Health Check: To chagrin of short sellers, Polynovo shares soar on type 1 diabetes breakthrough

Investors with a short position in wound care house Polynovo face a ‘short squeeze’ after type 1 diabetes trial results.

Polynovo's short sellers are all boxed in after Polynovo's exciting diabetes trial news. Pic via Getty.

• Investors with a short position in wound care house Polynovo face a 'short squeeze' after type 1 diabetes trial results

• Oz drug stocks partly recover after swooning yesterday on Trump drug-pricing edict

• Wellnex Life rediscovers its sales mojo, while Elinixol Wellness goes to the well

 

Spare a thought for the short sellers of PolyNovo (ASX:PNV) – the bourse’s eighth most ‘shorted’ stock – after this afternoon's news of an exciting type 1 diabetes breakthrough.

For some years, Polynovo and the private Adelaide-based entity Beta-Cell Technologies have worked on a novel method to stimulate insulin production for type 1 diabetes sufferers.

The idea is that Polynovo’s foam-like material Novosorb BTM (biodegradable temporising matrix) creates a skin-based implant to house donor islet cells.

The parties today reported that a proof-of-concept study showed that Novosorb enables survival and function of human pancreatic islets when transplanted into an “alternative neovascularised site within the skin.”

The trial involved three participants with long-standing type 1 diabetes.

“Our results are the culmination of the past ten years of research and
development using the Novosorb technology and islet cells in rats and pigs and now in a first in human study,” says Beta Cell director Professor Toby Coates.

The current standard of care is to transplant human islet cells into the
liver.

However, researchers report that 75% of cells are lost in the first 48 hours.

Beta-Cell Technologies was co-founded by Professor John Greenwood, Polynovo’s former medical director and Novosorb developer.

While the trial is small and there's a long way to go, Polynovo shares soared 19% after the company lifted a brief trading halt.

In the meantime, Polynovo has been recovering from its corporate governance woes that resulted in the March departure of CEO Swami Raote.

This followed claims of bullying and inappropriate levelled against chairman David Williams, which became subject to a third-party board review.

Polynovo this month reported record March sales of $11.9 million, up 71%, taking year to date turnover to $84.4 million, up 31%.

But back to those short sellers, who account for 10% of Polynovo’s register compared with 1.5% at the start of 2025.

With Polynovo shares gaining almost 50% over the last month, expect more advances as 'short squeezed' investors buy shares to cover their position.

The long and short of shorting is that it can work spectacularly well, but go horribly wrong if the target company encounters unforseen success.

Local biotechs shrug off Trump’s war on drugs (pricing)

After being hammered yesterday, ASX drug developers potentially exposed to Donald Trump’s proclaimed “most favoured nation” (MFN) policy on drug pricing staged tentative recoveries today.

These included Neuren Pharmaceuticals (ASX:NEU), Mesoblast (ASX:MSB), Clinuvel Pharmaceuticals (ASX:CUV) and Botanix Pharmaceuticals (ASX:BOT).

Radioimaging plays Telix Pharmaceuticals (ASX:TLX) and Clarity Pharmaceuticals (ASX:CU6) were also under the pump yesterday and duly saluted.

In an executive order, the Prez said drug pricing would be referenced to the cost in the lowest-priced countries, with vaunted costs savings of 30% to 80%.

We should add that the benchmarks are OECD (developed) countries, not Belize or Botswana (no offence).

The only ASX exponent to comment explicitly on the measures so far, Botanix asks a salient question: what if a drug company does not sell outside of the US?

In the US Botanix has started marketing its drug Sofdra, for excess underarm sweating (primary axillary hyperhidrosis).

The company says it’s not privy to the details of the Trump Decree, but notes that Sofdra is only approved in the US – or so far at least.

A variant is sold in Japan by Botanix’s partner Kaken Pharmaceutical, but it’s a different concentration and formulation.

“Based on the limited information currently available … Botanix does not consider that it is likely that it will be subject to price reductions based on sales of Sofdra outside the US, as there are none."

In the case of CSL (ASX:CSL), Morgan Stanley notes that plasma products were excluded from MFN last time around.

The firm opines that 25% of CSL’s revenue may be exposed to MFN pricing.

This is because CSL derives half of its revenue from the US, half of that from public payors such as Medicare and Medicaid.

While our heavy hitters swooned yesterday, the New York Stock Exchange Arca biotechnology and pharmaceuticals indices soared 3% and 1.5% respectively overnight.

Commentary from over the waters suggests this is because past efforts to rein in drug imports have failed, while the measure is open to negotiation.

Sound familiar?

Wellnex Life shrugs off sales slump

House of pharma brands Wellnex Life (ASX:WNX) has shrugged off a slow start to the financial year with a perkier performance for the January to April period.

Over this timeline, revenue rose 46% to $8 million, year on year. The gross margin improved 55% to $2.99 million.

In the month of April, revenue gained 75% to $2.57 million, with the margin improving 75% to $1.13 million.

Wellnex’s ‘hero’ own brands include Nighty Night, an ashwagandha (herb) based sleep aid and the caffeine and guarana-based antidote, Wakey Wakey.

Last year the company acquired the 25-year-old Pain Away range of topical pain relief for around $22 million.

Management says the problems of stock outages and delays in new products have abated.

On March 21 the company listed on London’s AIM exchange, after raising $16.5 million.

These funds have been used mainly for a $13 million debt demolition.

Wellnex shares popped around 15% this morning.

Meanwhile, shares in Elixinol Global (ASX:EXL) today entered trading halt, pending a “potential financing/capital raising arrangement” to be announced on or before May 15.

Elixinol runs a suite of cannabis focused human and pet brands, including Healthy Chef, Mt Elephant and Hemp Foods Australia (Byron Bay based, of course).

The company had $600,000 of cash at the end of March, so it’s time it went to the well.

At Stockhead, we tell it as it is. While Wellnex Life is a Stockhead advertiser, the company did not sponsor this article

Originally published as Health Check: To chagrin of short sellers, Polynovo shares soar on type 1 diabetes breakthrough