For hungry investors, even record results won't sate their appetite. Pic via Getty Images
Health & Biotech
Investor reaction to PolyNovo’s (ASX:PNV) half-year numbers shows how even seemingly minor earnings misses can result in a share price hammering if valuations are deemed to be elevated in the first place.
Especially when it’s a “volatile, high multiple stock”, in the words of Wilsons analyst Dr Shane Storey.
Polynovo shares this morning swooned up to 17%, having declined 8.5% yesterday on the back of the results release.
The wound-management house’s performance was sound enough: revenue up 25% to a record $59.86 million, with net profit up 24% to a record $3.38 million.
The company pre-released the revenue number in January, so no surprises there. But Monday’s earnings were deemed to have missed expectations, albeit not by much.
The revenue resulted from sales of the company’s synthetic Novosorb dermal scaffold, for burns wounds.
The lion’s share of sales derived from the US.
Chairman David Williams said that while the sales numbers were applaudable, “we can see that the equity market wants more; and we want more”.
He adds that the “more” will be achieved by taking market share, introducing new products and opening new markets.
The revenue includes a $5.41 million contract from the US disaster preparedness agency, BARDA, which is stumping up to trial Novosorb for full-thickness burns.
Polynovo’s cash fell to $30.4 million to $45.5 million a year previously – but that’s still a good position to be in.
In a note today, Wilsons’ Storey downgraded the stock from a buy to ‘market weight’, with a revised price target of $1.85 per share.
The reason lies in Polynovo’s $1.2 billion-plus valuation.
Storey notes that Polynovo historically has traded at a multiple of 12 times enterprise value, compared with a median on 2.8 times for international peers.
“Our discounted cash flow valuation weighs in at six times , illustrating the potential for further valuation downside”.
Meanwhile shares in fellow wound-repair company Avita Medical (ASX:AVH) plunged 30% over two days, after the company’s January 7 fourth (December) quarter numbers were shy of market expectations.
But Avita shares then soared 20% on February 14 on the full-year results announcement of record revenue of US$64.3 million.
That was up 29% but shy of management guidance of US$68 million to US$70 million.
Investors were undeterred by the reported loss expanding 75% to US$61.8 million – so go figure.
Cyclopharm (ASX:CYC) is making good progress with its US rollout of Technegas, its nuclear medicine tool for detecting pulmonary embolisms.
The company today posted record sales revenue of $27.6 million, with US sales up 131% $827,000 from 17 installations.
Given the FDA only approved the tool last year after a long wait, it’s early days.
Technegas already is the dominant tool in 65 countries.
“Early adoption by leading US clinicians and key opinion leaders has reinforced [our] confidence that US revenues will eventually eclipse those generated globally, delivering sustained, recurring revenues,” the company says.
Cyclopharm lost an “anticipated” $13.2 million, compared with $4.7 million previously and has $20.7 million of cash.
The pre-commercial Dimerix (ASX:DXB) reported a $12.9 million loss, up from $6.67 million.
The company is progressing its ongoing phase III trial for the kidney disease focal segmental glomerulosclerosis (FSGS).
At December’s end, Dimerix held cash of $21.1 million.
The company highlights the $458 million in upfront payments and potential milestones flowing from three geographic partnerships.
FSGS is a rare disease that attacks the kidney’s filtering units, causing irreversible scarring.
Patients rely on dialysis or a kidney transplant – hardly attractive options.
Dimerix’s lead candidate, DMX-200 inhibits dangerous inflammatory reactions in the spuds.
The company launched the 286-patient phase III effort, Action 3, in May 2022.
The trial’s custodians expect to complete dosing in the September quarter, with first results in 2026.
Meanwhile, Artrya (ASX:AYA) lost $7.4 million as it awaits FDA approval for its tool to detect coronary plaque.
Control Bionics (ASX:CBL) has raised $2 million in a private placement, with the funds earmarked for the further rollout of its assistive technology.
The company’s two biggest shareholders, Nightingale Partners Pty Ltd and Phoenix Development Fund Limited, took up the placement at 4.5 cents per share, compared with Monday’s closing price of 4.2 cents.
The company will use the funds partly to support commercialisation of its new products, Neuronode Only and Neurostrip.
Neuronode Only is a watch-like device to assist cognitive people with physical disabilities – notably sufferers of cerebral palsy or motor neurone disease – to perform everyday functions.
The FDA approved Neuronode in 2020. Last year, the company locked in insurance reimbursement at a rate of US$4300 ($6600) per device.
Neurostrip is a miniaturised version of the tech that measures physiological data such as unintentional muscle movements.
This wearable device expands the company’s market from disabilities to the much bigger sports science and occupational health and rehabilitation sectors.
“While the opportunities in the Neuronode Only and Neurostrip markets remain highly promising, scaling these initiatives has taken longer than initially expected,” Control Bionics CEO Jeremy Steele says.
As of the end of December Control Bionics had cash in the bank of a tad under $3 million, having raised $2.47 million in the quarter.
Good news for pregnant women who don’t shy from a jog or workout despite their enlarged condition.
Foetal monitoring device specialist HeraMED (ASX:HMD) has struck a collaboration agreement with smartwatch maker Garmin.
This allows the devices to be integrated with Heramed’s monitoring pregnancy platform, Heracare.
The initial three-year deal will focus on “data integration, joint marketing initiatives and exploration of women’s health research.”
The tie-up is expected to augment the platform’s existing capabilities, which include foetal and maternal heart rate monitoring, blood pressure tracking and mood assessment.
The New York-listed Garmin has a US$42 billion market cap – a big-ticket partner indeed for the $13 million market cap Heramed.
At Stockhead, we tell it is as it is. While Control Bionics and Dimerix are Stockhead advertisers, the companies did not sponsor this article
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