The prospect of a COVID‐19 vaccine is fuelling the market rally but it’s also set to create a new set of winners and losers in the ASX retail sector.

We are already starting to see a rotation unfolding even as the S&P/ASX 200 Index (Index:^AXJO) jumped a further 1.7% today. This takes its gains to around 4.4% since the start of the week.

But ASX tech stocks that outperformed through the pandemic have been sold in favour of ASX value stocks since news of Pfizer’s successful trials of its vaccine.

COVID the biggest threat to ASX retailers?

Brokers believe we will see a similar rotation among retailers as purchasing behaviour is expected to change in a new COVID-normal world.

Morgans made a swath of downgrades across the sector as it warned that an effective COVID vaccine poses the biggest threat to these ASX stocks.

It’s hard to reconcile the idea of a much-anticipated vaccine with bad news. But the broker is convinced it will hurt sentiment and valuation of retail stocks.

As good as it gets

“Whichever way you look at it, most retailers have been a major beneficiary of the redirection of spending during COVID and could now become a funding source,” said Morgans.

“We continue to think Christmas will be a boomer this year and 1H results will show extraordinary growth with strong opex leverage on buoyant top-line trading.

“However, as we saw with AGM update reactions, the market will likely look through this strength (one step closer to the peak; risk to FY22 earnings) – a potential vaccine makes this reaction even more likely in our view.”

ASX retail stocks getting the downgrade chop

This prompted the broker to downgrade its recommendation to “hold” from “add” for the Accent Group Ltd (ASX: AX1) share price and the Baby Bunting Group Ltd (ASX: BBN) share price,

Others that got a similar chop include the Beacon Lighting Group Ltd (ASX: BLX) share price, MotorCycle Holdings Ltd (ASX: MTO) share price and Super Retail Group Ltd (ASX: SUL) share price.

The analysts at Macquarie Group Ltd (ASX: MQG) have also echoed similar concerns about changing consumer behaviour if a vaccine is found.

The broker downgraded the Wesfarmers Ltd (ASX: WES) share price and JB Hi-Fi Limited (ASX: JBH) share price to “neutral” from “outperform”.

It chopped the Domino’s Pizza Enterprises Ltd. (ASX: DMP) share price to underperform in the same breath.

ASX retail stocks to buy now

One of Macquarie’s preferred buys among consumer-facing stocks is the Woolworths Group Ltd (ASX: WOW) share price. Consumers are still likely to eat more at home and the broker believes Woolies offers the best on-line experience.

On the other hand, Morgan’s key picks in the sector are the Eagers Automotive Ltd (ASX: APE) share price, the Breville Group Ltd (ASX: BRG) share price, Collins Foods Ltd (ASX: CKF) share price and Lovisa Holdings Ltd (ASX: LOV) share price.

More reading

• The Soul Patts (ASX:SOL) share price just hit a 52-week high
• Why the Breville (ASX:BRG) share price is lifting today
• 2 ASX healthcare shares that have risen since Pfizer’s vaccine news
• Wesfarmers (ASX:WES) share price on watch after FY 2021 trading update
• Brickworks (ASX:BKW) hasn’t cut its dividend for over 40 years

Motley Fool contributor Brendon Lau owns shares of Breville Group Ltd and Woolworths Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia owns shares of Wesfarmers Limited and Woolworths Limited. The Motley Fool Australia has recommended Accent Group and Collins Foods Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The SEEK Limited (ASX: SEK) share price has continued its positive run on Thursday.

In fact, at one stage today the job listings giant’s shares climbed to a record high of $24.94.

When the SEEK share price hit that level, it meant it was up an impressive 122% from its March low of $11.23.

Why is the SEEK share price at a record high?

Investors have been bidding the SEEK share price higher this week after news of a potentially effective COVID-19 vaccine sparked hopes of a swifter than expected global economic recovery.

Pfizer’s early data from its phase three trial was pointing to 90% effectiveness, which is materially better than the company was predicting.

A quicker economic recovery could be great news for the company as it has the potential to be supportive of job openings and ultimately job listing volumes on its platform.

In fact, CEO Andrew Bassat has previously predicted a strong rebound in SEEK’s financial performance when labour markets return to normal.

At its full year results, Mr Bassat commented: “SEEK’s short-term results will be negatively impacted by the challenges of COVID-19. Over the longterm, our strategy and overall revenue opportunity remain intact albeit COVID-19 will likely impact the timeframe to achieve our A$5b revenue aspirations. We are confident in our strategy and growth prospects, and as a result we will continue to invest across ANZ, Asia, Zhaopin, OES and ESVs.”

“When labour markets return to more normal conditions, we expect to generate a high ROI given our market leadership and track record of generating strong returns from investing in product, technology and data,” he added.

Not everyone is smiling.

The strong performance of the SEEK share price isn’t good news for everyone.

At the start of the month offshore short seller, Blue Orca, took aim at SEEK’s Zhaopin business. It claimed it was full of fake listings and CVs.

While this initially dragged the SEEK share price lower, investors have now shrugged this off, much to the dismay of the short seller.

More reading

• 3 ASX shares targeting huge growth in the 2020s
• Rising jobs and house loans place these ASX shares in focus
• Why the SEEK (ASX:SEK) share price rebounded after being 8% down
• Westpac (ASX:WBC) reports FY20 result, ASX 200 up 0.4% today
• Why 5G Networks, Cedar Woods, SEEK, & Tyro shares tumbled lower today

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The shares of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) continue to climb, the Soul Patts share price just hit a 52-week high after hitting $27.81.

A quick refresher about Soul Patts

Soul Patts is an investment house that has investments in a variety of listed and unlisted businesses.

It has large positions in companies like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API), Tuas Ltd (ASX: TUA) and Clover Corporation Limited (ASX: CLV). 

The company also has positions in unlisted businesses like resources, agriculture, financial services, swimming schools and a business called Ampcontrol.

It has actually been listed in Australia since 1903.

What has been going on?

The entire share market has been rising after the recent news of promising news about the BioNTech – Pfizer vaccine.

Global news media reported that the vaccine being produced could be 90% effective at stopping COVID-19. Around 44,000 people had been given a trial of the vaccine, and the results are promising when looking at the 94 people who have been infected by COVID-19, according to early results.

The Australian government is interested in this vaccine, it has signed an agreement to gain access to this one as well as ones from the University of Queensland and Oxford University. Federal Health Minister Greg Hunt said: “The data on our vaccine candidates continues to be positive. We will examine the evidence carefully but the latest results are heartening news.”

There are still several steps to bring the vaccine to public, but Pfizer hopes to start production of the vaccine as soon as it can.

But the Soul Patts share price was going up before then

Soul Patts shares may have gone up 9% since 4 November 2020 – being around the time of the US election – but it has actually risen by 32% over the past two months.

Changes in the share prices of Soul Patts’ investments will increase (or decrease) the book value of the Soul Patts share price. The book value is what some people focus on. 

Since 4 November 2020, the TPG share price has risen by around 10.6%. TPG is the largest position in the portfolio. Since 30 October 2020, the Brickworks share price has gone up 12%. The New Hope Corporation share price has also gone up around 10% over the past week as well.

Many of Soul Patts’ other positions are going up as the overall S&P/ASX 200 Index (ASX: XJO) climbs. Over the past week the Milton Corporation Limited (ASX: MLT) share price has risen 4.4% and the Bki Investment Co Ltd (ASX: BKI) share price has gone up 4.2%.

The business has increased its dividend every year since 2000 and it has paid a dividend every year since it listed in 1903.

The Motley Fool Dividend Investor service still rate the Soul Patts share price as a buy.

More reading

• 2 ASX healthcare shares that have risen since Pfizer’s vaccine news
• 2 ASX dividend shares growing their dividend every year
• Brickworks (ASX:BKW) hasn’t cut its dividend for over 40 years
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 surges again on Wednesday

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Breville Group Ltd (ASX: BRG) shares are lifting after the company announced an update on its business and provided guidance for FY21 at today’s annual general meeting (AGM). At the time of writing, the Breville share price is trading 1.3% higher at $26.46. 

Highlights from the AGM

Breville delivered some key numbers for FY20:

• 25.3% increase in top line revenue to $952 million. 
• Earnings before interest and taxes (EBIT) grew by 14.3% to $113 million after normalising one-off expenses incurred due to COVID-19.
• Net profit after tax (NPAT) on a normalised basis increased by 11.2% to $75 million
• Dividend for the year grew 10.8%, tracking growth in NPAT. 

The appliance company also mentioned the successful acquisition of Baratza, a designer and distributor of premium coffee grinders, in October.

Guidance for FY21 

Breville also issued an outlook for FY21, with a caveat that it won’t have a clear visibility of its numbers until January 2021 due to prevailing uncertainties. However, assuming no significant change in market conditions, Breville expects EBIT for the full year of FY21 to be consistent with the market’s current consensus forecast range of $128 million to $132 million.

A brief look at Breville

Breville is a well-known Australian designer and manufacturer of small appliances such as blenders, coffee machines, juicers and mixers. It owns popular brands such as Kambrook, Ronson, Sage, Solis, Gastroback, Stollar, Catler, Bork and Riviera & Bar. 

Breville positions its brands at the premium end of the market. The company’s brand strength is particularly prominent in North America and Europe, where it enjoys a substantial price premium to competitors, and where retail pricing is routinely up to 30% higher than in Australia.

In Australia ironically, Breville does not benefit from the same pricing premiums it commands in North America and Europe. While its domestic pricing is still at the upper end of the market, it doesn’t command an additional premium against high-end competitors such as De’Longhi and KitchenAid.

As the company’s products are priced at the top end, management has acknowledged that Breville’s business is exposed highly to the economic cycle, and a downturn could lead to consumers opting for cheaper alternatives that would erode its margins. 

How the Breville share price has performed in 2020

The Breville share price has climbed up by almost 50% this year, rising from $17.46 in January to $26.46 at today’s trading. The company has benefited from the COVID-19 lockdowns as more people working from home buy small appliances like coffee machines and blenders. Breville commands a market cap of $3.6b billion.

More reading

• 5 things to watch on the ASX 200 on Thursday
• 5 notable events on the ASX 200 this week
• The 10 ASX stocks worst hit by a Biden US presidential election win

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The past performance of equity markets suggests that it is only a matter of time before the next stock market crash takes place. After all, no bull market has ever lasted in perpetuity.

Furthermore, risks such as the coronavirus pandemic mean that the prospect of a market downturn is relatively high at the present time.

This may dissuade some investors from buying shares. However, the best stocks could offer good value for money and may have the capacity to survive a weak economic period. Therefore, they could be worth buying and holding for the long term.

An upcoming stock market crash?

The prospect of a stock market crash may currently be higher than it has been for a number of years. Risks such as political uncertainty in a number of the world’s major economies and the ongoing coronavirus pandemic may weigh on company performance. This could lead to increased risk aversion among investors that negatively impacts on stock prices.

However, a market downturn is not guaranteed to take place over the coming months. News regarding the economy and its outlook could be more positive than expected. Therefore, even though a market decline is very likely to take place over the long run, the stock market could deliver impressive returns for investors between now and then. Investors who avoid shares could miss out on gains, while receiving low returns from other assets such as cash and bonds.

Buying the best stocks today

Moreover, the best stocks are likely to survive a period of weak economic performance that prompts a stock market crash. For example, businesses that have solid balance sheets are relatively likely to have the financial means to cope with a period of slower sales growth. Equally, companies that have a competitive advantage over their peers may be less impacted by slowing consumer demand. This may enable them to maximise their market prospects for the long term.

Of course, identifying the best stocks is highly subjective. But they often have common traits, such as an adaptable business model that can provide flexibility in a rapidly-changing economic environment. They are also likely to have a solid track record of outperformance of their peers in a variety of market conditions.

Low valuations

Buying shares today while there is a heightened risk of a stock market crash could be a sound long-term move due to their low valuations. Indexes such as the FTSE 100 Index (FTSE: UKX) have yet to recover from the 2020 market decline. Many companies are trading at prices that are significantly below their average values. This suggests that investors are at least partially factoring in a period of weaker economic performance.

Therefore, building a diverse portfolio of stocks could be a shrewd move. It may experience high volatility in the short run, but has the potential to make solid gains in the long run.

More reading

• Here’s why the GrainCorp (ASX:GNC) share price jumped 8% higher today
• Nine (ASX:NEC) share price surges after AGM update
• 2 ASX healthcare shares that have risen since Pfizer’s vaccine news
• Why the De Grey Mining (ASX:DEG) share price is pushing higher
• Why the Paradigm (ASX:PAR) share price is climbing higher today

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The GrainCorp Ltd (ASX: GNC) share price has been on form on Thursday following the release of its full year results.

The grain exporter’s shares were up as much as 8% to $4.32 at one stage in early trade.

The GrainCorp share price has given back most of these gains now but is still up 1% to $4.03 at the time of writing.

How did GrainCorp perform in FY 2020?

GrainCorp reported an improved financial performance following a year of significant transformation.

For the 12 months ended 30 September, the company reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations of $108 million. This compares to an underlying EBITDA loss of $107 million a year earlier.

Things weren’t quite as positive for its underlying net profit after tax, which came in at a loss of $16 million. Though, this is still a major improvement on FY 2019’s $158 million loss.

GrainCorp’s statutory net profit after tax was far better at $343 million, compared to a loss of $113 million a year earlier.

Despite its underlying loss, the company’s board has reinstated its dividend and will pay shareholders 7 cents per share fully franked.

Managing Director and CEO, Robert Spurway, commented: “GrainCorp reported a substantially improved financial performance in FY20, despite a third year of drought. We are delivering on our operational initiatives and these are providing more consistent and stable earnings for the business.”

“The most significant drivers in the year were the positive impact from the Crop Production Contract (CPC), improved performance from our East Coast of Australia (ECA) grains and international trading businesses, and stronger oilseed crush volumes and margins,” he added.

Outlook.

While no concrete guidance was given for FY 2021, management advised that it expects growth in earnings. This is due to the anticipated larger ECA winter crop and the ongoing benefits from recent operating initiatives.

In Agribusiness, improved growing conditions and current grain receival year to date, indicate a very strong 2020/21 winter crop, similar in size to the FY 2017 harvest.

Whereas in Processing, the expected increased supply of Canola seed will continue to support strong oilseed crush margins, partially offset by reduced meal values.

More reading

• ASX 200 Weekly Wrap: ASX snaps winning streak… just
• These were the worst performing ASX 200 shares last week
• Are these 2 ASX commodity shares ready to ride 2 booming trends?
• There’s good news and bad for these ASX commodity shares
• Countries are panic buying food and this isn’t reflected in ASX agriculture stocks

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Nine Entertainment Co Holdings Ltd (ASX: NEC) announced that its FY21 first half earnings are expected to increase 30% on a rebound in advertising revenues. The Nine share price has jumped up 7.42% to $2.54 following the annual general meeting (AGM) announcement.

What are some highlights from the AGM

Nine advised that since the third quarter, its free-to-air advertising (FTA) market share had risen due to major events such as the State of Origin and NRL finals. Its fourth quarter results are now expected to show growth in FTA advertising revenue of around 15%.

Digital revenue for the period to 31 October is up by around 4% underpinned by Domain’s strong performance, with total group revenue down 7%. 

Nine says FY21 first-half earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be up by around 30% compared to the previous corresponding period.

Nine chief executive Hugh Marks welcomed the results, saying:

We are certainly trading more positively than we would have anticipated just three months ago and are very pleased with the operating performance and trends in each of our business units.

Despite this, given our limited visibility on the second half advertising market, we do not believe we are in a position to provide guidance on earnings for the full year. We expect to be in a better position to address this at our half year results in February.

Growth opportunities

According to its financial report, Nine generates 90% of its earnings from its Nine Network channel – one of only three television channels licensed to broadcast free-to-air in Australia. The total market for free-to-air advertising is $2.7 billion, of which Nine commands the number one position at 39%.

This market is gradually dwindling as advertisers move to digital platforms. However, management said Nine’s investments in digital platforms such as 9Now, Stan, and Domain had gradually increased its market share in the fragmented digital market. That’s where it expects to see future growth.

The Nine share price performance in 2020

Nine’s share price has been on the rise in 2020, gaining more than 40%. Nine’s share price is currently trading at $2.52, up by 7%. It commands a market cap of $3.8 billion.

More reading

• ASX stock of the day: Nine (ASX:NEC) share price surges on sporting venture
• Nine (ASX:NEC) share price edges up on rugby union deal
• Why the Nine (ASX:NEC) share price has surged 30% in 3 months
• Here’s what the US election means for investors

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) has risen by 4.67% since last Friday’s close (6 November) to 6,466 points. Global investors have snapped up pandemic-hit shares after Pfizer Inc. (NYSE: PFE) indicated that its COVID-19 vaccine had proved more than 90% effective in its trial.

A breakthrough COVID-19 vaccine

On Monday, the American drug maker Pfizer and its German partner BioNTech SE (NASDAQ: BNTX) released positive results from the clinical trial of their COVID-19 vaccine, BNT162b2. Pfizer’s chair and CEO Dr. Albert Bourla commented:

Today is a great day for science and humanity. The first set of results from our Phase 3 COVID-19 vaccine trial provides the initial evidence of our vaccine’s ability to prevent COVID-19.

Acting Victorian chief health officer Professor Allan Cheng commented that while the Pfizer vaccine was good news, there was “very little detail about what the results actually are,” as they have not been published in a peer-reviewed medical journal (as quoted by The Guardian).

Despite the lack of detail, investors are starting to look at the healthcare sector again. Here are 2 ASX healthcare shares that have gained traction since the anouncement.

Mayne Pharma Group (ASX: MYX)

Mayne Pharma is a specialty pharmaceutical company focused on applying its expertise in drug delivery to commercialise pharmaceutical products. The company’s flagship product TOLSURA is used for the treatment of infectious pulmonary and extrapulmonary diseases.

In its FY20 results presentation in August, Mayne Pharma reported revenue of $457 million and underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $95 million, including a non-cash intangible asset impairment of $99 million.

Meanwhile, the company reported that TOLSURA sales  grew by 460% in the fourth quarter year over year, due to the COVID-19 pandemic. Mayne expects the sales of TOLSURA to accelerate in FY21.

The Mayne share price has gone up 6.66% since last Friday’s close, valuing the company at a market capitalisation of $537 million. 

Medical Developments International Ltd (ASX: MVP)

This Australian healthcare company manufactures and distributes pharmaceutical drugs and medical equipment and has a market capitalisation of $419 million. The Medical Developments share price has risen by 14% since last Friday.

According to its FY20 report, Medical Development International grew sales by 61%, an all-time record, with Australian sales up by 43% and North American sales up by 88%. 

Finally, the company’s management team has also indicated their intention to replicate the success of the respiratory business internationally. This is achieved by buying back the European distribution rights to its Penthrox methoxyflurane inhaler from Mundipharma for 3 million euros.

Penthrox is the company’s pain relief product and is approved throughout Europe, with 568 European Union organisations buying the product. The company has indicated it is focused on taking a more direct role in the commercialisation of Penthrox by building a direct in-market presence in Europe.

More reading

• Brickworks (ASX:BKW) hasn’t cut its dividend for over 40 years
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 surges again on Wednesday
• Latest ASX stocks to be hit by a broker downgrade
• The irresistible urge that costs retail investors 3% a year

MWUaus has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Medical Developments International Limited. The Motley Fool Australia has recommended Medical Developments International Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The De Grey Mining Limited (ASX: DEG) share price has been a positive performer on Thursday despite weakness in the gold sector.

In morning trade the gold-focused mineral exploration company’s shares are up 2.5% to $1.16.

Why is the De Grey Mining share price pushing higher?

Investors have been buying De Grey Mining’s shares this morning after it released further drilling results from its Hemi prospect in Western Australia.

Today’s update relates to activities at the Aquila and Crow zones which are located adjacent and to the north of the large Brolga intrusion at Hemi.

According to the release, step out and infill drilling at Hemi is on-going and the latest results at Aquila and Crow continue to firm up areas of high grade gold mineralisation within a much larger and broader gold system.

Management notes that some outstanding high-grade intercepts continue to be returned at Crow, whereas drilling at Aquila is continuing to extend the high grade plunging shoot to the west.

Management commentary.

De Grey’s Managing Director, Glenn Jardine, was pleased with the latest set of results.

He commented: “The new results at Crow continue to demonstrate potential for higher grade lodes within the large, broad mineralised zones. The Company recently announced extensions to the northwest of Crow. Potential also remains for extensions to the northeast and southwest.”

More drilling is on the way and results are due in the near term from these activities.

Mr Jardine explained: “Wide spaced 80 by 80m extensional RC drilling continues in the northwest of Crow, with assay results awaited. Aircore drilling further to the west of the Crow intrusive has identified areas for follow up RC drilling. Drilling will continue at Crow to infill and expand the mineralised footprint. Drilling at the western end of Aquila continues and has extended mineralisation at depth and to the west toward Falcon.”

What now?

De Grey is on course to reveal its maiden resource estimate in the middle of next year.

“A broad mineralized zone is present at least 400 metres below surface that includes narrower high grade intervals. Total metres drilled at Hemi now exceed 200,000 metres since the discovery in December 2019. Seven rigs are currently operating around Hemi in support of completion of a maiden resource by the middle of 2021,” the managing director advised.

More reading

• Why the Paradigm (ASX:PAR) share price is climbing higher today
• Xero (ASX:XRO) share price hits record high after delivering strong first half growth
• Is the Commonwealth Bank (ASX:CBA) share price in the buy zone?
• 2 ASX dividend shares growing their dividend every year
• Wesfarmers (ASX:WES) share price on watch after FY 2021 trading update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price is climbing higher today on news the company has started Phase 2 trials of pentosan polysulphate sodium (iPPS).

In early morning trade, the Paradigm share price is up 1.62% to $3.13.

Phase 2 trial commences

Paradigm advised that it has started Phase 2 trials of iPPS to treat patients who suffer from orphan disease Mucopolysaccharidosis Type 1 (MPS-1).

Led by principal investigator, Dr David Ketteridge, the open label study will recruit up to 10 participants who meet specific criteria. Those enrolled in the trial will receive one of two dosing cohorts, either 0.75mg/kg or 1.5mg/kg. The drug will be administered weekly as an injectable dose for the first 12 weeks and then every second week for the 11-month duration.

Paradigm will seek to primarily assess the safety of iPPS in patients and evaluate if treatment can successfully alleviate pain. The biopharma company said its first patient has been enrolled and had received the first dose of iPPS.

The Phase 2 study will be undertaken at the Adelaide’s Women & Children’s hospital.

What is MPS-1?

Mucopolysaccharidosis type 1 is a rare metabolic disorder caused by a genetic defect when born. The disorder catabolises heparan sulphate and dermatan sulphates which cause a raft of problems for sufferers. They include abnormal bone development, irregular growth, cardiac and respiratory problems, and sometimes cognitive impairment.

Current treatments available are enzyme replacement therapy (ERT) and hematopoietic stem cell therapy (HSCT). Both therapies work to reduce the accumulation glycosaminoglycans (heparan sulphate and dermatan sulphate).

What did the CEO say?

Commenting on the trial, Paradigm CEO Paul Rennie said:

The data collected from the Phase 2 trial will be vital to support Paradigm’s future regulatory filings and applications for the development of PPS as a potential adjunctive therapy to enzyme replacement therapy (ERT) treatments. Our MPS programs will treat subjects as adjunct to ERT as well as previously bone marrow transplanted patients who may or may not remain on ERT.

Paradigm is making significant progress in the clinical development of PPS in both of our two programs of osteoarthritis (Zilosul) and the rare disease of MPS.

It is important to note both the US FDA and EU EMA have confirmed MPS is an orphan indication and as such the commercial advantage of an orphan drug is the 7-year regulatory exclusivity awarded to orphan drugs.

About the Paradigm share price

The Paradigm share price has been up and down over the past 12 months, reaching as high as $4.50 and as low as $1.08.

The company has a market capitalisation of $702.3 million and trades an average volume of 1.1 million shares daily. This shows investors are active when it comes to buying and selling Paradigm shares.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Paradigm (ASX:PAR) share price is climbing higher today appeared first on Motley Fool Australia.

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