Health Check: For biotechs plodding on a soft track, the race is far

• ASX medical device and diagnostics innovators report plenty of commercial progress, but their shares need a gee-up
• Clever Culture unveils a second device that will double its potential market
• Orthocell goes pearl diving

The Melbourne Cup field this afternoon faced a hard slog with the track downgraded overnight from ‘good’ to ‘soft’ – along with your columnist’s chances of ever picking a winner in the 24-horse lottery.

The nags aren’t the only ones to be pounding tricky turf: smaller biotechs have been handicapped by investor indifference – despite plenty of positive news from the stables.

Their plodding share price performances contrast with those of the S&P/ASX 200 healthcare thoroughbreds.

Excluding the Big Four biotechs, Biotech Daily calculates the next biggest 40 biotechs lost almost 10% of their value in October.

This compared with the broader market’s circa 1% gain.

The US Nasdaq Biotechnology Index edged up 3%, perhaps in anticipation of a Democratic congressional sweep that would be conducive to the healthcare sector.

But like ‘expert’ Melbourne Cup tipsters, we’re extrapolating much from little on that one.

But let’s stop horsing around and say ‘neigh’ to any further equine analogies.

Winners and losers

Of the biotech 40, 30 went backwards – 24 of them by more than 10%. Seven companies rose in value, with three unchanged.

Heart device play EBR Systems (ASX:EBR) led what Biotech Daily dubs as “far too many” falls, down 53%.

Cancer drug developer Starpharma (ASX:SPL) was 48% off the pace, while Botanix Pharmaceuticals (ASX:BOT) , Saluda Medical (ASX:SLD) and Lumos Diagnostics (ASX:LDX) also fell heavily.

In some cases, specific catalysts prompted the sell-offs. But in most instances, the declines reflect general market malaise or an exaggerated reaction to slower-than-expected commercial progress.

Some of the share swoons were plain baffling. These include 4D Medical’s (ASX:4DX) 25% swoon last Friday, or Starpharma’s one-day share hit on (arguably) good news.

More positively, shares in wound care house Avita Medical (ASX:AVH) surged 45% for the month on … no news. The burns and wound pioneer is due to announce its quarterly numbers on Friday.

Other winners were Optiscan (ASX:OIL) (up 15%). The imaging pioneer has lodged US Food and Drug Administration (FDA) marketing entreaties for its Inform and Invue tools, for pathology and real-time surgery.

If the FDA duly salutes, Optiscan will be off and racing … sorry.

Nova Eye Medical (ASX:EYE) shares popped up 13% on a strong showing for its glaucoma surgical devices,.

Commercialised stem-cell play Mesoblast (ASX:MSB) was 10% to the good.

Clever Culture starts a Revolution

Clever Culture Systems (ASX:CC5) has unveiled a second product that expands its total addressable market by 50%, to US$4.3 billion.

The company already has commercialised its APAS Independence device, to automate reading agar monitoring plates in sterile drug-making facilities.

Now … drum roll … Clever Culture will develop APAS Revolution, a benchtop iteration of the Automated Plate Assessment System (APAS) tech.

The company has received commitments for $2.6 million of funding to further the product, which caters to smaller drug facilities outside of APAS Independence’s purview.

The funding consists of a “targeted” $1 million capital raise and a $1.6m unsecured loan.

The company estimates a total addressable market of 3,400 APAS Revolution units, compared with 2,300 for APAS Independence devices.

Clever Culture expects to provide the new device for customer evaluation in calendar 2027 and then launch it in 2028.

A pearler from Orthocell

Orthocell (ASX:OCC) partner Marine Biomedical has won FDA clearance for PearlBone, a marine-derived bone graft substitute developed from sustainably-sourced pearl shell.

Orthocell holds about 12% of the private Marine Biomedical, having invested just over $1 million.

This gives Orthocell first right of refusal over global distribution rights for PearlBone and future bone repair and regeneration products.

Orthocell says PearlBone provides an opportunity to expand its “biologically driven product portfolio into the substantial global bone repair and regeneration market”.

Derived from shells harvested from WA’s Kimberley region, PearlBone is based on nacre.

The biomineralised structure of pearl shell, nacre supports bone repair and regeneration.

PearlBone has potential applications across orthopaedic, trauma and reconstructive surgery.

In the meantime, Orthocell is focused on rolling out its flagship nerve protection wrap Remplir in the US.

Hearty upside in Artrya shares?

Artrya’s (ASX:AYA) sharp share sell-off has caught the eye of Ord Minnett’s biowatchers, who have plonked a $7-a-share target price on the stock compared with today’s value of just under $3.

Artrya is commercialising its approved arterial plaque tool, Salix Coronary Plaque, in the US.

The AI-driven software enables doctors to detect dangerous build-up of the gunk.

Ord Minnett says Artrya’s September quarter showed a “step change” in Salix usage, across anchor clients Tanner Health and North Georgia Health System.

Tanner has authorised work, which should result in “materially stronger” revenue in the current quarter.

Artrya’s largest customer to date, Huntsville Hospital Health System inked a five-year commercial agreement.

Ord Minnett expects the company’s overall revenue to ramp up from nil in the year to June 2026, to $4.7 million this year.

This rises to $19 million 2027-28 and $47.5m in 2028-29.

But investors should expect losses up to 2028-29, when Ord Minnett forecasts maiden underlying earnings of $7.2 million.

As of the end of September, Artrya had cash of $67.2 million.

Bolstering clinical evidence

Meanwhile, Artrya has decided to conduct another clinical study to support its FDA submission for a second module, Salix Coronary Flow (SCF).

Petra Capital analyst Tanu Jain says while this pushes out the broker’s revenue forecasts by around six months, it improves the submission quality and de-risks the process.

Artrya’s management no doubt has learnt from the experience of fellow heart device play Echo IQ (ASX:EIQ) .

Echo IQ shares tumbled 60% in early September after the FDA knocked back approval for its follow-on device, to detect heart failure.

Investors assumed that one was in the bag and celebrated at the final furlong, rather than the finishing post: a la Wharfie Time.

Petra retains a ‘buy’ call on Artrya, with a $5.33 a share target price.

 At Stockhead we tell it as it is. While Clever Culture, Orthocell, Optiscan, EBR and Lumos are Stockhead advertisers, the companies did not sponsor this article.

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