Health Check: Biotechs rush to short-term funding fix
Audeara shares surge up to 36% on China deal
Bell Potter halves its Syntara valuation
With traditional equity fundraising conditions remaining patchy – albeit far from impossible – biotechs are flocking to short-term cash injections by way of research and development (R&D) cash advances.
Specialist lenders advance the funds with the security of the borrower receiving the federal Research & Development Tax Incentive (RDTI).
The RDTI compensates innovators with a 43.5% cash offset for every eligible dollar spent.
The company repays the loans when it pockets this payment, which can be some months after the financial year in question.
New lenders have sprung up to avail of the market opportunity, which applies not just to biotechs.
Today, psychedelic drug developer Tryptamine Therapeutics (ASX:TYP) said it raised $2.6 million, by way of an R&D advance with Rockford Equity Pty Ltd.
The funds will support the company's trial TRP-8803. This program uses intravenously infused psilocin to treat the difficult binge eating disorder.
The company can elect to drawdown on the facility in $500,000 tranches, accruing interest of 16% per annum on the outstanding balance.
The loan is secured by the company's expected R&D refund for the 2025-26 year.
As of June 30, Tryptamine had cash of $3.03 million.
Joining the rush
Last month, Neurizon Therapeutics (ASX:NUZ) took out a $1.5 million advance with Radium Capital and Zelira Therapeutics (ASX:ZLD) availed of $650,000 from RH Capital Finance.
In June, Chimeric Therapeutics (ASX:CHM) secured $2.5 million from Endpoints Capital.
Other companies using R&D advances include AdAlta (ASX:1AD), Recce Pharmaceuticals (ASX:RCE), Adherium (ASX:ADR) and Noxopharm (ASX:NOX).
The facilities don't preclude other fundraisings.
Recce recently raised $15.8 million of equity and took out a $30 million non-R&D loan with Avenue Capital Group of the US.
The funds will support Recce's Indonesian and local phase III trials of its synthetic antibiotic candidate.
These studies are to treat diabetic foot and acute bacterial skin and skin structure infections.
Investors all ears as Audeara pushes into China
Audeara (ASX:AUA) has signed a deal to sell its hearing aid-style devices in mainland China, which has 1.3 million people and (roughly) double the number of ears.
Audeara has developed headphones that adjust the volume and other levels to the wearer's individual profile, with the help of algo-based technology.
Over the past two years, Audeara has tweaked its business model from selling its headphones in its own right, to providing the tech to big-ticket international customers.
True to this strategy, the Middle Kingdom push is by way of a licensing agreement with a subsidiary of Taiwan's Eastech Holding Limited.
The parties signed a letter of intent last September.
The tie-up involves Audeara licensing its tech and provide engineering services to support the development of "advanced hearing devices".
These gizmos will be sold under a third-party brand and distributed via a 'leading Chinese e-commerce hearing aid provider with national reach'.
Audeara says China presents is a 'significant market opportunity', with about 426 million people affected by hearing loss.
This figure is expected to reach 561 million by 2034 – 40% of the population.
Whatever the case investors sure heard the news, with Audeara shares vaulting up to 35% this morning.
Syntara is half the company it used to be
Following Syntara's (ASX:SNT) FDA setback over the conduct of its proposed myelofibrosis trial, broker Bell Potter has halved its valuation of the company.
This is nice symmetry, give Syntara shares yesterday halved on the grim tidings.
The FDA has advised the company to carry out a placebo-controlled phase IIb trial, rather than skip to a pivotal phase II-III style effort.
The agency wanted extra safety and efficacy data for Syntara's drug candidate amsulostat, which is intended to be used alongside the standard of care ruxolitinib.
Bell Potter notes the extra trial means clinical development could take four to five years, compared with around three years for the original intended path.
'The upshot is amsulostat is now a phase IIb ready asset rather than phase III-ready,' the firm says.
'This does not at all diminish our view that the data reported to date from the phase IIa trial is highly compelling and strongly supportive of future development in myelofibrosis.'
The firm values the stock at six cents compared with 12 cents previously and today's opening price of 2.8 cents.
Syntara has other trials in myelodysplastic syndrome, skin scarring and a Parkinson's disease related disorder, but the market has focused on the myelofibrosis program.
Other indications should be child's play for Mesoblast
Broker Canaccord sees a big opportunity for stem-cell developer Mesoblast (ASX:MSB) to branch into other childhood immune-related diseases.
In December the FDA approved Mesoblast's maiden product, Ryoncil for steroid-resistant peadiatric graft-versus-host disease.
Mesoblast isn't currently running any other pediatric trials.
But Canaccord says the company's mesenchymal stromal cells have a 'strong mechanistic rationale' in areas of high unmet need.
This is especially the case when there are safety concerns.
'These include paediatric Crohn's disease, systemic juvenile idiopathic arthritis, or multisystem inflammatory syndrome in children, where standard of care immunosuppressants are often inadequate or carry significant toxicity risks.'
About 56,000 US children have Crohn's disease and up to 20,000 of have failed standard therapies.
The firm sees a Ryoncil opportunity of 7000-10,000 of these patients - a circa US$3 billion opportunity.
Mesoblast launched Ryoncil in April and reported gross June quarter revenues of US$13.2 million.
So far the company has signed up 20 transplant centres, with ten patients prescribed the therapy.
'Mesoblast has achieved 220 million covered US lives (commercial and government payers), with limited pushback," Canaccord says.
The firm assumes peak sales at $206 million a year. This is based on a 50% market share at around US$1.4 million per patient.
The firm values the stock at $2.97 a share a modest increment on the current $2.30 (ish).
This estimate does not factor in the potential childhood indications.
Mesoblast is working on an FDA approval application for adult heart disease variant. It also has an advanced lower back pain program.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
News.com.au
12 minutes ago
- News.com.au
Commonwealth Bank rides home loan wave to record $10.25bn profit
Australia's largest bank says improving household budgets helped drive it to a monster $10.25bn profit. Commonwealth Bank announced cash profits rose by 4 per cent through the year to June, with the banking giant benefiting from lowering bad debts and growth in its business loan sector. The record result was largely in line with expectations. In welcome news for households, CBA said loan impairments expenses had decreased, pointing to Aussies being able to make repayments on their home loan. Commonwealth Bank chief executive Matt Comyn said even though the Australian economy remained subdued, he expected it to improve in the coming year. 'Despite global uncertainty, the Australian economy has remained resilient, with strong fundamentals including a healthy labour market, steady immigration and ongoing public sector investment. CBA has declared a final dividend of $2.60 per share, fully franked, taking the business's dividend for the full year to $4.85.
News.com.au
24 minutes ago
- News.com.au
ACTU to propose four-day work week and reduced hours that won't impact pay
The Australian Council of Trade Unions (ACTU) will propose a four-day work week and shorter hours - that won't affect pay - in a bid to improve living standards. Unions have also suggested sector-specific alternatives for businesses where it was not appropriate to reduce the work week and hours. Other options include more rostered days off, lifting the amount of annual leave and 'redesigning the roster to improve predictability, security and work-balance'. Pay and conditions, such as penalty rates and overtime, would be protected to ensure a worker's wage is not impacted. The ACTU will outline its proposal at the Economic Reform Roundtable next week, saying 'workers deserve to benefit from productivity gains and technological advances'. The union pointed to a recent published study of countries, including Australia, which have trialled a four-day work week over six months. It found there was a lift in performance, a reduction in burnout and improved health and retention of workers from the 141 organisations and almost 3,000 employees involved. It also cited a Swinburne University study in 2023 which trialled the 100:80:100 model. In this model workers kept 100 per cent of what they would have been paid for five days from working 80 per cent of their hours as long as they maintained 100 per cent of their productivity. Seven out of the 10 firms involved saw higher productivity. Australians have been working 'record-hours' since the Covid pandemic, leading to a productivity slump. The Productivity Commission also flagged businesses had not made enough investment to improve efficiency. Business groups will likely be opposed to the shorter hours and four-day work week. ACTU President Michele O'Neil said the four-day work week proposal and shorter hours will benefit both the employee and employer. 'They deliver improved productivity and allow working people to work more efficiently,' she said in a statement. 'Unions want all Australians to benefit from higher productivity - not just those with money and power.' Ms O'Neil argued productivity growth did not translate to better living standards otherwise 'the average worker today would be around $350 a week better off'. 'A fair go in the age of AI should be about lifting everyone's living standards instead of just boosting corporate profits and executive bonuses,' she said. Social Services Minister Tanya Plibersek last month did not rule out a four-day work week. 'Well, we'll listen to all views respectfully,' she said on Sunrise.' 'The Treasurer's roundtable on productivity, I think is a great way of bringing unions and businesses and other groups together to discuss how we can make our economy stronger and more we won't be doing to improve productivity is ask people to work longer hours. We want to invest in our people, boost training, invest in technologies and new ways of working, make sure that we're playing to our competitive advantages as a nation.' Prime Minister Anthony Albanese previously said he wants to see practical measures put forward at the three-day event that have 'broad support'. Four-week trial a 'resounding success' The United Kingdom in 2022 trialled its largest four-week work involving 61 companies from different sectors and 2,900 workers. Each company was able to tailor the policy to fit their business to ensure productivity and challenges were met, such as giving workers Fridays off. Results showed almost four in ten employees were less stressed, one in seven suffered less burnout and anxiety, fatigue and sleep issues dropped. Over 50 per cent said they found it easier to balance work and household responsibilities and were overall more satisfied with their finances, relationships and at how they managed time. The study was a 'resounding success', with 56 of the companies continuing the four-day work week model and 18 of those saying it will become permanent. The trial was held between June and December. Shark Tank star and Canadian businessman Kevin O'Leary blasted the movement which has grown in popularity in France. 'That's the stupidest idea I have ever heard,' he told Fox News in June. 'I think we should let the French go to a two-day work week and then kick their arse internationally.' Mr O'Leary backs a traditional work week and the post-Covid new norms of working from home, saying 40 per cent of his staff work remotely.
News.com.au
39 minutes ago
- News.com.au
PM too focused on foreign affairs, opposition says
Anthony Albanese is neglecting Australians because he is focused on matters abroad rather than at home, Sussan Ley says. The criticism comes after the Prime Minister pledged to recognise Palestine at the UN General Assembly (UNGA) next month. Since announcing it on Monday, Mr Albanese has been both accused of 'rewarding terrorists' and praised for joining the global push to realise the rights of Palestinians. In an op-ed published on Wednesday, the Opposition Leader repeated her criticism of Mr Albanese's declaration and said Australians 'expect their government to put their jobs, families and future first'. 'Australians are enduring the worst cost-of-living crisis in a generation, yet you would not know it from the Prime Minister's priorities,' Ms Ley wrote in the Herald Sun. 'Mortgage repayments are up around $1800 a month, power bills have soared and groceries cost more and more. 'But Anthony Albanese seems more focused on foreign conflicts than the crisis in our own backyard.' Ms Ley acknowledged the enormous number of deaths caused by the war in Gaza, where Israeli forces have been relentlessly pursuing Islamist militants behind the October 7, 2023 attacks. Hamas, the group responsible, killed more than 1200 in the shock assault and took hundreds hostage. The ensuing 22-month conflict has killed tens of thousands of people. 'The Coalition's position is clear: Israel has the right to defend itself, Hamas must release all hostages, humanitarian aid should reach those in need and the war must end,' Ms Ley said. 'Recognising a Palestinian state before hostages are freed and Hamas is defeated rewards terrorism, not peace. 'These are serious matters, but Australians expect their Prime Minister's first priority to be the kitchen tables of this country, not negotiating tables 12,000km away. 'Day after day, he appears fixated on one foreign policy issue to the exclusion of everything else.' Ms Ley's criticisms come a day after the Reserve Bank cut interest rates a further 0.25 percentage points to 3.6 per cent amid the lowest inflation figures since 2021. The Albanese government has also committed record funding to Medicare and passed both its signature student debt-slashing Bill and snap childcare safety reforms. The war in Gaza has proven a major issue for Australians, many of whom have family members affected on both sides. Just less two weeks ago, more than 100,000 protesters marched across the Sydney Harbour Bridge calling for an end to the bloodshed. Ms Ley's op-ed also comes ahead of summit season – the final quarter of the year in which a series of major global meetings take place, such as the UNGA. As a middle power with deep trade, defence and diplomatic ties spanning Asia to North America, it is normal for Australia to attend these summits.
