Health Check: No consumer pharma-geddon as chemists dispense the right stuff

•  Apothecary owners Sigma and EBOS have the right growth prescription
• Starpharma’s CEO is baffled by share slump after JV tweak
• Cleo Diagnostics reports promising ovarian cancer assay data

Chemist custodians Sigma Healthcare (ASX:SIG) and EBOS Group (ASX:EBO) have shrugged off rising diesel costs and sluggish consumer sentiment to report resilient trading conditions.

Ahead of its AGM in Melbourne this arvo, Chemist Warehouse owner Sigma reported sales growth of 12.1% for the July 1 to October 16 period, with like-for-like sales up 9.8%.

Sigma also owns the Sigma drug distribution business and the Amcal and Discount Drug Store banners, but calls out the “solid trading momentum” of the Chemist Warehouse stores.

The company’s fledgling offshore network grew sales by 30.2%, 15.8% like-for-like.

GLP-1 fat-busting prescriptions continue to drive store visits, with new oral versions due in the June half of next year.

But not everything is smelling like roses, literally.

As with last year, “some discretionary categories such as ladies’ fragrances, vitamins and supplements are experiencing softness as consumers adjust their buying behaviours” in line with cost-of-living pressures.

“Our business model, however, is very defensive and resilient,” CEO Vikesh Ramsunder said.

While Chemist Warehouse stores are ubiquitous, the company says they account for only 10% of community pharmacies.

“This provides the opportunity to continue to grow our Chemist Warehouse branded store network, which together with [revitalised] Amcal and Discount Drug Stores provides a meaningful runway for disciplined domestic growth.”

EBOS defies trans-Tasman headwinds

At its shareholder jamboree in Auckland, EBOS affirmed previously enunciated guidance for the year to March 2027.

This is despite “persistent foreign exchange and fuel cost headwinds”. Diesel costs have soared 20% year to date.

EBOS owns the TerryWhite and Chemmart chemist chains and the Symbion drug wholesale business. The company also sells medical devices for hospitals and owns pet food brands including Black Hawk and Vita Pet.

EBOS guides to underlying earnings of NZ$635-655 million, 5% higher at the midpoint. Having completed a distribution centre expansion, capex should fall to NZ$100 million from last year’s elevated NZ$145m.

Management cites a NZ$150 million kitty for “disciplined bolt-on acquisitions”.

On the chemist side, CEO Adam Hall cites a “meaningful challenge to customer spend as the cost of living impacts their wallet”.

Given that, management will focus on helping stores to attract more customers, via physical and digital network expansion and boosting in-pharmacy services such as flu jabs.

Hall also referred to EBOS’s “disappointing” share price, down 30% over the last year.

“We recognise that progress within the business must ultimately translate into sustainable earnings growth and long-term shareholder value.”

Indeed.

Starpharma’s share slump “not what we hoped for”

Starpharma (ASX:SPL) shares this morning climbed from the mat after testy investors yesterday birched the stock by one third, or 25 cents.

They were reacting to Starpharma’s revelation that it would up its stake in a joint venture, Petalion Therapeutics, from 22.5% to 66%.

This will cost $5 million: $3 million in cash and up to $2m in research and development services.

Petalion is a joint venture with a London mob called Medixci, which takes a private equity-style approach to finding, developing and selling drug assets.

Overall, Starpharma is developing cancer radiotherapies, using the company’s dendrimer platform for better drug penetration.

Starpharma said the investment would enable it to lead development of the joint program, based on a differentiated fibroblast activation protein (FAP).

“Majority ownership enables us to integrate the program more closely into our oncology portfolio and direct the next phase with clear development and capital-allocation priorities,” Starpharma CEO Cheryl Maley said.

It also enabled development priorities, capital allocation and partnering decisions to be “aligned” with Starpharma’s broader DEP (dendrimer) strategy.

“The market didn’t react as we were hoping,” Maley told the Australian Microcaps Investment Conference in Melbourne yesterday.

The company was due to hold a webcast at noon.

Maley yesterday said that as well as enabling Starpharma to drive the program, the partial buyout removes confidentiality restraints.

Indeed, yesterday was the first time investors knew about the nature of Petalion’s asset.

It’s not clear why investors said ‘what the FAP?!’

But it appears they didn’t want $3 million of Starpharma’s $11m cash kitty to be used in such a manner.

Given the sell-off erased $158 million of market capitalisation, there’s a lack of symmetry between the market’s reaction and the financial aspects.

Buoyed by its separate radiopharma liaisons with Genentech and Radiopharm Theranostics (ASX:RAD) , Starpharma in July raised $32 million at 50 cents apiece.

Despite the pullback, the shares have gained 70% over the last year.

Telix affirms calendar 2026 guidance

Radiopharma house Telix Pharmaceuticals (ASX:TLX) has affirmed that its revenue and other income for calendar 2026 should exceed US$1 billion.

The revenue component is tracking “at the upper end” of guidance of US$950-970 million.

Management expects the research and development bill to come in between US$240-260 million, compared with the previously guided US$230-270m.

In the September (third) quarter, Telix’s revenue increased 19% year on year, to US$245 million.

In particular, sales in the month of September “indicated continued strength in underlying demand for Telix’s [prostate cancer imaging] products.”

Sales derived largely from Telix’s two approved prostate imaging tools, Gozellix and Illuccix.

The current quarter should reflect further sales of the company’s brain cancer imaging agent Pixclara, which the US Food and Drug Administration (FDA) approved last month.

Despite the numbers being pretty much as expected, Telix shares this morning declined around 5%.

Genetic and Microba tweak merger terms

Diagnostic lovebirds Genetic Signatures (ASX:GSS) and Microba Life Sciences (ASX:MAP) have revised the terms of their proposed union – but have assured the market everything is on track.

The scrip deal involves Genetic acquiring Microba. Originally, Microba shareholders were to emerge with 67% of the merged entity, but now will account for 60%.

Genetic holders will speak for 40% rather than 33%, naturelment.

The reason for the tweak is that Microba today announced a $2.02 million, two-tranche share placement.

Genetic shareholders vote on the deal at the company’s November 16 AGM.

Meanwhile, diagnostic ‘third wheel’ BCAL Diagnostics (ASX:BDX) in effect holds a 23% Genetic stake and has mounted a board challenge.

BCAL chair Jayne Shaw today was due to address the aforementioned microcaps seminar – and hopefully can shed some light on her company’s intentions.

Cleo ovarian cancer assay meets “rigorous” targets

Cleo Diagnostics (ASX:COV) says its ovarian cancer assay has met “rigorous” performance targets in a proof-of-concept study.

The retrospective study covered samples from 247 women.

Of these, 87 were healthy, 67 had benign gynaecological disease and 93 had ovarian cancer.

Of the 93 patients, 62 had early (stage one) cancer. The malady is hardest to detect at this stage, but doing so offers the best survival benefit.

In this high-risk category, testing achieved sensitivity of 92.2% and specificity of 98.7%.

This compared to the minimum required 90% in each case.

Sensitivity is the ability to detect a disease, whilst specificity is the ability to rule one out.

Across all the patients the test achieved 75% sensitivity and 100% specificity, compared to the minimum required 75% and 99.6%

Cleo is carrying out the study to support expanding the test from pre-surgical triage applications to broader screening.

Guess which market is biggest.

“Detecting ovarian cancer at its earliest stages remains one of the greatest unmet needs in women’s healthcare,” Cleo CEO Richard Allman said.

He said the next trial stage would involve improving scale and statistical ‘powering’, followed by evaluation in a real-world screening population.

Cleo hopes to lodge an application for FDA approval for pre-surgical applications in the June half of 2027.

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