While the S&P/ASX 200 Health Care (XHJ) index has closed in the negative, some healthcare shares are performing well.
Biome Limited (ASX: BIO)
Biome Limited delivered a strong Q1 FY25 performance, underscoring its momentum with a third consecutive quarter of positive EBITDA at $122,000, a record cash receipt of $3.89 million (up 84% YoY), and quarterly sales revenue reaching $4.25 million. This marks a 12% increase over the prior quarter (Q4 FY24) and a 55% rise from the previous corresponding period (Q1 FY24), further supporting Biome’s high gross margin, which remained above 60% for the quarter. The company’s same-store pharmacy sales were up by an impressive 68% YoY.
Additionally, Biome successfully launched Biome Cholesterol, a clinically proven product targeting cholesterol reduction. As of September 30, 2024, Biome held a cash balance of $2.67 million, reflecting effective cost management amid growth initiatives aligned with its Vision 27 strategic plan. In Q1, Biome invested strategically in human resources, inventory, and marketing to support its international growth agenda. This included preparing for a new market entry in Canada, bolstering its European business, and strengthening its presence in Australia. Resultantly, business activities expenditure for the quarter rose to $4.0 million, up from $3.05 million in Q4 FY24, excluding one-time expenses such as the Managing Director’s 3-year long-term incentive (LTI) payment and staff annual bonuses totalling $1.15 million.
Biome’s Q1 revenue, exceeding its $4 million target by $250,000 (6.3%), translates into an annualized run rate of approximately $17 million. Given current trends, Biome anticipates continued growth through FY25, setting the foundation for an ambitious three-year sales revenue target of $75-$85 million by FY27. Key to achieving this objective is expanding the company’s distribution footprint within Australia from 5,000 points to 8,000, capturing nearly 67% of total addressable market (TAM) across pharmacies and practitioner channels. Biome’s international expansion plans are also advancing, following successful test launches in the UK and Ireland. This quarter, Biome introduced its Activated Probiotics line into health retail channels, including pharmacies and health food stores. In North America, Biome is preparing for a Canadian test market launch in FY25, supported by recent Health Canada approvals. Biome’s strategy targets markets with specific traits: a robust pharmacy sector, an established integrative practitioner network, and favorable regulatory conditions.
One of the best long term healthcare stocks, Biome, beyond revenue growth, aims to maintain cash flow positivity and reinvest profits to accelerate its expansion through the Vision 27 period. The company is evaluating additional European geographies for future launches and remains confident that increased market share in Europe and North America will drive growth. Biome’s emphasis on operational efficiency and cost reduction, combined with market expansion efforts, aims to generate sustained value for shareholders. Overall, Biome’s Q1 results underscore its readiness to capture growth opportunities domestically and internationally, with a disciplined approach to scaling its business and meeting Vision 27’s revenue targets. This strategic positioning and strong execution are expected to fuel long-term growth in sales and profitability, ensuring enhanced value creation for its shareholders.
Cynata Therapeutics Limited (ASX: CYP)
Cynata Therapeutics Limited recently released its Quarterly Activity Report for the three-month period ending September 30, 2024. The report shows notable progress in several clinical trials. The Phase 2 trial for acute graft-versus-host disease (aGvHD) continues to recruit participants, with primary results expected by late 2025. The Phase 1 trial for diabetic foot ulcers (DFU) has completed patient visits, and results are anticipated in late 2024 or early 2025. Additionally, the company has joined its first patient in a Phase 1 trial for kidney transplantation, expecting dosing to begin in Q4 2024.
Cynata’s CYP-001, an off-the-shelf iPSC-derived MSC product, is at the forefront of these trials. The Phase 2 trial for aGvHD aims to recruit about 60 high-risk patients to assess the effectiveness of CYP-001 combined with steroids compared to a placebo. Encouragingly, initial Phase 1 trial results for GvHD showed positive safety and efficacy, leading to publications in a respected medical journal. Meanwhile, the Phase 1 kidney transplantation trial aims to reduce the need for long-term immunosuppressants, potentially minimizing associated toxicities, with the first patient set to receive CYP-001 shortly.
In the realm of wound healing, Cynata, among ASX healthcare companies is advancing its CYP-006TK, a topical MSC product candidate. The Phase 1 DFU trial, which has enrolled 30 patients, is examining the efficacy of CYP-006TK against standard care. Preliminary results showed a significant reduction in wound size for patients treated with the MSC dressing. The company is actively analyzing the data from this trial, with results expected soon. Furthermore, Cynata has secured ownership of the underlying technology for this wound dressing from TekCyte, enhancing its product portfolio.
Looking ahead, Cynata has outlined several key milestones for the remainder of the financial year. They cover the anticipated dosing of patients in the kidney transplantation trial, release of results from the DFU trial, and completion of recruitment for the aGvHD trial. With a cash balance of A$4.29 million and an expected R&D Tax Incentive rebate, Cynata is well-positioned to continue its research and development activities into the second half of 2025.
(Source: Company’s Report)
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