Biocurious: Nexsen’s upcoming IPO highlights the need for speed in diagnostic testing

• Nexsen is commercialising novel point-of-care diagnostic tech developed by RMIT University
• The company’s first target is group B streptococcus (GBS) bacteria, a potentially dangerous disease affecting one in six pregnant women.
• Nexsen is in the throes of an IPO to raise $6-8 million

Following the June 30 listing of woundcare play Tetratherix (ASX:TTX) after a long IPO biotech drought, the upcoming listing of point-of-care diagnosis play Nexsen provides further evidence the worm is turning for aspiring ASX life sciences debutantes.

Based on a somewhat esoteric, secret-squirrel tech developed at RMIT University, Nexsen has a simple charter of enable simpler and rapid lab-free diagnosis of several common yet difficult diseases.

Nexsen is undertaking a $6-8 million capital raising, ahead of an October 7 listing at a nominal enterprise value of $32 million. The company will list under the ticker NXN.

Nexsen deploys the common lateral flow tests, similar to Covid and pregnancy assays.

But the underlying nanoparticle platform provides the smarts that enable point-of care diagnostics with lab-grade accuracy.

The company has multiple products in development, across medtech, agritech and biosecurity.

“Nexsen was founded with a bold and ambitious purpose to provide accurate, affordable, timely and accessible testing of diseases and threats that are currently constrained by lab-based systems,” says executive chairman Reece O’Connell.

“Too often, critical health decisions are delayed or compromised because diagnostics rely on slow and costly laboratory systems.”

Sciencey stuff

Nexsen’s tech derived from the RMIT University-based Sir Ian Potter Nanosensing Facility, led by nanotech guru Professor Vipul Bansal.

While Covid tests use an antibody biomarker, Nexsen’s platform is based on aptamers. Aptamers are short-chain synthetic sequences of DNA RNA – nucleic acids that carry crucial genetic information.

The company has patented ten such sequences.

Meanwhile, the use of nanoparticles makes for an improved result.

The tests are cheap, have a long shelf life and don’t have to be stored at a particular temperature.

Tackling GBS

First off the rank is GBS Rapid Sensor, to detect group B streptococcus (GBS) bacteria.

GBS is a potentially dangerous disease that affects one in six pregnant women.

The World Health Organisation puts GBS infections at 26 million annually, including 3.7 million each in the US and Europe.

GBS is present in about 20% of people and is largely harmless – except in the case of the immunocompromised and newborns.

If passed on, the infant is in danger of contracting sepsis, pneumonia or meningitis.

GBS is one of the leading causes of infant mortality and disability.

This is especially the case in sub-Saharan Africa, which accounts for half of the world’s early-onset GBS deaths and pre-term births.

The bacterial infections linked to GBS result in around 2.9 million neonatal deaths every year.

Nexsen says the current tests are done weeks before labour, which might miss a crucial timespan for bacterial colonisation.

The current standard of care is two tests per pregnancy.

There’s also the issue of unnecessary antibiotic use.

On trial

Having received ethics approval, Nexsen plans to launch a trial, dubbed First, at Melbourne’s Northern Hospital in the December quarter.

The trial aims to screen 400 to 500 pregnant women, who will undergo the GBS test at 36 weeks, alongside the standard test. The tests will be compared side-by-side.

Nexsen is confident the trial data will be suffice for FDA marketing approval, under the 510k (predicate device) route.

FDA assent would streamline applications in other geographies including Australia, Canada, Brazil and Japan.

The women will be tested at the point of care via simple vaginal-rectal swabs, with the results known immediately.

In the past, the labs have taken three to five days to process the tests.

 “You are talking about tests with incredible accuracy a couple of hours before birth,” O’Connell says.

“There are thousands of bacteria in a vaginal swab, but GBS is one of the hardest to find.”

In effect, RMIT’s scientists went after the hardest indication first.

“By mastering that, it means other indications are a lot easier.”

Australia aside, Nexsen is targeting the US, Europe, India and Southeast Asia (via Malaysia).

Other applications

Chronic kidney disease (CKD) and acute kidney injury (AKI) affect more than 700 million people and account for 30% of all hospital intensive care unit admissions.

Nexsen’s AKI work is at proof-of-concept stage, while the company hopes to complete preclinical validation work for AKI by September 2026.

Other “indicative future indications” are dengue fever, sepsis, hand foot and mouth diseased and gonorrhoea (yep – that one never goes away).

In the ag space, Nexsen’s bovine mastitis diagnosis is at development stage.

The inflammation of a dairy cow’s mammary gland caused by bacteria, bovine mastitis is one of agriculture’s most common – and costliest – diseases.

According to the US bovine information repository The Cattle Site, the disease results in $32 billion of lost milk production annually.

The condition can be treated with antibiotics – and prevented through good hygiene – but it needs to be detected early.

Early diagnosis also could prevent the mass dosing of beef and dairy cattle, a common practice in the US which risks increasing antibiotic resistance through the food chain.

Border patrol

“Biosecurity is central to protecting global health and agriculture from emerging threats,” Nexsen says.

Indeed.

Border checkpoints could use Nexsen’s diagnostics platform, initially targeting Xyella fastidiosa and HLB citrus (or Huanglongbing).

Xyella is a pathogen that can infect a wide variety of plants including fruit, almond and olive trees and grape vines.

“An incursion of Xylella could cost the Australian horticultural industry up to $11.7 billion,” the company says.

Also a bacterial disease, HLB affects citrus trees causing yellowing leaves, misshapen and bitter fruit and eventual tree death.

As a guide to its destructive potential, an HLB outbreak in Florida in the early 2000s slashed citrus production by 90%.

Show us the money

Post listing, Nexsen will join a pantheon of point-of-care diagnostic companies that include Lumos Diagnostics (ASX:LDX), Atomo Diagnostics (ASX:AT1), Proteomics International Laboratories (ASX:PIQ) and Genetic Signatures (ASX:GSS).

All are different in their own ways.

Via lead manager Alpine Capital, Nexsen aims to raise $6-8 million, at 20 cents apiece.

Earlier, the company raised $3.12 million from a convertible note, which will convert to ordinary shares on listing at 10 cents per share.

The biggest licks of funds are earmarked for the GBS and kidney disease development ($1.08 million and $1.35 million respectively).

Nexsen’s development to date has been funded partly by $10.9 million of government grants.

These include $7.7 million from Ausindustry’s Cooperative Research Centres Program, for the GBS program.

Nexsen also received separate grants of $1.6 million each from the Australian Research Council, for the biosecurity and bovine mastitis programs.

On listing, CEO Mark Muzzin will own 18.5% of the company. Regal’s Emerging Companies Opportunity Fund and RMIT will account for 5% and 3.5% respectively.

For RMIT, it’s the first equity investment over the august institution’s 150-year history.

The offer closes this Friday.

Think big

Nexsen can’t be accused of thinking small, given its vision of having every man woman and child on the plant using at least one Nexsen test.

It’s certainly paying in the right sector.

Research house Frost and Sullivan estimates the overall point of care testing market at $17.7 billion and estimates it will grow to $22.7 billion by 2028 (a compound annual growth rate of 6%).

The US currently is the biggest market, accounting for 40% of value, but Asia Pacific is the fastest growing.

Also the founder of the Perth based Summit Biotech Fund, O’Connell was attracted to what he dubs a rare platform opportunity across multiple indications.

“The company is exceptionally well positioned to capitalise on the ongoing global transition in decentralised healthcare,” he says.