Good morning,
Welcome to today’s edition of The Armchair Analyst, a 5-minute daily update on the ASX life-sciences sector.
It’s quarterly reporting season - also known as confession season.
Cash balances are revealed, quarterly sales disclosed… and a few hidden gems in management commentary.
Today, I will walk you through my playbook for evaluating the 4Cs and leveraging them to make better investment decisions.
But first…
The Pulse Check
Actinogen Medical (ASX: ACW) goes into a trading halt pending the interim analysis results from its Phase 2b/3 Alzheimer’s trial.
🪑: 🍿… it all comes down to this.
Arovella Therapeutics’ (ASX: ALA) IND application is approved by the FDA for its off-the-shelf cancer cell therapy, enabling first-in-human Phase 1 trials. (ALA)
🪑My ALA “Holiday Trade” is playing out nicely; now I just need a run-up to the Phase 1 trial start…
Control Bionics (ASX: CBL) signs a 2-year US distribution agreement with PRC-Saltillo for its brain computer interface technology.
🪑That’s two distribution deals in three days for CBL - I like the strategy of partnering with distribution partners, rather than running the sales themselves. Let’s see how this translates into more profitability over the coming months
Cyclopharm (ASX: CYC) has partnered with Macquarie University to conduct a new clinical study using its AI imaging product on patients with severe COPD. (CYC)
Imricor (ASX: IMR) receives FDA 510(k) clearance for its MRI-native mapping system in the U.S. (IMR)
Compumedics (ASX: CMP) secures a $4.2M order for its Orion LifeSpan™ MEG system from Shandong Normal University, China. (CMP)
CSL (ASX: CSL) reports that Vanguard Group has increased its substantial holding to 6%.
The Report Card
A swarm of 4C reports, so again, the ones that stood out.
Doctor Care Anywhere (ASX: DOC) reports £1.1M (A$2.2M) net positive cash flow in Q4 FY25, marking the third consecutive quarter of cash generation. Cash balances up to £6.6M (A$13.2M). (DOC)
Nova Eye Medical (ASX: EYE) reports record December 2025 quarterly sales of US$6.1M, up 38% PCP, driven by strong US demand for its iTrack™ technology. (EYE).
Vitasora Health (ASX: VHL) reports a 17% QoQ revenue increase to A$1.25M, driven by a 22% rise in daily billing productivity and higher CMS reimbursement rates. (VHL)
M&A, Big Pharma Wants a Wife
Boehringer Ingelheim will pay up to €1.05B deal for the ex-China rights to Simcere's preclinical irritable bowel syndrome antibody. (Fierce Pharma)
Under the Microscope
This week is the quarterly season…
Also known as confession season in small-cap land
After three months of activities, companies will need to demonstrate the cash runway they have to execute everything they’ve set out to do.
Sometimes stocks can run on the back of a positive quarterly (perhaps some unexpected revenues have come in)...
But a company can also sink if its cash balance is less than the market expects.
Stocks that are revenue-generating, profitable and cash flow positive generally don’t need to publish quarterly reports under ASX rules (think of companies like CSL, Simga Healthcare or Cochlear)...
But for the minnows, they will be put under the microscope for everyone to see.
For each quarterly report, there are 5 key things that I’m looking out for:
CASH: What’s the company’s cash balance and runway? When will they need to raise again?
BURN: Was the operating cash burn reasonable compared to the activity?
REVENUE: How much cash did they bring in? Was this below, at or above expectations?
FUTURE OUTLOOK: What were the comments from management? Any insights to help me set expectations for the next 3 months?
BURIED INFORMATION: Any information on projects that have quietly been jettisoned or buried in the quarterly report.
Let’s go into each one of these in a little more detail.
First, CASH.
As an investor in pre-revenue small-cap stocks, one of the most important things to understand is when a company will need to raise capital.
This comes down to a simple question: how long will it take for the company run out of cash based on its expected activities?
Hint: If you scroll to Section 8 and find the line item “Estimated quarters of funding available,” this calculation signals the runway.
If the answer is below 2.0, the company will provide commentary on how they expect to manage cash flows or raise funds; if it is above 2.0, the work is yours.
Will cash burn increase because a clinical trial is about to start?
Or decrease because an unprofitable program has been shut down?
Make your own call on how long the runway really is, and if the company is “come-raise”, size or manage your position accordingly.
Next, BURN.
For this section, you’ll need to take a look at the “Consolidated Statement of Cash Flows”.
What you want to work out is whether the company’s burn was:
Reasonable relative to its activity
Sustainable until its next big re-rating milestone
How it compares to the company’s market cap.
Stocks that are currently running one or more clinical trials tend to have much higher cash burn.
If cash burn is predominantly in R&D, expect approximately 45% to be reimbursed under the Australian R&D incentive scheme.
Next, REVENUE/INFLOWS.
How much cash did they bring in? Was this below, at or above expectations?
These expectations can be difficult to identify… as they reflect a mix of investor sentiment and company guidance from previous quarters and presentations.
It can take a lot of work to understand market expectations, and it is often more art than science.
I like to set expectations before the quarterly season begins.
There are two ways that revenues are benchmarked:
Previous Comparable Quarter/Period (pcq/pcp)
Previous Quarter
Benchmarking against previous comparable quarters (same time last year) can help in businesses that have lump or cyclical revenue cycles.
Where the reveneus are smoother, quarter-on-quarter growth can be more accurate.
As I said… It’s more of an art than a science.
Next, FUTURE OUTLOOK.
Every quarter, management will provide comments on the quarter and the company’s outlook.
This can be a great way to understand market expectations for the next three months.
A bullish take can be good for the short term, but too many quarters of bullishness without results can lead to “the stock that cried wolf”.
There can only be so many quarters of near-term deals that are just ready to be announced before the market stops believing.
(funnily enough, it is at the point when the market finally gives up that deals end up landing)
Reading a few of these quarterly reports gives you an idea of whether management falls into the bullish or bearish category.
And a bullish take from a bearish or conservative management? That’s a good sign.
Finally, BURIED INFORMATION.
Like all early-stage companies, there are things that just don’t work.
Partnerships that fizzle, assets that are not worth continuing to pursue or deals that fall through.
Sometimes, companies bury this not-so-good news in the quarterly reports.
It means that investors following the story very closely will be able to see what’s going on, but for new investors to the stock, everything is (and always appears to be) perfect.
(and we know that’s not always the case).
For your favourite companies, read the quarterly reports carefully to identify any hidden issues that could affect your expectations of the company or the market at large.
Final thoughts
Quarterly season is confession season, but it is also a reset or a cleanse of the market’s expectations for the company.
If you accept that…
Nothing works out as planned.
Everything takes longer than expected.
Companies spend more than they should.
It provides a framework for entering the confession season “eyes wide open” and objectively evaluating whether the stock advanced toward its goals or experienced a setback.
Once the information is out, the company has a baseline to build on for the next three months…
Hopefully, before it needs to raise cash again.
See you all tomorrow.
The Armchair Analyst
