Health Check: Cashed-up clinical-stage biotechs are poised to go all the way

• The latest quarterlies show that key drug and diagnostics developers are well funded for the task
• Cann Group enters company-saving debt and equity restructuring deal
• A rebirth for Monash IVF?   

Today’s crop of quarterly reports shows the impact of capital raisings on swelling the bank balances of key development-stage biotechs.

Genetic disease drug developer PYC Therapeutics (ASX:PYC) reported September quarter outflows of $17.4 million, but still had end-of-quarter cash of $123 million.

PYC has a busy slate of three clinical programs, for polycystic kidney disease and the eye conditions retinitis pigmentosa type 11 (RP11) and autosomal dominant optic atrophy.

The most advanced program, RP11 is in phase I/II trial stage.

The developer of AI-driven coronary artery disease detection tools, Artrya (ASX:AYA) expended just under $6 million.

But Artrya still had $62.8 million in the bank. The company expects a further $19.7 million from a share purchase plan ($5 million) and the second tranche of a placement ($14.7 million).

The developer of kidney disease, esophageal cancer and endometriosis diagnostics, Proteomics International Laboratories (ASX:PIQ) reported receipts of $1.86 million.

The company burnt $769,000, resulting in a $10 million cash balance.

Having listed on June 30 after raising $25 million, wound device house Tetratherix (ASX:TTX) revealed outflows of $4.1 million.

That takes end of quarter cash to $24.8 million, “in line with prospectus assumptions”.

Debt forgiveness? Cann do

Speaking of the green stuff – in more ways than one – medical pot grower Cann Group’s (ASX:CAN) future now looks more assured after a seminal capital restructuring.

Firstly, creditor National Australia Bank has agreed to settle a $70 million debt for $15.3 million, in a “full and final settlement”.

As the NAB’s slogan goes, they’re “more than money”. More likely, the bank realised it couldn’t get blood from a cannabis leaf and took the pragmatic approach.

In addition, a private credit fund owed $5.5 million by Cann will advance a further $9 million. This facility matures in two years and has a 9.5% interest rate.

Secondly, Cann has firm commitments for a $9 million capital raising, by way of a $6.5 million insto placement and a $2.5 million underwritten share purchase plan.

The placement is being done at 1.15 cents a share, an 18% discount to last Wednesday’s frozen share price.

As is the vogue, the shares come with a one-for-one attached option and then one-for-one ‘piggyback’ oppies on top of that.

Investors can exercise the options at 1.15 cents up to June 15 2026. The ‘piggybacks’ are exercisable at 2.85 cents by June 15 2028.

Cann also has guided to revenue of $17 million for the year to June 2026, 50% higher.

The company also expects underlying earnings of $300,000 to $700,000, compared with last year’s $5 million loss.

Psychedelics boost

A pioneer in psychedelic-assisted psychotherapy, Emyria (ASX:EMD) reports receipts of $468,000 from insurance-funded clinical services, at its Perth and Brisbane clinics.

Regulators globally are yet to approve any psychedelic therapy, typically based around psilocybin or MDMA (a.k.a ‘ecstasy’).

However, since July this year the local gatekeeper has allowed authorised psychiatrists to prescribe MDMA for certain conditions.

Emyria has a multi-year funding agreement with Medibank Private (ASX:MPL), the first of its ilk for such treatments.

Emyria had September quarter outflows of $964,000, leaving cash of $3.8 million.

Let’s consolidate …

At least two biotechs are seeking shareholder consent to undergo share consolidations to plump up their stock price.

Such actions don’t fundamentally change the valuations of a company.

But investing is 90% pyschology and a share price of, say, 10 cents imbues more confidence than a one cent stock.

Many  institutional investors avoid lower-priced stocks due to perceived volatility, so a consolidation can make a company a more attractive investment for them.

US investors, in particular, are accustomed to high share prices such as Apple’s US$260+ per share valuation.

At its November 26 AGM, oncology play AdAlta (ASX:1AD) will seek permission for a ten-for-one consolidation, to “provide a share price that is considered more appealing”.

The company has just over 1.69 billion shares on issue.

The developer of the world’s first digital pain assessment app, PainChek (ASX:PCK) is also taking the ten-for-one approach. Painchek also holds its AGM on November 26.

Painchek has just over 2.08 billion shares on issue.

… or split?

On the contrary, some companies are candidates for the reverse action – a share split – because their shares look too ‘expensive’.

Pro Medicus (ASX:PME) has a $280 share price and a mere 104 million shares on issue.

Unusually, that’s not much more than the shares on issue when Pro Medicus listed a quarter of a century ago. That’s because the company has NEVER done an equity raising.

At last year’s AGM chairman Peter Kempen said a split was something the board “should consider’’. No doubt the issue will be raised again at this year’s meet, on November 24.

CSL (ASX:CSL) underwent a one-for-three share split in 2007, having listed in 1994 at $2.30 apiece.

While CSL shares are well shy of their $336 peak of mid 2020, without the share split they still would be worth $639 a share.

Signs of life for Monash IVF

Macquarie Equities sees signs of life for the embattled Monash IVF Group (ASX:MVF), given improved overall assisted reproduction activity in the month of September.

Medicare stats show total IVF cycles rose 1.2% for the month on a year-on-year comparison. Frozen cycle growth of 7.9% offset a 3.8% decline in fresh cycles.

In the September quarter total cycles grew 1.4%, with frozen cycles gaining 4.9% and fresh cycles declining 1.3%.

The improvement was most evident in Victoria, Monash IVF’s home state that accounts for 30% of its total domestic revenue.

There, fresh cycles gained 3.5% compared with a 0.4% decline in NSW.

Macquarie forecasts total cycles of 23,093 for Monash IVF in the current year,  compared with 23,603 in the year to June 2025.

This includes a small overseas revenue contribution.

Monash IVF shares tumbled as much as 50% after mid-April , when the company admitted to the first (Brisbane) incident.

In mid-June the company reported a second one at its Clayton clinic in Melbourne. CEO Michael Knaap resigned shortly thereafter.

In August the company said an independent probe carried out by Fiona McLeod SC concluded the Brisbane snafu was the result of human error.

The report, which has not been released, attributed the Clayton mix up to human foibles and ‘IT systems limitations”.

“We see the prior incidents as captured in the share price and we think the improved macro [environment] should support better growth for 2026-27,” Macquarie says.

The firm has an ‘outperform’ call on the stock and a target price of $1 a share, implying 40% of upside.