Are these 4 ASX medical shares set for a healthy 2021?

We take a look at how 4 ASX healthcare companies performed last year, and what they might be focusing on as we enter 2021. 

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If 2020 taught us anything, it was the importance of quality healthcare. The COVID-19 pandemic put unprecedented demand on global health services, with many providers rising to the challenge. Healthcare has long been seen as a defensive investment sector — no matter the state of the economy, the population will need the lifesaving therapies and treatments provided by healthcare companies. 

The healthcare sector is made up of many different industries — from hospital providers, to medical device makers, to pharmaceutical companies. There are a wide variety of ASX healthcare shares, with nearly 200 healthcare companies listed on the ASX. These range from behemoths like CSL Limited (ASX: CSL) to small-cap experimental healthcare companies. 

We take a look at how 4 ASX healthcare companies performed last year, and what they might be focusing on as we enter 2021. 

Cynata Therapeutics Ltd (ASX: CYP)

Cynata Therapeutics is a stem cell and regenerative medicine company that has developed a therapeutic stem cell platform technology called Cymerus. Cymerus technology allows for the manufacture of Mesenchymal stem cells (MSCs) at a commercial scale.

MSCs have the ability to reduce inflammation, enhance clearance of pathogens, and stimulate tissue repair. They are at the forefront of a new generation of treatments being investigated to treat diseases including osteoarthritis, Crohn's disease, and heart disease. As the most widely studied type of adult stem cells, there are currently over 850 clinical trials in progress using MSCs. The ability to achieve economic manufacture of MSCs at commercial scale has the potential to open a wide range of therapeutic and manufacturing possibilities for Cynata. 

In 2020, Cynata significantly advanced its leadership position in regenerative medicine and emerged in a robust position to progress key clinical trials with the lifting of pandemic restrictions. The company has a broad pipeline of clinical developments plans. Its phase 3 osteoarthritis trial commenced in November 2020 and a clinical trial treating intensive care patients with COVID-19 in Australia is open for enrolment.

In addition, Cynata is focused on developing clinical programs for new priority targets of idiopathic pulmonary fibrosis, renal transplantation, and diabetic foot ulcers, leveraging encouraging preclinical data. 

At the time of writing, the Cynata share price is sitting at 68 cents per share, with a current market capitalisation of $94.22 million.

Polynovo Ltd (ASX: PNV)

Polynovo develops medical devices using its patented bioabsorbable polymer technology, NovoSorb. The Novosorb polymer technology originated from the CSIRO and is driving Polynovo's next generation of novel medical devices currently in development. These devices are set to bring clinical advances to multiple surgical applications including hernia repair and breast reconstruction.  Novosorb BTM is the first product commercialised by Polynovo. First used in Adelaide in 2013, Novosorb BTM is an implantable wound dressing that can be integrated into the body as it heals. 

Novosorb BTM works to regenerate the dermis, providing a scaffold which blood vessels can migrate into. This allows new cells to regenerate and repopulate the structure before the product dissolves away. The only synthetic product in its space, sales of Novosorb BTM increased 104% in FY20 thanks to strong performance in the US, Australia, New Zealand and the DACH region in Europe (Austria, Germany, and Switzerland). According to the company, COVID-19 has a minimal impact on sales, with an active digital marketing program proving effective.

Polynovo is now in the process of building a hernia device manufacturing facility, with plans to enter the US market in FY22. At the time of writing, Polynovo's share price is $3.57 and the company commands a current market cap of $2.43 billion.

Starpharma Holdings Limited (ASX: SPL)

Starpharma is a biopharmaceutical company which develops products based on proprietary polymers called dendrimers. Dendrimers are man-made nanoscale compounds that can be used both to enhance existing health products and as entirely new products.

Starpharma's proprietary drug delivery platform, DEP, is being used to improve pharmaceuticals, reduce toxicities, and enhance performance. There are numerous programs underway to develop DEP versions of existing drugs, particularly in the area of anti-cancer therapies. DEP partnerships include programs with world leading pharmaceutical companies, which have the potential to generate significant future royalties. 

Starpharma employs a partnering strategy in which sector-leading partners are identified to advance products to market. According to the company, this approach ensures Starpharma can remain focused on its core competencies whilst maximising the opportunities for commercialisation of its technology.

Currently, Starpharma has a number of clinical trials underway, with a trial of its Viraleze product commencing in January 2021. Viraleze is an antiviral nasal spray which has been shown to stop COVID-19 infection in laboratory studies. According to the company, the broad antiviral activity of Viraleze means the product could have an important role in future pandemics. 

The Starpharma share price is currently sitting at $1.52, giving the company a market cap of $621.20 million.

Althea Group Holdings Ltd (ASX: AGH)

Althea is in the medical marijuana game, distributing pharmaceutical grade medical marijuana products. Althea offers a free online service which simplifies the process for accessing medicinal cannabis for patients, professionals, and pharmacies. The Althea Concierge app provides healthcare professionals with access to patient treatment plans and information on dosing specific to the Althea product supplied.

During FY20 Althea continued to deliver strong results despite the impact of COVID-19 restrictions. Althea ended the 2020 financial year with 7,294 patients, more than seven times the number of patients it had at the end of the 2019 financial year. 

It is estimated the Australian medicinal marijuana market grew 3x in 2020, closing the year with almost 30,000 active patients. Althea closed the calendar year with more than 10,000 patients, meaning it holds significant market share in Australia.

Althea is also making progress in the UK, exporting its first UK shipment of medical cannabis products in FY20 and opening MyAccess clinics. In Canada, Althea has entered the manufacturing game with its Peak Processing Solutions facility. The facility aims to take advantage of Canada's Cannabis 2.0 legislation, which made cannabis containing edibles and concentrates legal. 

At the time of writing, the Althea share price is 45 cents per share, with a market cap of $111.66 million.

Kate O'Brien owns shares of CSL Ltd., CYNATA THR FPO, and POLYNOVO FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., POLYNOVO FPO, and Starpharma Holdings Limited. The Motley Fool Australia has recommended Starpharma Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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