Every July Aussie stock pickers roam the Internet in search of analyst top picks for the coming fiscal year.  Like clockwork, the close of one fiscal year ushers in analysis of the year ahead, focusing on stocks most likely to be worthy of investment.  
Some articles restrict picks to a few sectors or a few favorites among the analyst community or from individual companies.  Some contain “bare bones” information while others offer a more detailed analysis.
For FY 2019 stockbroker Bell Potter released a detailed “pick list” covering nine ASX sectors.  Yet expert opinion is decidedly mixed on global growth in 2019, with some seeing storm clouds while others only see rising tides.
Investors concerned about the impact of a global trade war on markets may have been heartened by the 26 July news out of the US, when President Trump claimed a “victory” with a deal with the EU (European Union) meant to reduce trade tensions.
Expert opinions on the deal are mixed, with some hailing the shelving of the Trump proposed tariffs on EU auto imports to the US and others pointing out the agreement is nothing more than a deal to make a deal.
The agreement does little to impact the “elephant in the room” in the global trade dispute – China.  Trump continues to promise another round of tariffs on Chinese imports while the Chinese continue to promise retaliation, with little action from either country over the past few weeks.  Investors concerned about the impact a US/China trade war as well as other global flash points could have on ASX stocks may be well advised to look for defensive stocks. 
Recent history suggests healthcare may be the safest sector available, based on the minimal share price depreciation following the GFC of some of the top healthcare stocks on the ASX.
The Bell Potter report included seven healthcare stocks, the majority from the volatile biotechnology sub-sector.  Of those seven, five have double-digit earnings growth forecasts over the next two years.  The following table lists the stocks, with the Bell Potter recommendation and valuation or target price along with price information and historical shareholder return.

For the average retail investor, the dendrimer technology developed at Starpharma Holdings (SPL) sounds like the stuff of science fiction.  The technology is a part of the broader world of nanotechnology, where novel compounds and structures are created by manipulating the tiniest of molecular matter.
How the company can make money with the technology is the key consideration of investors, not the technical and complex details of how dendrimers are created.  The final dendrimer structure is suitable for multiple pharmaceutical and life sciences applications, as well as chemical, electronic, and materials applications.
One of the company’s technologies – VivaGel® – has been applied to treatments for women’s sexual and health needs, such as treating bacterial vaginosis (BV) and preventing sexually transmitted infections (STIs).  VivaGel® is also available in condoms.
The company has established marketing partnerships for the product distribution, with over the counter versions of VivaGel® BV – named Fleurstat BV Gel – available in Australia via Aspen Pharmacare in 2018.  The VivaGel® condom is available in Australia and Canada under the LifeStyles® Dual Protect™ brand.
Although the gel formulation of VivaGel® for management of BV and STI prevention is awaiting product launch, the company has marketing agreements in place to introduce the product in Asia, the Middle East, Africa and parts of Latin America – announced in May of 2018 – followed by the announcement of an agreement for product distribution in Europe, Russia, and the Latin American countries not included in the previous agreement.  The company is on track for US FDA (Food and Drug Administration) approval, announcing on 9 July that “the FDA has confirmed that the VivaGel® BV NDA (new drug application) will be the subject of a priority review, which has a target review period of approximately 6 months from acceptance.”
The company has another technology in its pipeline – Dendrimer Drug Delivery (DEP®) – both for use by partner companies and Starpharma’s own development.  The company has two products in clinical trials.  The most advanced is DEP™ docetaxel – a chemotherapy drug for the treatment of large tumours – in US FDA Phase 2 Clinical Trials. DEP® cabazitaxel – a treatment for prostate cancer – is in early stage clinical trials in London. Starpharma claims to have multiple patents for its dendrimer technology in place and in application stages.
For some investors a key indicator of a worthy investment is the calibre of its partnering companies and its investors.  Bionomics Limited (BNO) enjoys both with global pharmaceutical giant Merck & Company (NYSE:MRK).  Merck is a BNO shareholder as well as a partner in two major deals to market treatments developed by Bionomics. The first is for neuropathic pain and the second for Alzheimer’s.
Bionomics core focus is diseases of the central nervous system (CNS), along with cancer treatments.  The company’s business model actively seeks development funding from marketing deals with large pharma companies. 
As is often the case with early stage biotechnology companies, Bionomics features its own proprietary technologies – MULTICORE® and IONX®.  The company has four clinical trials for CNS disorders underway, all in Phase 2, with some in the US under the jurisdiction of the FDA and here in Australia under the jurisdiction of the Therapeutic Goods Administration (TGA).  In addition, Bionomics has five clinical trials for cancer treatments here and in the US, with one in Phase 2.
The most advanced is BNC210 for the Treatment of PTSD (Post-Traumatic Stress Disorder).  Treatment of study recruits has been completed with results expected to be released in Q 3 of 2018.  The company has another promising candidate – BNC210 for the Treatment of Agitation in the Elderly.  This one has promising growth potential for Bionomics, given the rising tide of ageing populations globally and the negative side effects of current treatments in use.
Avita Medical (AVH) is a medical device company whose primary product is ReCell, a spray on treatment for regeneration of scarred or burned tissue, applied by physicians, that makes use of the patients’ own cells.  The company also has two physician applied devices for using a patient’s skin to treat leg and foot ulcers – Regenercell – and Renovacell – for skin improving skin appearance marred by scars, wrinkles, and sun damage.
The company is US based with offices in the UK and Australia.  Avita investors were buoyed by the news the FDA had approved the company’s application to begin clinical trials for ReCell – back in December of 2009.  The stock price has been on the wildest of roller coaster rides, tracking repeated delays and a series of limited FDA extended approvals for the “compassionate” use of ReCell with the latest, and fifth, such extension coming in February of this year. 

At the time of the 2009 announcement the company’s CEO proudly proclaimed “Avita is now on track for its US regulatory approval process for ReCell.”
Nine years later Avita may be getting closer, as the company recently reached an agreement to assume control of a manufacturing facility in the US to produce the RECELL® Autologous Cell Harvesting Device, in anticipation of approval for a commercial launch of the product in the US.  Clinical trials to date have shown positive results.  Avita is already selling its skin regeneration products directly in the UK, Germany, Australia and New Zealand.  The company has a global distribution network for sales in France, Belgium, Netherlands, Turkey, China, Malaysia, Taiwan, Iran and South Africa.
Pharmaxis Limited (PXS) is a pharmaceutical research company with a broad reach of treatments under development to combat inflammatory diseases, fibrosis (scar tissue), in the lungs, kidney, and liver, as well as treatments for inflammatory bowel disease and cancer.
The company has two approved products in use from which it is generating revenue but has not shown a full year profit since FY 2015.  The treatment for cystic fibrosis – Bronchitol® – successfully completed three large scale clinical trials and is available in Europe, Russia and Australia. A Phase 3 trial in the US was successfully completed in 2017 and the company is awaiting FDA approval for marketing in the US.
A diagnostic treatment for asthma – Aridol® – is available in Europe, Australia and Asia.
Pharmaxis has multiple products in its pipeline with partnering agreements with multi-national pharmaceutical firms, among them Germany’s Boehringer Ingelheim (BI).  The company’s Half Year 2018 results showed marked improvement with revenues from sale of goods increasing 45% and a profit of $5.9 million following a Half Year 2017 loss of $11 million. 
Micro-cap healthcare provider Zenitas Healthcare (ZNT) operates in what could be the sweetest of all sweet spots in healthcare demand – reduced cost services.  While there is no doubt the demand for healthcare is set to skyrocket as the baby boomers retire and people live longer, the costs are skyrocketing as well.  Governments in developed countries are looking for alternatives to the high costs of residential and institutional acute care.  
Zenitas listed on the ASX in January of 2017 via a reverse merger.  In November of 2016 the company staked out its niche in Australian healthcare, acquiring five businesses placing the company in community-based healthcare.  The company’s operating segments include:
• Allied Health – a diverse range of healthcare professionals including physiotherapists, exercise physiologists, dietitians, occupational therapists and podiatrists;
• Home Care – in-home and respite community care covering disability, aged and 24-hour care services; and
• Primary Care – in-clinic general practitioner and complementary care services.
This company was born with 54 operational healthcare facilities across Australia.  Following the listing the company acquired controlling interest in five additional facilities and a minority interest in another. In 2018 the company acquired three new facilities and continues to pursue organic growth as well, adding services and clinicians to existing facilities as well as maximising existing facilities with joined services such as including allied health practitioners at primary care facilities.
In its first financial reporting covering operations since listing, Zenitas delighted investors with its Half Year 2018 results – an astounding 1482% revenue increase along with a 200% rise in net profit, as well as a dividend payment of $0.01 per share.
>> BACK TO THE NEWSLETTER: Click here to read other articles from this week’s newsletter