Resmed remains the biotech big end of town’s best performer, but some investors are tossing and turning. Pic: Getty Images
Investors have sold down Resmed after last week’s $700 million divestment – and have other concerns
Starpharma raises $32 million to further its radiotherapies
Emvision’s Emu stroke trial ‘surpasses enrolment expectations’
ResMed’s (ASX:RMD) reputation as the most resilient pillar of the Big Four life sciences stocks has come into question since last week’s US$490 million ($700m) divestment of software business MatrixPartners.
Some investors also are concerned about a problem with some older sleep apnoea ventilators and the pending re-entry of Philips Respironics into the US market.
Generating US$200 million of revenue annually and US$55 million of earnings in the 2025-26 year, MatrixPartners largely services the aged care sectors.
Resmed paid US$750 million for the asset in 2018.
Analysts generally view the move as sensible, given Resmed can focus on its core sleep health franchise.
In a note, Macquarie Equities opines the sale ties up some loose ends and comes amid lower patient volumes and staff shortages post Covid.
Morgans says MatrixCare was a “somewhat peripheral vertical” for Resmed but dubs the sale price as “disappointing”.
The firm notes the company intends to use the funds for further share buybacks, thus offsetting the dilution from the company’s US$340 million purchase of Noctrix in early June.
Noctrix has a device to treat the common restless leg syndrome during sleep – a.k.a. driving your partner crazy.
RBC Capital Markets says given the division’s underperformance post pandemic, the sale did not surprise.
But the realised price – a ~1/3rd haircut on what Resmed paid for the asset – was “well below our expectations”.
RBC adds: “we wonder if Resmed’s decision to sell at this multiple partly reflects possible risks of future AI disruption to its software business”
Other concerns weigh on investors
Other factors may be contributing to the 7% decline in Resmed’s share price since the July 7 MatrixCare announcement.
One is a problem with some of its Astral sleep apnoea ventilators made before October 2024.
In a Field Safety Notice, the company warns an internal supercapacitor may leak electrolytes over time, potentially causing the therapy to stop.
“The part required is scarce so making new machines will be deprioritised for now,” Citi says.
The company says it is prioritising “corrective actions to ensure continuity of care for patients currently using affected Astral ventilators”.
Citi estimates lost sales of US$200 million and a US$100m underlying earnings hit in the 2026-27-year.
Meanwhile, key rival Respironics is poised to re-enter the US market, after a devastating recall of millions of its ventilators in June 2021.
The units contained sound-dampening foam that could degrade into particles and release harmful gases.
That’s enough for Citi to pare its ‘buy’ call to a hold.
“We think we see [many] investors staying on the sidelines for now”.
To be fair, Resmed still wins the Resilience Award, with its shares declining only 28% over the last year.
CSL (ASX:CSL) and Cochlear (ASX:COH) have swooned 51% and 59% respectively, while ProMedicus (ASX:PME) stock is down 40% despite a heroic comeback over the last month.
DEP stars in oncology play’s $32m raising
Cancer drug developer Starpharma (ASX:SPL) is testing the strength of improving biotech funding conditions by launching a rights offer to raise around $32 million.
The company offers one right for every 7.5 shares held, exercisable at 57 cents apiece.
That’s a 25% discount to yesterday’s ‘frozen’ price of 76 cents.
Broker Canaccord is fully underwriting the renounceable raising (the rights can be traded on market).
The raising takes Starpharma’s cash balance to $44 million, thus extending the company’s cash runway “into 2027-28”.
“The offer follows Starpharma’s recent announcements regarding the application of its dendritic technology in radioligand therapy across a range of oncology targets,” the company says.
Radioligand couples a radioactive isotope with a therapeutic molecule to target the cancer site directly.
It’s all about dendrimers
Starpharma’s reason for being is its dendrimer enhanced product platform, DEP.
Before you ask, dendrimers are nanoscale polymers aimed at improving drug efficacy and reducing side effects.
The funds will support the company’s phase I program, DEP HER2-Lu (as in lutetium isotope).
This one targets patients with advanced HER2-positive tumours, including gastric cancers.
Starpharma is shares have soared 678% over the last year on the back of the company’s radiotherapy pivot.
(Originally, the company developed a DEP-based Vivagel, a treatment for bacterial vaginosis and a protective condom coating).
In effect, Starpharma is a less evolved version of Telix Pharmaceuticals (ASX:TLX) or Clarity Pharmaceuticals (ASX:CU6).
Starpharma also has a collab with Radiopharm Theranostics (ASX:RAD).
In September last year the company entered a partnership with Genentech – an arm of the giant Roche Group – to further its ‘next generation’ therapies.
Starpharma pocketed US$5.5 million upfront and is in line for up to US$564 million in potential development and commercialisation milestones.
Also today, Starpharma issued its June quarterly report, showing $1.4 million of customer receipts and cash burn of $3.2m.
Starpharma shares this morning traded around its pre-raising price – not a bad effort.
Emvision makes strides with Emu
EMvision Medical Devices (ASX:EMV) says its pivotal stroke detection study has “surpassed key enrolment milestones”, raising hopes of US Food & Drug Administration (FDA) clearance for its emu point of care scanner.
The study is recruiting across leading US and local hospitals. These include the Mayo Clinic, Mt Sinai Hospital, Ronald Reagan UCLA Medical Center, Royal Melbourne Hospital and Sydney’s Liverpool Hospital.
“Recruitment momentum continues to build across all active US and Australian hospitals, supported by acceleration initiatives introduced during the quarter,” EMvision says in its June quarter report.
“The emu device continues to integrate seamlessly into hospital code stroke workflows, with no device-related adverse events reported to date.”
The company expects full enrolment by early calendar 2027, “with sequential cohort readouts to follow shortly thereafter”.
emu tackles the age-old problem of differentiating ischaemic strokes (blockages) from haemorrhgaic ones (bleeds).
When it comes to treatment, it’s crucial to make the distinction – and quickly.
“The primary objective of the trial is to demonstrate haemorrhage detection sensitivity and specificity of greater than 80%,” the company says.
Sensitivity is the ability to identify a stroke, while specificity is the ability to rule one out.
The company also intends to add acute ischaemia detection as an endpoint.
Meanwhile the Royal Flying Doctor Service has tested an even lighter version of emu, called First Responder. Flight nurses and patients rated the prototype device “favourably”.
EMvision reported outflows for the quarter of $1.267 million, leaving cash of $17.1 million.
The company also can access $4.6 million from existing grant programs.
Dimerix flags asset and funding deal
Shares in kidney disease drug developer Dimerix (ASX:DXB) have entered a trading halt, ahead of an asset acquisition and related funding deal.
Dimerix is in phase III trialling of its drug candidate DMX-200 for the rare focal segmental glomerulosclerosis.
But in a prezzo last month, the company flagged potential acquisitions to expand DMX-200 to other “renal and/or rare disease indications”.
Funding wise, Dimerix is in a decent position after last month sealing its fifth global distributorship deal, with Everest Medicine.
Covering greater China, South Korea and Southeast Asia, the compact takes Dimerix’s potential proceeds to $1.9 billion, including upfronts, milestones and royalties.
Dimerix has pocketed $80 million upfront from the five deals.
But when it comes to drug development and commercialisation, too much funding is never enough.
At Stockhead we tell it as it is. While EMvision and Dimerix are Stockhead advertisers, the companies did not sponsor this article.