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News.com.au
29-04-2025
- Business
- News.com.au
Health Check: We're a goer says Aroa, with US tariffs unlikely to be a ‘major headwind'
Aroa says the real impact from the 10% US tariff imposed on New Zealand goods will be much less than that Quarter time scores show companies are kicking with the wind Dimerix shares enter trading halt ahead of licensing deal Kiwi wounds management house Aroa Biosurgery (ASX:ARX) says it expects the US tariff imposed on its products will be 'substantially less' than the 10% general duty imposed on New Zealand. At Aroa's fourth quarter results briefing this morning, CEO Brian Ward said that's because of the company's tie-up with its US distributor, the Nasdaq-listed Telabio. Aroa makes its biologic products from the stomach foreskin of sheep – in NZ of course. 'Due to the commercial arrangement with Telabio - particularly in terms of how pricing and cost sharing works – we expect the net impact of this will be substantially lower than 10%,' he said. 'Don't feel this is going to be a major headwind for us in the coming year.' Selling mainly in the US, Aroa reported positive cash flow of NZ$1.1 million, on customer receipts of NZ$20 million (11% higher year-on-year). This is the second consecutive quarter of positive cash flow, with Aroa reporting a $1.2 million surplus in the December stanza. The company has reiterated revenue guidance of NZ$81-84 million for the full year to March 2025 – up 17-22% – with underlying earnings of NZ$2-4 million. 'We are finishing the year in a strong position,' Ward said. Management highlights sales of its key product Myriad, with sales up 32% on a pcp basis for the quarter. Sales for the month of March were also a record NZ$2 million. Myriad is used for general soft tissue reconstruction, and is utilised in a wide range of procedures, and increasingly for trauma. Distributed via Telabio, sales of Ovitex (for hernia and breast reconstruction) gained 17% year-on-year. This improvement comes despite difficult conditions for Telabio, which faces sales headwinds and stiff competition. This is reflected in the company's share price decline over the last year. Ward says Telabio has had up quarters and down quarters, which is not unusual. 'Over the last quarter we have seen good demand from Telabio.' He says that if Telabio weren't to remain viable, 'Aroa is well placed to be part of whatever takes place there.' Aroa will provide more detail on its performance when it releases its full-year numbers in May. Quarter-time scores Quarterly reports are flooding in like tardy voters to the polling booths just before Saturday's 6pm close. Artrya (ASX:AYA) says it is cashed up and ready to start selling its heart device Salix Coronary Anatomy, having recently won US Food and Drug Administration (FDA) clearance for the AI-enabled tool. Locally, Artrya secured three-year commercial contracts with Sonic Healthcare's local radiology arm, a well as Lumus Healthcare. Following a $15 million two-tranche placement, Artrya has $17 million in the bank, having burnt $4.6 million for the quarter. Salix Coronary Anatomy detects coronary artery disease. The company is also preparing a variant, Salix Coronary Plaque, for an FDA approval submission. This is a reference to thousands of doctors walking off the job over a government plan to increase medical student numbers – a measure the docs claim will not alleviate the nation's health crisis. The company had $780,000 of operating cash outflows. Shares in Medical Developments International (ASX:MVP) rocketed by more than 30% this morning after the company reported a 7% revenue improvement to $8.9 million. This was on the back of improved pricing and volumes for its key product Penthrox. A.k.a. the 'green whistle', the long-standing Penthrox is a front-line analgesic for temporary pain relief. The company recorded operating cash flow of $900,000, a turnaround on the big improvement on the deficit of $10.4 million a year ago. That's clever Formerly LBT Innovations, Clever Culture Systems (ASX:CC5) yesterday recorded a more than 700% surge in March quarter receipts to $2.14 million. The company has developed an automated plate assessment system (APAS) for labs – a welcome innovation at a time of acute pathologist shortages. Clever Culture also recorded positive cash flow of a tad over $1.1 million, its second consecutive quarter in the black. The company cites a sales pipeline of more than 40 'active and qualified customer opportunities', amounting to about $75 million in potential upfront sales revenue and $15 million per annum of recurring revenue. Cash flow was a positive $1.86 million. This revenue resulted from the manufacturing and wholesaling of medical pot and the psychedelic MDMA (a.k.a. Ecstasy), on the part of its subsidiary Breathe Life Sciences Receipts for the nine months surged 202% to $21.8 million Bioxyne's cash rose to $6.5 million compared to $750,000 previously. Bubs results are nothing to bleat about A purveyor of goat's milk-based infant formula, Bubs Australia (ASX:BUB) sneaks into the 'life sciences' category by a chin hair's width. The hitherto troubled Bubs showed a second consecutive positive cash flow of $500,000, compared worth a $10.9 million deficit a year ago. Revenue surged 52% to $23.2 million, with sales in its traditional Chinese market and new US market growing 48% and 185% respectively. In 2022, then US prez joe Biden praised Bubs for helping to fill a critical shortage of infant formula. But the glowing endorsement from the Commander in Chief did little to help founder Kristy Carr, who was ousted in acrimonious circumstances in 2023 Dimerix in suspense over licensing deal Dimerix (ASX:DXB) shares today entered trading halt pending news of a licensing agreement – presumably a geographic-based one. The kidney drug developer's shares soared in October 2023, after the company unveiled a tie-up covering Europe, Canada, Australia and New Zealand. This compact, with the UK-based Advanz Pharma, delivered $10.8 million upfront, $219 million of potential milestones and royalties. In May last year the company struck a deal with Taiba, for Iraq and the Gulf Countries. They're relatively small markets, but the deal delivers another $120 million of potential milestones. In January this year a Japan deal with Fuso delivered another $7.2 million upfront and $100 million of potential milestones. The missing link, of course, is the US and mainland China. In early April management said the company was discussing coverage of these geographies with potential partners. The shares are due to go off trading halt on Thursday, so presumably we will know more then.
News.com.au
23-04-2025
- Health
- News.com.au
Dr Boreham's Crucible: WISE guys de-risked with FDA approval for EBR cardiac device
The US Food and Drug Administration might be in a mess, but a slew of ASX biotechs can't complain that the agency's approval process has stalled. This month, the FDA approved Artrya's (ASX:AYA) arterial plaque detection tool, Salix Coronary Anatomy, and then gave the nod to Orthocell's (ASX:OCC) nerve repair device, Remplir. The private Headsafe MFG won assent for its wearable concussion headset. Now, EBR Systems (ASX:EBR) joins the happy list after the FDA brandished the 'approved' stamp on the company's novel wireless pacemaker device, WISE. WISE is the only leadless left ventricular endocardial pacing device and the only one able to deliver cardiac resynchronisation therapy (CRT). 'It's a spectacular day for us and for shareholders,' EBR chief John McCutcheon said. 'It changes us from a clinical company with a commercial footing where it's more about execution and growth.' Investors were less chuffed and wiped 22% off the stock, apparently because of profit taking on the back of the company's stellar share run. EBR plans to sell to selected heart surgeons by the end of the year, in a US$3.6 billion addressable market. To date, EBR has spent US$340 million to develop WISE. Three WISE guys What happens when an electro-physiologist, an ultrasound scientist and pacemaker engineer walk into a bar? You don't get a joke, but a better way to undergo CRT by accessing the left ventricle and removing annoying leads that are prone to failure. The trio, Dr Debra Echt, Dr Axel Brisken and Richard Riley founded the Silicon Valley based EBR in 2003. Bletchley Park cryptologists would pick up that 'EBR' combines their initials. Echt saw a problem with leads and thought there was a better way to defibrillate (reduce dangerous rapid heartbeat) the heart. With a background in sales and marketing in the heart device sector, McCutcheon joined EBR in 2019. EBR listed on the ASX on November 24, 2021, having raised $110 million at $1.08 apiece. In May 2023, EBR reported its 183-patient, pivotal study for its WISE device met its primary safety and efficacy endpoints, for patients with acute and chronic lead failures and high-risk upgrades. European authorities approved the device in October 2015, but regulatory upheaval there meant that selling initially in the US was more attractive. More than 500 patients have been embedded with WISE to date, with the first Australian patient implanted in February 2018. This use relates to clinical trials and special access arrangements. The heart of the matter WISE stands for 'wireless stimulation endocardially' – but we all knew that already. CRT involves inserting electrodes in the left and right ventricles of the heart, as well as on occasion the right atrium, to treat heart failure by coordinating the function of the left and right ventricles via a pacemaker. If the right ventricle contracts before the left one, desynchrony occurs and the ticker does not pump blood adequately. CRT is a subset of the cardiac rhythm management sector, which includes bradycardia pacing (for slow heart beats) and defibrillations via high voltage leads added to the pacemaker. Pacemakers have saved many lives, but the trouble is about 4% of the embedded leads fail every year. The longer the pacemaker is in there, the higher the chance of failure. One reason the left ventricle is trickier is because it circulates arterial blood straight to the brain. The right side (venous blood) circulates through the lungs and is less prone to clotting. To avoid clots, the left-side leads are currently placed in the surrounding coronary sinus, with stimulation occurring outside the chamber. Being wireless, WISE obviates this problem. A very handy grain of 'rice' The size of a grain of cooked rice – and we're talking Jasmine rather than the fatter Arborio – WISE, powered by a subcutaneous battery, is embedded in the heart to provide left ventricle pacing stimulation. A transmitter picks up the groove of the right ventricle and sends a signal to the WISE electrode, which converts ultrasound energy to electrical energy to stimulate the left ventricle. The transmitter sits between the ribs and is flush to the skin, so it is unobtrusive and not noticeable to the patient. What's the target market? WISE provides the only way for patients to upgrade from leadless pacemakers to CRT. To be clear, other wireless pacemakers have been developed, but they cater for the right ventricle. WISE is designed to be used alongside them. Medtronic was the first five years ago with Micra and then Abbott followed with Aveir. Boston Scientific awaits approval of a third device, Empower. These right-side devices pace for non-heart failure arrythmias such as bradycardia (slow heartbeat). 'In these cases, the arrhythmias are treated in the right ventricle. But with heart failure, the left ventricle needs to be included for the condition to be treated effectively.' Use strictly as directed The FDA has bestowed broad indications for WISE, the first provision being that the patients are at least 22 years old and have an implanted right ventricular pacing system. The allowed uses cover four sectors that comprise the US$3.6 billion market. They are high-risk leadless upgrades, high-risk conventional upgrades and acute and chronic lead failure. High-risk upgrades mean the surgeons have attempted to place a lead in the coronary sinus to access the left ventricle. Or the procedure has been deemed to be too dangerous in the first place. Another scenario is when a patient with a lead-based pacemaker progresses to needing CRT, but a left ventricle lead would be too risky. About 30% of this cohort will require CRT within four years. In these cases, the patient might be re-installed with a leadless right ventricle device, in conjunction with WISE. In other cases, leads may have been removed because of infection and re-installing them risks further infection. The biggest single opportunity lies with chronic lead failures, a US$1.45 billion a year market. Finances and performance EBR lost just under US$11 million in the fourth (December 2024) quarter, with a full year loss of US$41.2 million compared with a US$32.7 million loss previously. Research and development costs came in at US$6.65 million. But they trended down to US$601,300 in the December quarter from US$2.5 million in the March stanza, because the company has been capitalising its pre-launch inventory purchases. But it's swings and roundabouts, with product manufacturing and operating costs up from US$493,000 in the March quarter to US$2.3 million in the December quarter (for a year's total of US$4.25 million). In October last year EBR raised $50 million in a placement and share purchase plan (SPP), at 82 cents apiece. In mid-2023 the company raised $35 million, also in a placement and SPP, at 91 cents apiece. At the time EBR also drew-down US$20 million of debt on a US$50 million deal signed with Runway Growth Capital in mid-2022. The first US$20m was drawn at the signing of the deal. With US$66 million ($105 million) of cash on hand, EBR says it is adequately funded for 'initial' commercialisation. Over the last 12 months, EBR shares have ranged between 83 cents (September last year) and an all-time high of just over $2 (late March this year). Despite the post-approval pull-back – and an attempted rebound fizzle out – the stock has gained about 64% over the last year. EBR has a bevy of big-ticket names on the register, including industrialist Mark Carnegie, Brandon Capital and industry super funds HESTA, Hostplus and Australian Super. Since last October, EBR has been exempt from ASX reporting requirements and falls under US reporting rules. Rearing to go EBR has been building inventory and amassing a small direct sales force. For those worried about tariffs, EBR recently took out an 11-year lease on an expanded, 4750m2 production facility at Santa Clara, in the heart of Silicon Valley. Given the cardiac community is small, EBR will sell directly in the US initially, but is amenable to using distributors elsewhere. McCutcheon cautions investors not to expect a 'rocket-ship take-off': initial uptake could be slow, as clinicians familiarise themselves with the product. The company sees first use by 20 to 40 heart centres, with first adopters likely to use them for 10-25% of procedures. He says EBR has a 'clear path' to US reimbursement, expected by October this year. The company has modelled per-procedure public and private reimbursement at US$45,000, but McCutcheon says: 'we certainly want to get more than that'. The company has been accepted into the 'new technology add-on payment' pathway and other exotic reimbursement conduits. McCutcheon adds that pacemakers were becoming commoditised until Medtronic entered the market with Micra five years ago. 'Now, it is the most dynamic and fastest growing part of the market, because of wireless devices,' he says. 'That's a proxy for our future and how it will parlay into our success.' Dr Boreham's diagnosis As McCutcheon notes, EBR has now grown-up and reached the life sciences equivalent of adulthood. But he well knows that commercial-stage companies can have growing pains and stresses the rollout will be measured enough to pick up problems before they become big ones. 'I've done a lot of new technology launches, but as smart as we think we are, there's always something we didn't learn.' In 2021 alone, the FDA ordered recalls on certain Medtronic and Abbott pacemakers and Medtronic defibrillators, owing to premature battery depletion. Another commercial reality is that major product rollouts involve buckets of money. While EBR has $105 million, broker Bell Potter expects the company will raise a similar amount this year to complete US commercialisation in the US and attack other markets. Bell Potter also forecasts EBR will post a US$48 million loss this year and deficits of US$52 million and US$42 million in 2026 and 2027. Still, with its FDA certificate safely in its corporate paws, EBR becomes a de-risked company more befitting its ~$500 million market valuation. One oddity of it all is why the WISE guys at the heart device giants haven't devised their own left ventricle devices. The simple reason is that's it's hard and when you are making a lot of money from what you are currently doing, you just keep doing it. 'We are going to own our space for some time, we don't see any threats on the horizon,' McCutcheon says. 'Everything looks like it is going our way.' At a glance ASX Code: EBR Share price: $1.22 Shares on issue (CDIs): 372,896,324 Market cap: $454.3 million CEO: John McCutcheon Board: Allan Will (executive chair), McCutcheon, Dr Christopher Nave, Trevor Moody, Dr Bronwyn Evans, Dr David Steinhaus, Karen Drexler Financials (calendar 2024): income nil, net loss US$41.2 million (previous loss US$32.7 million), cash balance US$64.5 million (at December 31, 2024) *US$1.00 = 62 Australian cents Major identifiable shareholders: Hostplus 12.8%, HESTA 10.6%, Brandon Capital (partners and clients) 5.6%, MH Carnegie Funds 10.8%, Split Rock Partners LP 7.2% Disclosure: Dr Boreham is not a qualified medical practitioner and does not possess a doctorate of any sort. He sees no threats on the horizon and everything is going his way, not that he earns that much from doing what he's doing. At Stockhead, we tell it like it is. While EBR Systems is a Stockhead advertiser, it did not sponsor this article.
