Four Pharma and Biotech stocks on the move in June

Claire Aitchison

Independent Investment Research

There were three companies in the Pharma & Biotech sector whose share prices rallied 70%+ in June, although share price increases for the sector were relatively muted when compared to the previous month. Below we take a look at four companies whose share prices rallied in June. 

Actinogen Medical Limited (ASX: ACW)

Actinogen Medical is a biotech company developing a novel therapy for neurological and neuropsychiatric diseases associated with dysregulated brain cortisol. The share price rallied 113.8% in June largely driven by the announcement that the peer reviewed publication of the Phase 2a biomarker trial was published in the Journal of Alzheimer’s Disease. 

The Phase 2a biomarker trial was a stand-alone, prospective, double-blind trial using plasma biomarker data and clinical data on file from participants in the XanADu Phase 2a trial. The XanADu trial treated 185 patients with mild Alzheimer’s Disease for 12 weeks. Patients received either 10mg of Xanamem or placebo. While the drug was considered safe and the data showed Xanamem inhibiting cortisol production, the results did not demonstrate statistical significance on any of the endpoints.

In the XanADu trial there was no routine use of biomarker or imaging confirmation of the diagnosis of AD at the time the trial was designed. As such, the Company undertook the biomarker study to determine if there was a cohort of patients from the trial in which Xanamem was effective. The biomarker study was conducted in 72 patients with available blood biomarker samples from the XanADu study. The study, which was completed in October 2022, found that the Xanamem had a therapeutic effect in patients with elevated pTau levels, a known biomarker for Alzheimer’s Disease. 

Of the 72 patient samples, 34 patients had elevated pTau. These patients had much more rapid progression of the disease than patients with lower levels of pTau across a number of clinical endpoints. The results of the biomarker study confirm that the XanADu trial population contained a high proportion of non-progressive patients, many of whom may have had an alternative diagnosis to Alzheimer’s Disease.

The Company is currently conducting a Phase 2b trial of the use of Xanamem in the treatment of patients with mild to moderate Alzheimer’s Disease. The trial is using elevated plasma pTau levels to select patients, in which Xanamem is likely to have a more demonstrable effect over the 36 week trial period. Interim results from this trial are expected in 1H’2025 with final results expected in 2H’2025. In the event the results are positive the Company will be seeking to commence a Phase 3 trial in 2026. 

The Company is also trialling the use of Xanamem to improve the cognitive function of patients with major depressive disorder (MDD). The Company completed the final patient visit for the Phase 2a XanaCIDD trial in July and expects the results to be available in August 2024. The trial included 167 patients with persistent MDD and measurable cognitive impairment at baseline. Patients took either 10mg of Xanamem or placebo in addition to the existing anti-depressant therapy or for patients with history of anti-depressant treatment was used as a stand-alone treatment. The primary endpoint is the computerized Cogstate attention composite test battery, measuring attention and working memory. The key secondary endpoint is the Montgomery-Asberg Depression Rating Scale (MADRS) which is a structured interview evaluating MDD symptoms and is a commonly used endpoint for trials and regulatory approvals for anti-depressant medication. The results of this trial will be a catalyst for the share price in the near-term. 

Optiscan Imaging Limited (ASX: OIL)

Optiscan Imaging shares have been on an upward trajectory since May with the share price rising 104.3% in June. The rally was triggered by the announcement of the release of InVue, a next-gen microscopic medical imaging device for precision surgery. 

InVue expands Optiscan Imaging’s product portfolio into the surgical application market with the device able to be used in a variety of clinical settings, most notably in cancer diagnosis and treatment. The device is designed to provide real-time digital pathology to surgeons as they operate for decision making and treatment adjustments in the operating theatre, as opposed to having to wait for the pathology work to be conducted within dedicated pathology labs.

The InVue device has a spatial resolution of 0.55µ and is more than 1000x more powerful than traditional CT and MRI scanners with a typical resolution of 0.5-1mm. The InVue is DICOM-compliant and PACS-enabled and designed to integrate with Optiscan’s cloud-based telepathology platform, which is expected to be revealed in 2025, which will enable surgeons and pathologists to collaborate on surgical cases in real-time from anywhere in the world.
The release of InVue is another step towards the Company’s strategic goals which are to be a leader in digital health solutions with a full suite of digital health products. The Company is currently expanding the product portfolio and seeking to cultivate strategic partnerships to achieve its strategic goals. 

In May 2024, the Company signed an agreement with the Mayo Clinic to develop a new endomicroscopic imaging system. The organisations will work together to co-develop technology for use in robotic surgery with an initial focus on robotic-assisted breast cancer surgery. The agreement covers a 24-month co-development plan. The robotic-assisted surgery market is experiencing significant growth and is expected to continue expanding driven by technological advancements, increasing adoption, rising prevalence of chronic diseases, an aging population, surgeon demand, and favourable reimbursement policies. The US robotic surgery service market was valued at US$1.8 billion in 2022 and is estimated to grow to US$6.4 billion in 2030.

The Company continues to work with the FDA on the suitability of its topical fluorescein approach for oral tissue imaging following feedback received from the Agency late in 2023. Given the requirement for a contrast agent for successful deployment of the Optiscan devices, coupled with the new regulatory changes around contrast agents being classified as drugs and the feedback and advice received from the FDA, the Company has commenced discussions with drug manufacturers to find appropriate alternate pathways to resolve the issues raised by the FDA in relation to the novel topical use of fluorescein. The Company is also concurrently exploring alternative approaches for non-topical fluorescein use, which may facilitate the progress of the InVivage submission through alternative means and potentially streamline discussions around the Company’s other devices with the FDA. The FDA have granted the Company additional time to explore these alternatives before finalising its latest Q-submission guidance. It is anticipated that these dealings will take place by end of Q4’FY24, after which a decision will be made on the most appropriate path forward and the relevant clinical studies required to demonstrate utility and efficacy for oral imaging. 

While there are some issues to be ironed out, the Company has made significant strides in achieving its strategic goals with large addressable markets providing significant future earnings potential for the Company. 

EZZ Life Science Holdings Limited (ASX: EZZ)

EZZ’s positive share price momentum continued in June, with the share price up 73.2%. The share price is now up 269% over the 12-months to 30 June 2024. 

EZZ formulates, produces, markets and distributes health supplements under the EZZ brand and is an exclusive distributor of skin care products under the EAORON brand in Australia and New Zealand.

Receipts from customers for the 3Q’FY24 were up 111% on the pcp at $23.6 million and operating cash flow was positive at $2.04 million. As at 31 March 2024, cash had increased to $14.5 million and the Company had no debt. 

On 31 May 2024, the Company announced it had signed a five-year sales agreement with Pinehills (Hong Kong) Limited. Pinehills has committed to purchasing EZZ-branded products with a minimum value of $12 million in the first 12-months. Annual purchases will increase by a minimum of 10% annually over the period of the agreement. This represents a total minimum purchase of $91.58 million over the term of the agreement. The agreement provides EZZ with expanded distribution channels into the key markets of China and Vietnam.

On 25 June 2024, the Company announced the FDA had approved nine EZZ products in the food category for market release. EZZ plans to implement similar marketing strategies as deployed in other key consumer markets with a focus on online marketplaces and platforms. The US represents a significant market opportunity with online sales of health supplements in the US totaling over $23 billion in 2023 according to IBISWorld. 

Race Oncology Ltd (ASX: RAC)

Race Oncology continued to rebound off its 12-month low hit in January 2024, with the share price rising 23.3% in June, taking the 12-month share price increase to 49.0%. 

In June, the FDA extended the Orphan Drug Designation (ODD) to Race’s re-formulated RC220 for the treatment of Acute Myeloid Leukemia. ODD provides a wide range of benefits including 7-year US marketing exclusivity for approved orphan products, 25% federal tax credit for expenses incurred from clinical research conducted within the US with tax credits able to be applied against up to 20 years of future sales, fee waivers, research grants and regulatory assistance from the FDA.

The FDA has also extended the Rare Paediatric Disease Designation (RPDD) to RC220. RPDD provides eligibility for RC220 to receive a Priority Review Voucher (PRV) upon marketing approval that can be transferred/sold to other parties. RPD’s are a valuable asset with sales averaging US$100 million. 

Race is advancing RC220 to address the needs of patients for better treatments across multiple oncology indications, with a clinical focus on anthracycline combinations with the aim of protecting patient’s hearts from the permanent damage caused by chemotherapy while providing enhanced anticancer activity in a range of solid tumours.

In addition, Race is investigating the effect of bisantrene on the m6A RNA pathway, following independent research published by the City of Hope identifying bisantrene as a potent inhibitor of FTO (Fat mass and obesity-associated protein), a known m6A RNA demethylase. Dysregulation of the m6A RNA pathway has been described in numerous peer reviewed studies to be a driver of a diverse range of cancers. 

The Bonus Options expired in June. 84% of all Bonus Options were exercised resulting in the issue of 6.7 million new shares at $0.75 per share, raising over $5 million. As part of the offer, a further three Piggyback Options for every one Bonus Option exercised were issued. Piggyback Options have an exercise price of $1.25 per option and can be exercised on or before 29 May 2026. The option exercise provided a boost to the $16.2 million the Company had in cash as at 31 March 2024.   

The views here are not recommendations and should not be considered as investment advice.

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4 stocks mentioned

Claire Aitchison
Head of Equities & Funds Research
Independent Investment Research
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