How I came to choose to analyze Resonance Health (RHT)
Resonance Health Limited is now a little known biotech stock. A fellow contributor to “Ten Bags Full” community traders research and information website invited discussion on what appears from its medical potential, to be an undervalued stock at only 1.5 cents. I am not a share-holder of RHT.
This post is the outcome of my limited research, having no prior knowledge of the company. My understanding of the technology is necessarily limited, and I welcome more accurate informed advice.
The opinions expressed are my own, based on technical considerations. Please do not rely on this post for investment purposes.
My motive in these chart analyses is to assess the value or otherwise of TA as a predictive tool in my hands.
The Perth based company has three subsidiaries with which I am unfamiliar:
- Resonance Health Analysis Services Pty Ltd
- WA Private Health care Services Pty Ltd and
- IVB Holdings Pty Ltd.
It has offices in the UK, Germany, USA and distributors in the Middle East and Turkey.
It’s FerriScan technology has been endorsed by leading haematologists in the UK for the measurement of liver (and cardiac) iron concentrations.
The Medical Problems
Iron is of course an essential body element in the haeme component of haemoglobin, the oxygen transferring substance found in the red blood cells.
Body iron requirements are derived from the food we eat. Iron levels are regulated by modifying the absorption of iron from the gut, since little is excreted from the body. Surplus body iron is transferred via the blood to be stored mostly in the liver, but in other organs, including the heart as well.
More Iron is needed in actively bleeding medical conditions, illnesses where red blood cells are actively destroyed, and in pregnancy. Insufficiency results in an iron deficiency anaemia in which the red cells are smaller and contain less haemoglobin than usual.
On the other hand, excessive iron in the body, when extreme, may also be harmful. There are two scenarios for this:
- The breakdown of blood in patients who have had to have repeated blood transfusions for conditions such as thalassaemia. Excesssive iron is released and is stored in the liver etc. This is known as Haemosiderosis.
- The excessive absorption of dietary iron, commonly as a result of a genetic condition, es known as Haemochromatosis. Excessive alcohol consumption is a significant risk factor.
Haemachromatosis may lead to cirrhosis of the liver, cardiomyopathy (heart deposits), diabetes mellitus (pancreas), and may cause impotence. It is important to be able to measure the extent of the iron overload on body organs, and tissues, and to monitor the response to treatment. This may take the form of phlebotomy (blood-letting), and the administration of chelating agents which bind, and renders iron inactive.
FerriScan has already received regulatory approval and is being marketed. It is of course not a therapy but a diagnostic adjunct, based I surmise on computerized evaluation and measurement of data from Magnetic Resonance Imaging (MRI) films. In doing this it quantifies the severity and risk of the iron overload. It then can monitor any response to treatment.
The technology has added application for assessing the extent of fatty change to the liver, and of fibrosis (cirrhosis) of the liver.
From a medical perspective FerriScan is at the forefront of research and management of an important, although somewhat esoteric branch of Medicine.
The Directors are well-qualified in their fields, and the past research appears to have been well-received. Resonance Health is currently funding relevant clinical studies at the Charles Gardiner Hospital in Perth, and the Austin Hospital in Melbourne.
Investor appraisal of Resonance Health using Technical Analysis.
Research excellence and clinical promise are vital for biotech stocks. But how have shareholders fared in the life of the company.
TA Observations based on a 20 year monthly chart for a long term view
- Chart starts in January 1992 with an opening price of a $3.05.
- In the four years to the end of 1995, the share-price was steady, with support at $2.
- This was followed by four years of reward for share-holders with two peaks, one at $18.60 and the other at an incredible $25.30, demonstrating how rewarding biotech stocks can be, at least for a time.
- Since then there have been fall-offs first to $2 support, and then through the $1 support to now go about as low as they can at 1.5 cents.
- Looking at this chart, for the last 10 years, the candle-stick chart has been a straight line. In a cardiogram trace (ECG), you would diagnose a cardiac arrest. In non-medical terms, this total lack of volatility shows investor indifference.
- In the last twelve months a daily chart show range trading between one and two and a half cents, a peak reached a year ago.
The long-term story for investors has been abysmal with not even dividends to cushion the blow of declining prices.
The low price does not prevent a turn-around in fortunes, but on the present chart appearances, this seems most unlikely.
One wonders if the company has now out-lived its usefulness as a source of funds and is likely to be wound up, despite having been able to survive for over twenty years.
Review of company fundamentals, including the profitability of the three subsidiaries would be interesting but beyond the scope of this post.
- Exposing the Hidden Dangers of Iron: What Every Medical Professional Should Know about the Impact of Iron on the Disease Process (dbestreview.com)
- Magnetic Resonance and Brain Function: Approaches from Physics (Proceedings of the International School of Physics) (dbestreview.com)
- A Host of Ills When Iron’s Out of Balance (iplanethealthnews.com)
- CiRRhOsIs of LiVeR (indranilc69.wordpress.com)
- The iron elephant – The dangers of iron overload (sott.net)
Categories: Chart Analyses, Technical Analysis, Trading opinion
what are your thoughts on RHT now ?
I am grateful for your question josh. I have not looked at the company since reviewing it in 2013, so it is of considerable interest to me. I would like to take another look at it when I find the time. My short answer is that I have great respect for the scientific work of the company, but that it does not meet my personal investment criteria. It is currently in a down-trend. Should there be a break-out higher it might be a sensational stock in which to invest for a short- time-frame.