Weekly Reports | 10:00 AM
This week brokers took the magnifying lens out to focus on three micro/small caps with transcend biotech. software and gold mining, what else does an investor need?
- Cannabinoid (CBD) sleep treatment advances toward pivotal interim trial outcome
- Digital health platform gains traction as hospital IT modernisation accelerates
- Historic NSW gold field revival drives transition from explorer to producer
By Danielle Ecuyer
This week's quote comes from ANZ Bank:
"Once a conflict extends beyond the initial shock phase, oil markets tend to shift from pricing uncertainty to pricing endurance.
"At that point, the key question is no longer whether supply is disrupted, but how long producers can physically sustain output under deteriorating operating conditions."
Sandoz partnership and June trial catalyst underpin investment case
Avecho Biotechnology ((AVE)) is an Australian biotech company developing a cannabidiol (CBD) soft-gel capsule for insomnia using its proprietary TPM (Tocopheryl Phosphate Mixture) technology, which enhances the absorption and bioavailability of drugs.
Research as a Service (RaaS) notes the lead program is currently in a pivotal Phase III clinical trial, with an interim analysis expected in June this year after the company completed recruitment of about 210 patients.
This milestone followed a lengthy recruitment process due to strict patient inclusion criteria designed to improve the quality of the data.
RaaS highlights the challenges this creates for both Avecho and shareholders. While strict criteria can produce higher quality datasets and clearer trial outcomes, they often lengthen recruitment timelines and place pressure on funding and share price performance.
The interim results will determine whether the trial continues toward the full planned enrollment of 519 patients or is stopped early if the treatment shows insufficient efficacy.
Management’s commercial strategy is to develop drugs and license them to large pharmaceutical partners with established distribution networks.
The analyst notes Avecho has already secured a 10-year licensing agreement with Sandoz to commercialise its insomnia CBD product in Australia. The deal includes a US$3m upfront payment, up to US$16m in development milestones, and tiered royalties of 14%–19% on net sales.
Avecho retains rights to global markets outside Australia and management is currently in discussions with potential partners regarding further licensing agreements. RaaS believes a positive interim trial result would represent a significant de-risking event for the program and could accelerate additional licensing deals and funding opportunities.
The investment case centres on the upcoming trial results and the potential advantages of Avecho’s TPM technology. The company argues the technology improves CBD absorption, with animal studies showing up to a 400% increase in bioavailability when combined with TPM.
The analyst highlights this could allow the product to achieve therapeutic efficacy within the TGA’s 150mg dose limit for over-the-counter CBD medicines, a hurdle that has limited other CBD insomnia treatments. If successful, the product could become the first TGA-approved OTC CBD sleep aid in Australia, and potentially expand into large global insomnia markets.
From a funding perspective, Avecho had about $4.7m in cash at December 2025 and expects around $1.8m in R&D tax credits. With a cash burn of roughly -$1m per quarter, this should be sufficient to reach the interim trial results.
If the trial continues, additional funding may be required, although positive results would likely improve access to capital or enable non-dilutive funding through licensing agreements.
The report also notes Avecho’s market capitalisation of around $38m remains low compared with other ASX-listed biotechs at the Phase III stage, suggesting potential valuation upside if the clinical program proves successful.
RaaS does not assign a rating or target price, although the analyst holds shares.
Macro tailwinds and positive earnings a boost for an emerging health tech company
Moelis initiated coverage of Alcidion ((ALC)) this week with a Buy rating.
The emerging health technology company provides software designed to improve how hospitals manage patient information, clinical workflows and operational decision-making.
The analyst explains the company’s core product is the Miya Precision platform, which integrates data from multiple hospital systems such as patient administration systems, pathology, radiology and medical devices. This allows clinicians to access real-time patient information and receive alerts or insights within their workflows, unlike traditional health IT systems which are largely passive.
The platform sits on top of existing hospital IT infrastructure rather than replacing it, enabling hospitals to improve interoperability and adopt new technologies such as AI-driven clinical decision support without undertaking large-scale system replacements.
Against a macro backdrop of governments and hospital systems seeking to improve efficiency and patient outcomes while managing rising healthcare costs, demand for healthcare digitisation is increasing, providing a tailwind for platforms like Miya.
Many legacy electronic health record systems were originally designed for record keeping rather than real-time clinical decision-making, which further supports demand for interoperable platforms.
Alcidion has increasingly secured large contracts with NHS trusts in the UK to deliver electronic patient record (EPR) systems, and successful delivery of these deployments could help build reference sites that support further business development and larger contract opportunities.
The company has also generated momentum through several recent contracts and preferred supplier arrangements across the UK and Australia, including projects with University Hospitals Sussex, North Cumbria Integrated Care and South Tees Hospitals.
Alcidion’s base of recurring revenue continues to expand through these contracts and demonstrates the company’s “land and expand” strategy, where hospitals initially deploy individual modules before expanding to broader system implementations.
Contract sizes and durations have also increased, with average contract terms extending to around six years and larger integrated EPR deployments typically valued at roughly $20m to $40m over multi-year periods.
FY25 marked the company’s transition to positive EBITDA and operating cash flow, supported partly by licence revenues from large EPR contracts.
Moelis forecasts EBITDA to exceed $5m as the company continues scaling its installed customer base. The business model combines upfront licence and implementation fees with recurring support and maintenance revenue over contract terms typically lasting five to ten years, which could support margin expansion as deployments mature.
Moelis has set a target price of $0.15.
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