Health Check: From feather duster to rooster, Nanosonics again rules the roost

Surgical probe steriliser Nanosonics flags robust December half numbers
The biotech quarterlies are tricking in – and there’s mixed news
Paradigm shares are worth twice as much as their current price, says Pitt Street Partners

Nanosonics (ASX:NAN) has achieved a feather duster-to-rooster transformation with a bullish trading update for the December 2024 half.

The maker of sterilising devices for hospital probes said unaudited profit before tax would come in at around $10.9 million.

That’s 120% higher than the $4.9m profit for the December 2023 half and 34% better than the $8.1m for the June 2024 stanza.

Revenue is expected to be $93.6m, 18% higher year-on-year and 4% up on the June half.

Exactly a year ago, Nanosonics shares plunged 33% after the company flagged a 2.4% revenue decline to $79.6m and a 57% profit plunge to $4.9m.

The company blamed hospital budgetary pressures that stymied sales of its flagship devices, known as Trophons.

This time around, Trophon sales remain flat, but the revenue increase was driven by a 20% rise in sales of associated consumables and service revenue.

The Trophons ensure that invasive devices are cleaned properly, as opposed to cumbersome and haphazard current methods.

The company will release its full interim results on February 20.

Nanosonics shares this morning advanced up to 6% to $3.97, before quixotic investors pared back the gains to around even. Still, the shares have risen close to 25% over the last month.

Quarter-time score card

As well as half year updates, the quarterlies are trickling in before the end-of-month cut off.

Germ-buster Firebrick Pharma (ASX:FRE) reports “significant strides” forward with plans to sell its Nasodine nasal spray in Singapore, having secured a marketing agreement with the local Innorini Life Sciences.

Guardian Health & Beauty, the Lion City’s biggest pharmacy chain, has also agreed to promote and to sell the product, which is based on the liquid disinfectant Betadine and aims to quash the common cold and other nasties.

That’s all well and good but Firebrick ended the quarter with scant capital of $910,000, after net cash outflows of $939,000.

The company raised $774,000 during the quarter, but with a cash runway of less than a quarter it clearly needs some more dosh.

Underperforming wound care provider Next Science (ASX:NXS) looks to have had a better quarter, with a 48% boost in product sales to US$6.9 million (compared to the September quarter).

Cash receipts for the quarter of US$7.2m were up 25% year-on-year and 78% higher than the September quarter.

The company has also achieved positive underlying earnings positive “on a monthly basis at different points” during the quarter.

The company’s products reduce the impact of biofilm-based infections.

Interestingly, the company reports a US shortage of medical saline – surely something new health czar Robert F. Kennedy can get on to in his early days at the helm.

This dearth of the salty stuff boosted sales of the company’s Xperience, a surgical irrigation wash to prevent surgical site infections.

The developer of blood-based tests for diseases including bowel cancer, Rhythm Biosciences (ASX:RHY) highlights the potential of the Genetype business it acquired this month from Genetic Technologies (which is in receivership) for $625,000.

Genetype provides genetic-based risk assessment tests for a range of cancers and other tests.

Management says the business is a good fit, partly because people deemed to be at high risk are likely to use the company’s Colostat tests for ongoing monitoring.

Rhythm ended the quarter with $4.37m in the bank, having raised $3.5m in a placement and pocketed a $3.23m R&D tax incentive.

Paradigm gets to the pointy bit with its dodgy knee trial

As Paradigm Biopharmaceuticals (ASX:PAR) prepares to start its long-awaited pivotal phase III knee osteoarthritis trial, biotech watcher Pitt Street Partners has raised its valuation of the shares to between 87 cents and $1.19 per share – more than twice their current value.

The company is trialling Zilosul, a repurposed form of the old pentosan polysulphate sodium, to treat the common but difficult inflammatory disease.

As Pitt Street Partners’ company-sponsored report notes, Paradigm has determined the optimal dose for the study, with its trial protocol rubber-stamped by the US Food and Drug Administration.

Crucially, the company has raised $16 million in an institutional placement, taking its cash balance to $26.9m.

This quarter the company intends to enrol the first candidate in the 883-patient, placebo-controlled trial.

An interim analysis is expected in the first half of 2026.

More than 32 million Americans and two million Australians suffer from osteoarthritis. While drugs are available, many are opioid-based with reduced effectiveness over time.

Given Paradigm has been listed for almost a decade, progress has been slow with plenty of setbacks. The stock has gained 26% over the last year but have lost 89% of their value over five years.

As Pitt Street implies, the shares should be worth much more if the drug stacks up – and the company is heading towards the moment of truth.

Pitt Street Partners also points to upside even before regulatory approval, by way of potential licensing deals for Zilosul and clinical progress in other indications including mucopolysaccharidosis, a metabolic genetic disorder.

News from the naughty corner

Troubled and failed cannabis plays feature in the ASX’s list of long-term suspended stocks that risk ejection from the bourse if they don’t produce their financials within a given period.

Of the ASX’s list of 76 errant stocks, six are in the life-sciences sector, which highlights the ever-present risks of investing in the space.

The cannabis-related plays are BOD Australia (ASX:BOD), which last year appointed a voluntary administrator and Epsilon Healthcare (ASX:EPN) which emerged from voluntary administration in June.

Medlab is in discussions to “repurpose” the company and seek a relisting.

Outside of cannabis corner, the aforementioned Genetic Technologies (ASX:GTG) ,Nuheara (ASX:NUH) (hearing devices) and Wellfully (ASX:WFL) (transdermal drug delivery) have appointed voluntary administrators and are seeking a new meaning of life.

At Stockhead, we tell it like it is. While Paradigm and Rhythm are Stockhead advertisers, they did not sponsor this article.