- Genetic and Microba are discussing a union, but BCAL has upped its Genetic stake to 18%
- While burns are the foundation of Polynovo’s business, the company is on a concerted drive to expand its indications
- Medical cannabis competition weighs on Vitura Health profit
Do we have a love triangle developing in the diagnostics sector?
The struggling gastrointestinal diagnostics play Genetic Signatures (ASX:GSS) this morning revealed it was in merger discussions with Microba Life Sciences (ASX:MAP).
A union would be a marriage made in the intestinal tract.
Microba focuses on microbiome-based gastrointestinal (GI) diagnostics, while Genetic has developed tools to detect a range of tummy bugs.
“A potential transaction would provide the combined group broader access to major pathology networks, a differentiated infectious disease offering and further establish Genetic’s domestic and international footprint,” Genetic said.
Microba chairman Pasquale Rombola said: “a merger would create a leader in microbiome and infectious disease diagnostics, with broader revenue and customer bases and a materially stronger balance sheet to meet the significant global opportunity facing the merged group.”
But there’s an interloper spoiling the seductive overtures.
Today BCAL Diagnostics (ASX:BDX) said it had upped its stake in Genetic to 18.46%, having acquired a 10.2% stake in early July.
Back then, Genetic said BCAL’s move was unsolicited.
BCAL’s flagship product is the blood-based breast cancer assay, Breastest.
On a pro forma basis, the merged Genetic/Microba would have revenue of around $29 million in the 2025-26 year, with combined cash of around $30m.
Genetic today stressed the discussions were preliminary and incomplete.
The prospect of a rare takeover in the sector – and a contested one at that – only mildly titillated the punters, with Genetic shares up around 3%.
With a $36 million market cap, Microba is worth about twice as much as Genetic.
Polynovo shares slump despite ‘beyond burns’ focus
The biggest of the ASX-listed wound care houses, PolyNovo (ASX:PNV) will intensify its efforts to move further into non-burns applications after reporting a 16% full-year revenue boost, to $150 million.
Polynovo’s commercial sales increased 17% to $138 million.
EBITDA rose 8% to $12.1 million, but reported net profit slumped 44% to $7.3m.
The latter reflected insurance recovery from a fire at the company’s R&D centre in Port Melbourne and a prior-year $5.7 million tax benefit.
Gross margin slipped to 89% from 95.6% previously, reflecting higher inventory levels.
“Despite these impacts, underlying manufacturing performance improved materially during the second half as production volumes increased to normal levels,” management proclaimed.
R&D costs reduced with the run-off of full thickness burns clinical trials, being done in cahoots with BARDA.
BARDA is the US doomsday preparation authority, the Biomedical Advanced Research and Development Authority.
Polynovo is based on Novosorb, its bio-resorbable polymer for tissue regeneration in complex wound care.
The company can make Novosorb products in many forms, including as a film, fibre, foam and coatings.
In 2015, the US Food and Drug Administration (FDA) cleared Novosorb BTM – as in biodegradable temporising matrix.
Novosorb BTM is a synthetic dermal scaffold, for reconstructive and surgical applications such as complex full and partial thickness burns and wounds.
The company’s latest product, NovoSorb MTX (matrix), is a dermal substitute with applications in trauma, plastic and reconstructive surgery.
The company is preparing a premarket approval (PMA) submission to the FDA for full-thickness burns. This would expand the company’s US market and reimbursement opportunities.
Beyond burns
However, the incidence of burns is sporadic – except on July 4 when thousands of patriotic Americans pour gasoline on to bonfires after a few too many Jack Daniels.
Under new chief scientific officer Dr Marthe D‘Ombrain, the company will create a dedicated business development function.
This unit will have a remit to extend the Novosorb platform, including potential partnerships and licensing.
“While burns remains an important foundation for the business, our opportunity extends well beyond,” CEO Bruce Peatey said.
Sadly, investors this morning weren’t buying the long-term vision, sending Polynovo shares down 9%.
The company bears a market cap of $666.66 million – and there must have been a devil in the detail to prompt the sell-off.
Lumos gets its diagnostics ducks in a row
Point-of-care diagnostics house Lumos Diagnostics (ASX:LDX) reports a 6% surge in full-year revenue to US$13.2 million, driven by early sales of its bacterial-versus-viral device FebriDx.
The revenue should only be the beginning for US sales, with the company only recently winning so-called CLIA waiver. This coveted status expands the company’s addressable market tenfold.
Management said its key priorities included driving US sales via its distribution partnership with Phase Scientific. This compact delivers Febridx orders of US$317 million over six years.
CEO Doug Ward said that as of July, more than 170 healthcare locations across 24 states had ordered Febridx.
“Reimbursement performance exceeded expectations, with more than 90% of claims paid.”
Lumos also narrowed a previously reported $7 million net loss to a $5m deficit. Presumably the imminent sales ramp-up will take care of the bottom line.
Poor pot prices poleaxe Vitura profits
Medical cannabis procurement and telehealth platform Vitura Health (ASX:VIT) has posted a $4.4 million loss for the full year to June 2026, compared with a previous $3.3m surplus.
The company attributes the decline to falling average selling prices on its key Canview market platform, the result of “industry-wide gross margin pressures” from increased competition.
Vitura reports the average selling price fell 8% during the year, from an average $105 per unit to $97.
“To support sales amid increasing competition, the company continued to offer pricing discounts and rebates,” Vitura said.
“This had a corresponding impact on the average gross margin realised from those sales”.
However, the expansive Vitura’s revenue grew by 6%, to $131.1 million.
Enhanced by the February 2025 acquisition of Candor Medical, Vitura’s clinics contributed $30.7 million of this turnover, up 11%.
Product sales and distribution revenue – selling third-party products – grew 4% to $100.3 million.
Volume-wise, Canview’s medical dope volumes grew 10%.
But the company looks to be on a winner with its new line of approved nicotine vapes, with volumes surging 119%.
Biome activates its bottom line
Meanwhile, the trendy probiotics sector suffers none of the pot pricing pressures, judging from Biome Australia’s (ASX:BIO) annual results.
The maker of the Activated Probiotics and Activated Therapeutics range, Biome reported a $3.6 million net profit compared to a slender $214,000 surplus previously.
Okay, this number included a non-cash tax loss benefit of $2.42 million. But by including it, management signals the asset will be able to be used against future profits.
Revenue surged 30%, to $23.9 million.
Biome founder and managing director Blair Vega Norfolk says the company’s Biome Daily range became the best-selling probiotics in Australian pharmacies, by volume and value.
Trial news
Psychedelic drug developer Entropy Neurodynamics (ASX:ENP) has signed an agreement with the University of California San Francisco to conduct a phase II ‘head-to-head’ trial for depression.
The study will pit Entropy’s psilocin-based candidate TRP-8803 against escitalopram – brand name Lexapro – the most widely prescribed antidepressant in the US.
The trial will recruit young adults in the US with major depressive disorder and assess depression severity over eight weeks and six months.
Entropy expects the study to start in the June half of next year. Professor Robin Carhart-Harris – “the world’s foremost psychedelics researcher” – will lead the effort.
Entropy remains responsible for securing FDA Investigational New Drug (IND) status.
In the meantime, Entropy is carrying out a 72 patient, Ib/IIa study with Melbourne’s Swinburne University, across a ‘basket’ of indications.
With an IND, Entropy potentially could use this Swinburne data to pursue other indications under the preferred US regulatory path.
More trial news
Imagion Biosystems (ASX:IBX) has initiated trial site activities for its phase Ib/II study of its imaging agent Magsense, for HER2-positive breast cancers.
The company says it has engaged with seven prospective sites, with contracting underway with the first.
The three-part study includes a safety leg, a lower dose stage for optimising the study protocol and then a larger stanza to gauge Magsense’s diagnostic chops.
The company expects the study to take 18 to 24 months, with readouts after parts A and B.
At Stockhead we tell it like it is. While Lumos, Entropy and Imagion are Stockhead advertisers, the companies did not sponsor this article.
