FDA approval for ASX health stocks is the dream that just about all emerging companies in the sector are aspiring to. Just over 12 months ago, we predicted that Neuren Pharmaceuticals (ASX:NEU) and Cyclopharm (ASX:CYC) would get the green light during 2023, and we were ultimately right on both.
It is now time for us to look at which companies might get approval during 2024, or at least get very close to it this year, with approval in 2025. We see three in particular as standing a chance.
FDA approval for ASX health stocks: 3 that are very close to it 2024
Opthea is an ASX biotech that is developing a drug called OPT-302. OPT-302 is administered via injection and it is a ‘VEGF-inhibitor’ (Vascular endothelial growth factor). It prevents the abnormal growth of blood vessels and leakage of fluid and protein from the vessels, which can cause wet AMD. Wet AMD is the leading cause of blindness, impacting 3.5m people annually across the globe.
As successful as its 2019 Phase 2 results were, it took a while to commence Phase 3. Fast forward to early 2024, and it could well have results by the end of this year. If they are successful, it is difficult to imagine it not getting FDA approval.
Dimerix’s DMX-200 drug targets Focal Segmental Glomerular Sclerosis (FSGS) and Diabetic Kidney Disease. The latter of these is also a kidney disease and represents a US$3bn market per annum.
When you have FSGS, the filters (glomeruli) of your kidneys become inflamed and are damaged by scarring. This makes the filters “leaky” and allows protein from your blood to collect in your urine (proteinuria). For patients with FSGS, the kidneys’ ability to purify (clean) the blood is impaired. This can lead to kidney failure that may eventually requires dialysis or a kidney transplant.
It is undertaking a Phase 3 clinical trial and is expecting to report interim results on or around the middle of March next year. At this point it may be able to apply for accelerated approval, or alternatively at the next ‘set’ of results which are due in December 2024.
EBR Systems (ASX:EBR)
This company, hailed by venture capitalists that’ve backed it as ‘the next Cochlear’, has a wireless pacing system for heart failure.
It is designed for patients at risk of heart failure who cannot receive cardiac resynchronisation therapy from existing devices, or are at high risk from conventional upgrades.
After a dour first 15 months or so, shares took off in May after positive clinical trial results.
The biotech is now preparing its case to the FDA, hoping to complete the submission early in CY23 and get FDA approval in the second half of the year.
So when ASX health stocks have FDA approval, what then?
Being granted FDA approval is a big step for ASX health stocks. This is why there can be a positive share price reaction when approval is granted and why there is a bad share price reaction when an application is rejected.
Obviously, FDA approval is of little use if the company cannot execute following approval – just ask 4D Medical (ASX:4DX). Approval may also be limited to particular conditions that have a relatively small addressable market.
In the end, the largest ASX health stocks, such as ResMed (ASX:RMD) and Cochlear (ASX:COH), would never have been as successful as they were without the US market, and they wouldn’t have been able to penetrate the US market without FDA approval.
FDA approval opens the door to the US market for ASX health stocks. However, it offers no promises about what will happen once they walk through the door that is the US market.
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