (iPSC)-derived mesenchymal stromal cell (MSC) product candidate for intravenous administration.

On Friday, Cynata resumed trading after releasing top-line results from the phase III SCUlpTOR trial of CYP-004 in patients with knee osteoarthritis.

The study found no statistically significant differences between treatment and placebo groups on either of its co-primary endpoints, including knee pain and cartilage loss at 24 months.

CYP-004 is Cynata’s Cymerus off-the-shelf iPSC-derived MSC product candidate for intra-articular injection.

Cynata said it was now “actively reviewing options for further development of the Cymerus technology” with CEO Dr Kilian Kelly and chairman Dr Geoff Brooke scheduled to host an investor webinar on Monday.

Power said it was a “very disappointing outcome for Cynata and the emerging ASX healthcare space”, coming after recent clinical disappointments at Opthea (ASX:OPT) and Immutep (ASX:IMM).

 

Healthcare catalyst pipeline remains active

All is not lost with several upcoming catalysts remaining for ASX healthcare stocks in June. Echo IQ (ASX:EIQ) is awaiting US Food and Drug Administration (FDA) 510(k) clearance for its artificial intelligence (AI) heart failure solution, EchoSolv HF.

Top-line results are expected this month from a European ADHD study of Blinklab’s (ASX:BB1) smartphone-based neurobehavioural assessment platform.

Imricor Medical Systems (ASX:IMR) is awaiting FDA approval of a paediatric label expansion for its NorthStar 3D Mapping System through the Special 510(k) pathway. The system enables radiation-free, MRI-guided cardiac mapping procedures.

And Neuren Pharmaceuticals (ASX:NEU) is also anticipating a key regulatory outcome, with its Nasdaq-listed partner Acadia Pharmaceuticals expected to receive a decision this month on its request to re-examine the European marketing application for trofinetide, marketed as DAYBUE, for the treatment of Rett syndrome.

“We are looking for a number of companies to hit some key milestones and assuming they are successful that could bring investor interest back into the space,” Power said.

“At the moment there are other areas like AI and the resource sector which is attracting more of the speculative money.”

 

 

 

Island secures orphan drug designation for antiviral

Island Pharmaceuticals (ASX:ILA) has been granted US Food and Drug Administration (FDA) Orphan Drug Designation to Galidesivir for the post-exposure prophylaxis of Marburg virus disease, bolstering the drug’s regulatory pathway and supporting its advancement into the next phase of development.

Galidesivir is a broad-spectrum antiviral candidate that has shown effectiveness against more than 20 RNA viruses, including the deadly Ebola, Marburg, Middle East Respiratory Syndrome (MERS), Zika and Yellow fever.

Island acquired Galidesivir from the Nasdaq-listed BioCryst Pharmaceuticals in July 2025 and is progressing its development under the US Food and Drug Administration’s (FDA) Animal Rule pathway.

The pathway is designed for situations where human trials would be too dangerous, allowing therapies for serious or life-threatening conditions to be approved on the strength of animal studies.

“This is another meaningful step which adds tangible commercial protections to the asset,”  Morgans healthcare analyst Iain Wilkie wrote in a research note.

He wrote the ODD provides several layers of significance beyond the regulatory tick with the standout seven-year US market exclusivity upon approval.

“For a biodefence asset largely reliant on US government procurement, exclusivity matters less for pricing power and more as a signal to BARDA/DoD counterparties that ILA holds durable rights,” he wrote.

Wilkie noted Island was entering “a phase of higher catalytic density over the next 12 months”, including non-human primate dose optimisation data readout in H1 CY27, with the study set to start in Q3.

 

Neurizon inks long-term API supply deal ALS drug candidate

Neurizon Therapeutics (ASX:NUZ) has inked a five-year supply deal with New York-listed Elanco Animal Health, ensuring long-term access to monepantel, the active pharmaceutical ingredient (API)  underpinning its lead drug candidate, NUZ-001.

The agreement marks an important milestone for NUZ-001 as it advances through late-stage clinical development for amyotrophic lateral sclerosis (ALS), the most common form of motor neurone disease (MND).

Neurizon has the human use rights for monepantel, while Elanco retains veterinary rights.

The deal also grants Neurizon the right, under specified circumstances, to manufacture or source a functionally equivalent active pharmaceutical ingredient from third-party suppliers, providing further supply security.

NUZ-001 is currently being evaluated in Regimen I of the HEALEY ALS Platform Trial, representing a phase II/III registrational study designed to generate the clinical data required to support potential regulatory submissions.

In a research note Iain Wilkie wrote what was “potentially more interesting” was a line in the announcement which flagged that Neurizon continued to progress “discussions with potential pharmaceutical partners and broader commercial stakeholders.”

“Potentially a bit of a throwaway line, but interesting nonetheless,” he wrote.

“We view the asset has high partnering potential but would be unusual ahead of the binary HEALEY readout in late CY27.

“In any case, a locked-in GMP supply chain materially improves their negotiating position and reduces diligence risk for any incoming partner.”

Morgans has a speculative buy rating on Neurizon and 12-month target price of 20 cents.

 

Blinklab collaboration to generate real world data

Blinklab has partnered with Ecuador’s Escuela Superior Politécnica de Chimborazo (ESPOCH) to support Proyecto Wiñay, a large-scale, multicentre study investigating autism, sensorimotor function, nutrition and gut microbiota in children and adolescents.

Blinklab is set to provide its smartphone-based neurobehavioural assessment technology and technical support at no cost, while ESPOCH funds the program.

The study aims to recruit ~300 participants and generate real-world data on autism in Ecuador, where ~6,000 children are  born with autism annually.

Power said the collaboration expands on the company’s Morocco’s nationwide, government-funded early autism screening program from 18 months of age and reinforces demand for scalable, accessible autism diagnostics in underserved regions.

“While not expected to generate near-term revenue, the program will support validation of BB1’s technology, build clinician relationships, and create pathways for future commercial adoption through real-world evidence and regional reference sites,” he said.

Morgans has a speculative buy rating on Blinklab with a 12-month price target of $1.76.

 

 

 

The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.

Scott Power owned shares in Blinklab and Imricor Medical Systems at the time of writing this article.

At Stockhead we tell it like it is. While Cynata Therapeutics, Island Pharmaceuticals and Neurizon Therapeutics are Stockhead advertisers, the companies did not sponsor this article.