Health Check: Medical device makers Trump drug developers in volatile US healthcare climate

Relative to drug developers, medical device makers have outperformed amid the turmoil of the Trump administration’s healthcare reforms.

Heart device makers are among the key medtech winners from the US healthcare turmoil. Pic via Getty

• Medical device makers – including ASX-listed heart plays – are the likely winners from the US healthcare chaos

• Painchek hopes for US device approval by September

• Mayne Pharma flags legal action over Cosette bid but also waves an olive branch

Medical device makers are better placed than drug companies to withstand the volatile US healthcare climate, according to broker Canaccord.

In a report, the firm notes that while the US biotech sector has fallen in value over the past 12 months, medtechs have gained ground.

The overall measure, the Nasdaq Biotechnology Index, has lost 8% over the past year and 1.25% over the past month.

But the benchmark Ishares US Medical Devices ETF (IHI) has gained 10% over the past year and 12% over the past month.

The firm says the performance is supported by recent earnings announcements, with 15 of the top 16 stocks reporting higher than expected profits.

The firm opines the device makers look a safer bet because they are not caught up in the debate about lower drug prices, following Donald Trump’s ‘Most Favoured Nation’ (MFN) decree (see below).

“Medical device/tech companies also appear to have more clarity regarding how/if tariffs may or may not impact their businesses.”

ASX device makers active in the US include the ginormous ResMed (ASX:RMD) and Cochlear (ASX:COH), as well as Telix Pharmaceuticals (ASX:TLX).

In April EBR Systems (ASX:EBR) won US approval for its Wise pacemaker, the world’s first left-sided ventricular assist device.

Also in the heart space, the agency approved Echo IQ (ASX:EIQ) aortic stenosis tool, Echo AS.

In April 2023 Cardiex (ASX:CDX) won FDA assent for Conneqt Pulse, its vascular biometric heart monitor. This week, the local Therapeutic Goods Administration followed suit.

Drug makers ‘in the dark’ on pricing

MFN means US drug prices would be benchmarked against the lowest prevailing price across developed countries.

The drug debate originated in the Biden era, with the Inflation Reduction Act (IRA) requiring the Medicare system to negotiate prices for certain high-cost drugs.

“Pharma/biotech companies seem somewhat in the dark regarding proposed MFN policies, but recent discussions have suggested decisions may be set to come through in the next 30 to 60 days,” Canaccord says.

“The push to lower drug prices could be a long-drawn-out legal battle, which may ultimately fail to move beyond the IRA, or contain a number of exemptions and loopholes.”

The firm says ASX healthcare stocks “have not been immune to the chaos” engulfing the US.

But US biotech earnings momentum has turned positive. This likely will result in  improved share valuations “which the ASX is likely to follow.”

Painchek has nice chat with FDA

Still on Trumpian shores, PainChek (ASX:PCK) said it has a “successful” follow-up  meeting with the FDA that sought feedback ahead of its intended US marketing application.

Painchek is the world’s first mobile-based pain assessment and monitoring device for patients unable to enunciate their discomfort (such as dementia patients).

Held on June 3, the second meeting focused on Painchek addressing the FDA’s final questions about the company’s recent US trial results.

“The meeting was a positive two-way conversation providing feedback and clarity for both parties.”

The company hopes to lodge its submission this month, under the new device pathway.

Under the FDA’s timelines, the company should have an answer by late September.

FDA consent would be a company maker for Painchek, which already has a foothold in the local and UK aged-care sectors.

Share fever as Clarity trial proves a DISCO hit

Shares in radiotherapy play Clarity Pharmaceuticals (ASX:CU6) today bounded up to 11% after the company reported top-line results from its groovily-monikered DISCO trial.

The study blew the (strobe) lights out by showing its copper-isotope based candidate to be highly effective in detecting neuroendocrine tumours (NETs)

NETs most commonly occur in the gastrointestinal tract, lung and pancreas, but may also originate in other areas including the breast, prostate and skin.

The phase II study compared Clarity’s 64Cu-Sartate against standard of care imaging.

64 Cu-Sartate “substantially outperformed” the standard gallium isotope-based therapy, detecting 393 to 488 lesions among 45 participants.

Of these lesions, 230-251 were deemed “discordant”, that is, identified on only one of the scans.

And guess what? Clarity's method accounted for 93% of them.

Clarity initially designed the trial to enrol up to 63 patients.

But after early analysis the company was able to reduce the sample size to 45 and thus expedite the study.

Clarity is now eyeing FDA assent for a phase III registrational trial.

And if you really want to know, DISCO stands for “Diagnostic Imaging Study of 64COpper-Sartate”.

Who would have predicted a “massive oversubscription”?

Predictive diagnostics play Proteomics International Laboratories (ASX:PIQ) says its $7.5 million share purchase plan (SPP) was “massively oversubscribed” – a rare event for such funding mechanisms.

The SPP follows a $4.5 million into raising and a $500,000 board and management whip 'round.

The funds were raised at 37 cents a share, a 17% discount, with an attached option on every second share subscribed for.

The $12 million will support the company’s commercialisation of its three tests.

These are for diabetic kidney disease (PromarkerD), Promarker Eso (esophageal cancer) and endometriosis (Promarker Endo).

Also today, the company pointed to a write up of its Promarker Eso study in the peer-reviewed tome Proteomes.

For the few of us who don’t subscribe, the assay detected esophageal carcinomas accurately across 259 serum samples.

As we opined last week, its hard to know whether peer-reviewed pronouncements reiterate old announcements, or are ‘new news’.

In this case, the company says the published stuff “builds upon and extends” earlier announced study results.

Mayne, Mayne won’t go away

Mayne Pharma (ASX:MYX) is far from conceding that its $600 million takeover has been blown away, despite suitor Cosette terminating the deal on the grounds of ‘material adverse events’.

The company releasetoday noted the scheme meeting would go ahead on June 18, as scheduled.

“Mayne Pharma directors continue to unanimously recommend that vote in favour of the scheme resolution at the scheme meeting, in the absence of a superior proposal," intoned chairman Frank Condella.

There’s a big proviso, though: the company needs a court decision to affirm its view that the ‘material adverse events’ were not, in fact, material.

While the company will go legal if needs be, it is open to “seeking to find a path forward with the scheme that does not involve pursuing litigation”.

Mayne shares today edged up around 3%, having plunged 14% yesterday after Cosette's withdrawal.

Originally published as Health Check: Medical device makers Trump drug developers in volatile US healthcare climate