Health Check: ASX sleep company emerges from slumber with a revenue and earnings upgrade

Somnomed shares soar 28% on this morning’s upgrade
Biome tells a revenue growth story in a few words
2a and now 2b, says Island – with safety not a question

A corporate ‘reset’ at sleep disorders house Somnomed (ASX:SOM) looks to be paying off, with the unloved company’s shares soaring 28% after this morning’s upgrade.

Somnomed supplies special mouthguards to tackle sleep apnoea – bad snoring – a field dominated by ResMed (ASX:RMD) with its continuous positive airway pressure (CPAP) devices.

Somnomed’s two flagship Somnodent devices are to be complemented with the approved but not yet launched Restassure, the first such oral gizmo with in-built compliance, cloud-based monitoring.

This year’s corporate renovation included a $22 million capital raising, $15 million of debt repair and – unusually – the appointment of co-CEOs (Karen Borg and Amrita Blickstead).

Management has increased revenue guidance for the 2024-25 to $105 million, from the $100 million foreshadowed at August’s 2023-24 results briefing.

The company also expects more than $7 million of underlying earnings, compared with August’s guidance of more than $5 million.

In the 2023-24 year, the company managed $91.7 million of revenue and skinny underlying earnings of $600,000 and reported a $12.2 million statutory loss.

Somnomed has been unloved for some time, with the shares losing 85% of their value over the last five years before today’s share spurt (and close to 30% year-to-date).

Even after this morning’s share price awakening to 34.5 cents the company is valued at a mere $74 million – scant for an established revenue generator with net cash of $16 million.

Somnomed’s appliances don’t suit all sleep apnoea sufferers, but they are a cheaper alternative to the CPAP machines and ‘Hannibal Lecter’ masks which have low compliance rates.

Not that that has stopped Resmed from becoming a $50 billion giant – and good on ’em.

In short, Biome Australia has a record quarter

No doubt inspired by Ernest Hemingway’s famously concise style, probiotic product purveyor Biome Australia’s (ASX:BIO) trading update tells the story in a crisp par or two.

“Biome is pleased to announce strong growth has continued through the [second] December quarter-to-date, with sales revenue expected to surpass $4.5m,” the release says.

“This result will lead to a new quarterly record for sales revenue after last quarter’s record of $4.25 million.”

The end.

Okay, there were a couple of superfluous words, but even economical Ernest managed to spin a novella about a bloke’s bad fishing trip into a 22,000 word novel.

Put in context, Biome achieved $13 million of sales in the full year to June 30, 80% higher and the current run rate suggests the company easily will exceed that benchmark.

The company has a three-year sales target to achieve $85 million of sales by 2026-27 – an ambitious target but one that it may well achieve.

Probiotics are complementary medicines derived from – or modelled on – healthy gut bacteria. Sold in Priceline pharmacies, Biome’s products include treatments for cholesterol, acne, osteoarthritis and constipation.

Biome shares were up 3.5% to 59 cents.

Island to move to dengue-busting therapy trial

Island Pharmaceuticals (ASX:ILA) will move to the treatment stage of its dengue fever trial, after a safety review committee saw no problems with the stage-one prophylactic effort.

In the phase 2a preventative leg, four subjects were treated with Island’s drug candidate ISLA-101 and then an attenuated (weakened) version of the mosquito-borne virus (one of them was given a placebo).

Island isn’t privy to the ‘blinded’ results, but the safety committee was. These experts opined there were no safety concerns, with “evidence of anti-dengue activity”.

The primary endpoint was simple enough – reduced virus levels in the blood.

The phase 2b stanza involves infecting 10 patients with the virus – two of them placebo – and then delivering the drug.

The company expects to start the trial, which is being carried out at SUNY Upstate Medical University in New York, in January.

But there remains a potential obstacle in the guise of the US Food & Drug Administration, which has requested a look at the safety data.

Emerging from Monday’s trading halt, the shares gained 4.5% to 25.5 cents.

Nuclear medicine play in RAD(X) Nasdaq move

As with its more substantive peer Telix Pharmaceuticals (ASX:TLX), Radiopharm Theranostics (ASX:RAD) has put on its big boy’s pants and joined the ranks of the Nasdaq.

From tonight, Radiopharm’s American Depositary Receipts (ADRs) trade on the tech-heavy exchange under the ticker RADX.

As with Telix, Radiopharm has not used the opportunity to raise cash, but is more about flying the flag and servicing existing US holders, who account for 21% of the register.

“Listing on Nasdaq is a very important strategic milestone for Radiopharm that will help increase our visibility with US and international investors,” says Radiopharm chief Riccardo Canevari.

In contrast to many companies who complain about the cost of a Nasdaq listing, the company cites “modest administrative and financial compliance overheads”.

Radiopharm says initial Nasdaq trading is likely to be limited because existing shareholders need to time to convert their existing shares to ADRs.

The company’s clinical program includes one phase II and two phase I trials for solid tumour cancers including brain, lung, breast and pancreas.

Radiopharm shares spurted 7% to 3 cents.

On Monday holders were less jolly, delivering the company a first ‘strike’ over its remuneration report at the company’s AGM.

At Stockhead, we tell it as it is. While Island is a Stockhead advertiser it did not sponsor this article.