The Australian medical sector has been one of the great drivers of innovation in global health for decades. For example, Australians created the electronic pacemaker. In addition, together with Alexander Fleming, we helped pioneer the life saving application of penicillin. We also developed the world's first vaccine to prevent cervical cancer. Consequently, it should be no surprise that we have a range of breakthrough healthcare shares on the ASX today.
I believe the following ASX healthcare shares have, firstly, pioneered solutions for new or unmet challenges and, secondly, started to gain some momentum.
Defeating sepsis
Sepsis is a life-threatening, inflammatory response to infection that has spread in the body. Consequently, any infection has the potential to cause sepsis. The following figures may shock you, they shocked me.
A study published in The Lancet medical journal in 2018 revealed there were 11 million sepsis-related deaths worldwide in 2017 alone. The study, which included 195 countries, highlighted the fact that sepsis accounted for 19.7% of all deaths globally. Kind of puts things into perspective doesn't it?
Enter Recce Pharmaceuticals Ltd (ASX: RCE). This ASX healthcare share is developing a new class of synthetic antibiotics. They are designed to deal with the new form of antibiotic-resistant superbugs. As such, they continue to be effective, even with repeated use.
The company's primary focus has been to develop a treatment for sepsis. Its lead candidate, RECCE® 327, has received awards labelling it for 'fast track designation'. This allows global regulators to expedite the review and approvals process. Furthermore, it grants the product 10 years of market exclusivity post approval.
On Thursday, following a 2-day pause, Recce shares began trading again after announcing two of its products had been selected as part of a CSIRO study for antiviral treatments to manage COVID-19. Correspondingly, the Recce share price rocketed up by 54.14% yesterday.
Healing broken bones
Osteopore Ltd (ASX: OSX) is an ASX healthcare share that has patented a world first technology in the production of 3D-printed, bioresorbable implants. These implants are used in conjunction with surgical procedures to facilitate bone healing. They do this by providing a lattice or framework between the two ends of a break for the bone to grow back on. Once the bone has healed, the material is absorbed into the body.
Alternatives to Osteopore include bone grafts and permanent implants, i.e. plates and pins. There are, however, competitors to Osteopore in the substitute bone graft space. Nevertheless, the company's competitive advantage lies in its 3D printing technology, for which it holds a number of patents. Moreover, this technology is precise and allows for customisation of shape and geometry.
The current bone graft substitute market is worth around US$4 billion, whereas sales of permanent implants are estimated at over US$100 billion annually. Most of which is in the United States.
As at February 2020, the company's products had been used to successfully treat around 30,000 patients, predominantly in the Asia Pacific region. On 2 July, Osteopore announced it has signed a distribution agreement with a United States company. This opens up significant opportunities for it to capitalise on this highly lucrative market. The Osteopore share price rocketed more than 270% to a new all-time high of $1.49 following the announcement. Shares have since fallen back and are currently trading at 58 cents.
Foolish takeaway
These are just two of the many pioneering, healthcare shares available on the ASX. I believe they offer proven technologies and limited requirement for regulatory approval (or considerable expertise in how to navigate the regulatory system, at the very least). I expect both of these healthcare shares to do well over the medium term. Having said that, being fairly newly listed, small caps, there is likely still a lot of bumpy road between now and a 10 times increase in the current share price.
