Good morning Armchair Army,

I have looked at almost EVERY healthcare stock on the ASX…

… to find the one best leveraged to the US$80 billion GLP-1 market.

After 12 months of searching…

I have found it.

The next Armchair Pick. 

(Market Cap $40M | Cash Balance: ~$10.4M)*
* post-raise

For 20 years, Resonance sold a diagnostic that interpreted MRI to measure liver iron.

For 20 years, sales were flat.

$2M… $2M… $2M… $2M…

But have a look at the last five years.

$3.8M… $4.4M… $8.6M… $11.1M… $15.8M…

… and guidance set for this year at $17M - $22M.

What happened?

GLP-1s entered the scene.

You might know GLP-1s better by their product names… 

Ozempic, Wegovy, or Mounjaro.

Weight loss drugs.

The sector is in a massive arms race.

FOUR of the Top 10 selling drugs of 2026 are GLP-1s.

TWO of the Top 3.

US$80 billion in sales this year alone.

The “best” GLP-1 is NOT the one that can lose the most weight.

It is all about the QUALITY of the weight loss.

Suddenly, big pharma wants to measure a bunch of things about GLP-1s.

Suddenly, the technology Resonance had built for 20 years as a diagnostics product became an industry benchmark for clinical trial endpoints. 

Where Resonance fits into the picture is MRI.

MRI = Magnetic Resonance Imaging.

(Resonance… get it.)

MRI uses a giant magnet and radio waves to take detailed pictures inside of your body. 

No radiation.

I had my first-ever MRI two weeks ago.

I fractured my wrist in a bike accident.

Facepalm.

Resonance doesn't do wrists. Unfortunately.

MRI readings for liver fat… 

MRI readings for liver iron…

MRI readings for a bunch of things.

Not wrists.

The dream is for Resonance to pull this all together into ONE SCAN and offer it to big Pharma companies for clinical trials.

One MRI scan → A bunch of metabolic, muscle and iron biomarkers = The Dream.

Parts of this are already on the market.

Other bits under development…

Resonance's blue-sky opportunity is Fibrosis Assessment.

Measure liver fibrosis using only MRI.

Liver fibrosis is a major endpoint biomarker for assessing GLP-1s and metabolic diseases.

The best test available is an invasive biopsy.

Today Resonance published proof-of-concept results showing its technology is on the right track to detect liver fibrosis in clinical trials.

(more on this later)

The last thing to know about the Resonance product is that there is NO HARDWARE.

It reads MRI sequences and uses a proprietary algorithm to produce a biomarker assessment.

MRI-agnostic.

No expensive hardware additions.

Incredibly difficult technical challenge.

(and that’s the moat)

Capped at ~$40 million, with $10.4 million in the bank, Resonance is… 

Growing.

Profitable.

 … and cash flow positive.

The $6 million capital raise was done in an afternoon.

Small discount, no options.

(amazing feat in this macro environment for speckies)

Resonance has been an EXPERT at measuring MRI for over 20 years, and that skill is now HIGHLY VALUABLE in GLP-1 clinical trials.

GLP-1s represent the biggest arms race in pharmaceutical history.

… and Resonance is right in the middle of it.

“Resonance (ASX: RHT) becomes the benchmark biomarker assessment for GLP-1 clinical trials, and it accelerates into a highly profitable, self-sustaining business.”

Like what the $600 million capped CogState (ASX: CGS) did for neurological diseases… 

But in GLP-1s.

1. Best leverage to the GLP-1 Industry on the ASX

Big Pharma is racing to develop the next GLP-1. Resonance sells technology to measure clinical-trial endpoints. Essentially, Resonance is the scorekeeper for the biggest arms race in pharmaceutical history.

2. It measures the QUALITY of weight loss.

Liver fat, organ fat, fat under the skin, muscle loss… the exact things Lilly, Pfizer, Novo and other Big Pharma companies are now competing on.

3. RHT is growing. Fast.

Revenue up from $4.4M to $15.8M in four years (37.7% compound growth), with $17M - $22M guided for this year.

Still, the company trades at just 2x forward revenue guidance and a $40 million market cap (with $10.4 million in the bank).

4. Cashflow Positive & Profitable

Positive operating cash flow in all four quarters of FY26, $2.9M net operating cash inflows for the year. The ASX has stopped asking for quarterly cash reports.

5. S-Tier customers for TrialsWest business

Three Perth sites that run more than 20 active trials for sponsors including GSK, Pfizer, Novartis, Sanofi and MSD. 

Front-door access to sell Resonance’s high-margin MRI scanning technology into the next trial for big pharma companies.

6. Blue Sky: Fibrosis without a biopsy.

Measure liver fibrosis with a standard MRI, no biopsy and no extra hardware. Early results show it's on par with market-leading tech. Could be a genuine $10 billion opportunity.

7. CEO has a proven track record of successful exits

Resonance CEO Andrew Harrison founded Capitol Health (ASX: CAJ), a radiology clinic business that merged with Integral Diagnostics (ASX: IDX) in 2024.

Merger value: A$1 billion; Capitol Health value: A$413 million.

Here is the 1-page investment memo on the company:

Resonance Health is really three complementary businesses under one umbrella.

Own the sites.

Run the trials.

Own the tech that measures the results.

Each business operates independently… 

But the magic comes when they work together.

One contract win can lead to THREE across all businesses.

Win a CRO contract?

Sell the software into that trial.

Clinical trial needs a site? 

Why not add a scan?

The ASX-listed company most similar to it is CogState (ASX: CGS).

CogState sells digital memory and cognition tests to Big Pharma companies, which use them to evaluate whether their drugs work for a range of neurological diseases.

… and boy has CogState been on a monster run.

Capped at $600 million and a genuine 20-bagger in 6 years.

Resonance is like CogState… but for GLP-1 clinical trials.

Own the sites.

Run the trials.

Own the tech that measures the results.

The who's who of Big Pharma is using Resonance’s technology and running clinical trials through the TrialsWest network:

To get a good sense of the growth opportunities, here is the revenue breakdown by business segments:

TrialsWest are a combination of clinical trial sites in WA.

These are physical locations that recruit and operate clinical trials for large pharmaceutical companies.

The goal is to replicate this success by adding six new sites on the East Coast.

In 2024, Andrew Harrison, Resonance CEO, successfully exited Capitol Health when it merged with Integral Diagnostics.

For A$413 million in a $1 billion merger:

So Andrew knows how to build and scale these healthcare infrastructure businesses.

… and exit.

To benchmark what this TrialsWest business alone could be worth, Helius just sold Agilex Biolabs (CRO and clinical site business) for A$160 million.

The contract research arm.

Resonance signed its FIRST big contract in August 2023 to run a GLP-1 clinical trial for Sun Pharma.

$6.3 million over 18 months.

THEN, a second trial with Sun Pharma in 2024.

$13.8 million over 24 months.

These are big, lumpy revenue contracts.

According to the annual report presentation, Resonance “is continuing to bid for new work from existing and new customers, with several opportunities being progressed”.

This is Resonance's high-margin software business.

It sells products worldwide for endpoint assessment in clinical trials.

Products include…

The lead product is FerriScan, which is the standard of care for measuring iron in the liver endpoints in clinical trials and has been used in hundreds of clinical trial sites:

Again… used by the who’s who of Big Pharma.

Last month, Resonance signed a distribution agreement with Image Analysis Group.

The deal?

IAG will make Resonance products orderable endpoints through its network, which has supported over 700 clinical trials since the company was founded in 2007.

So that’s three businesses, all working in sync.

Resonance has been listening to its customers, and they want a liver fibrosis measurement that doesn’t use an external device.

Resonance estimates the market for non-invasive liver fibrosis imaging at US$8 to 12 billion, with an initial $1 to 2 billion opportunity in pharma trials.

Several products are on the market now, with two leading.

MRE is an add-on MRI device that sends vibrations through the liver and measures its stiffness as a proxy for scarring.

It’s fairly accurate and provides continuous measurements.

The limitation is the need for extra equipment (about US$150,000), and only a small portion of MRI centres carry this device.

An ultrasound that measures liver stiffness through a probe placed against your skin rather than inside an MRI machine.

Convenient and widely used (but also costs US$125,000).

However, obesity can complicate measurements, and inflammation can make the liver look stiffer without necessarily meaning more scarring.

So it is not a great biomarker assessment versus biopsy.

(more of a screen-in and screen-out tool)

Resonance’s pitch is to measure liver fibrosis using standard MRI sequences, WITHOUT the extra hardware or a contrast injection.

The CEO, Andrew Harrison, talks about this in a recent interview.

“To show that your drug reverses fibrosis or reverses disease, you need to show that fibrosis moves back by at least one grade.

“Measurements between those gradings are really important.

“Is the fibrosis moving by a small amount? Is it moving back over time?”

The only way to get this granular, detailed measurement is through an invasive biopsy.

… and no non-invasive method on the market can measure fibrosis the way FerriScan measures liver iron.

For Big Pharma companies pouring literally billions of dollars into GLP-1 and metabolic disease trials, this level of granularity is necessary to win.

That’s what Resonance is working towards.

A highly accurate, MRI-agnostic algorithm that measures liver fibrosis.

Resonance published the first results from 50 patients:

Sensitivity: 75% and specificity: 80% for “significant fibrosis”, with an AUC of 0.82.

This is on par with FibroScan.

(Which is widely used and costs US$125,000) 

For advanced fibrosis, it scored 0.788 AUC, compared with MRE (AUC 0.91).

… so still a little bit to go.

NEXT, the goal is to refine the model using the existing 50 patients to get closer to 0.91 AUC.

Importantly, Resonance won’t need to recruit more patients.

It already has data on those 50 patients (MRI scans and confirmatory biopsies) and can use it to improve the model.

THEN, Resonance will run the model prospectively on Cohort 2… the next 18 patients. 

… see if they get close to the benchmark.

(Hopefully some peer-reviewed publication somewhere in here as well)

Once they get up around the 0.91 AUC, it is time to SELL the product.

How can they do this without recruiting more patients and running another trial?

Well, they’re not selling it as a diagnostics product…

But it’s just to measure “investigational” endpoints.

IF they have someone interested in these endpoints,

THEN they can start selling it directly into clinical trials.

(Once the algorithm hits that 0.91 AUC benchmark that is.)

Resonance says this could add $1-2 million per trial.

Trials that Resonance is already running. 

AND…

This is the best bit…

Resonance collects all of that data from someone else’s trial to improve the model and potentially get the device approved as a diagnostic.

But the next stage is still:

Improve the model → Get closer to 0.91 AUC on the same data.

RHT needs to keep winning new trial work to replace what is rolling off.

It is not your traditional “ARR” software business.

The fibrosis product still needs more development and validation.

Getting it to work across different patients, scanners, and sites could take longer and cost more than expected.

RHT competes with other imaging technologies and software providers.

The risk is that another imaging provider delivers a more accurate measurement, a lower price, or becomes the preferred tool in pharma’s trial protocols.

I have this saying.

Luck is what happens when preparation meets opportunity.

For 20 years, Resonance sold a diagnostic that interpreted MRI to measure liver iron. 

… and for 20 years, revenue was flat.

But thanks to GLP-1s… 

This skill, measuring fat, iron, and muscle through MRI, has become INCREADIBLY VALUABLE in the largest arms race in pharmaceutical history.

Opportunity without preparation?

Chance missed.

Opportunity with preparation?

That’s where Resonance stands today.

Resonance has the trial sites.

Resonance has the CRO capabilities.

Resonance has the technology.

Now it is time to grow, scale and dominate the GLP-1 clinical trial space.

See you all tomorrow.

The Armchair Analyst.