Volpara Health Technologies shares are on a tear - thanks to gains in the US, and an attendant jump in revenue.
The Wellington-based, Australian-listed maker of breast-screening software edged ahead of its guidance when it delivered its quarterly cashflow report to the ASX this morning - and predicted strong gains ahead.
Volpara's stock has performed solidly since its April 2016 IPO at 50Ac (see chart below).
But it has really taken off over the past few weeks, spiking to an all-time high of A$1.94 on several pieces of positive news.
The first came on March 28, when the US Food and Drug Administration (FDA) proposed an overhaul of the Mammography Standards Act to make it compulsory for all US screen facilities to provide women with information about their breast density - a key indicator of cancer risk.
Currently, there has been a confusion of patchy, state-by-state regulations, Volpara founder and CEO Dr Ralph Highnam told the Herald .
"The Federal law will be much more powerful."
There will be a regular inspections, and a standardised regime, including a requirement for specific, plain-English reports.
It will be good for American women, and good for Volpara's business - more so because the US accounts for more than 90 per cent of the Wellington company's revenue.
That's because of the 75 million or so women who are screened for breast cancer each year, around 40 million are in the US.
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Here, the National Screening Unit's BreastScreen Aoteroa programme does not include an FDA-style requirement to discuss breast density results, but "private clinics are likely to use breast-density assessments and can offer ultrasound to women with dense breasts", Volpara spokeswoman Jenny Shackleton says.
And there was more good news today as Volpara formally confirmed its April 1 revised-upwards forecast that annual recurring revenue (ARR) had increased 86 per cent (vs its rate in the fourth quarter of last year) to $6.63 million.
The company is forecasting 50-80 per cent ARR growth for its 2020 financial year.
It also said the number of customers for its Volpara Enterprise software - which is used to run a breast-screening practice - had jumped from the year-ago 57 to 128.
Volpara is still in the relatively early stages of commercialising its software, following years of trials. When it listed in 2016, its first revenue was only just starting to trickle in and its prospectus did not make any forecast about when it could hit profit.
There has been some speculation among analysts that Volpara - which had $14.4m in cash as of March 31 and lost $2.6m in the quarter - will soon embark on another capital-raising effort.
Highnam poured cold water on that, however, saying his company had enough cash for six quarters at its anticipated burn rate. No raise is on the immediate horizon.
Today, the company is starting to get real momentum in revenue, but Highnam is still wary about specific profit guidance.
However he did offer: "If people keep paying annually upfront then, low churn, we could break-even in a couple of years."
March 22 saw another piece of positive news on that front as Volpara expanded its partnership with X-Ray machine maker GE from the US to Europe, Asia and other territories.
"It's a symbiotic relationship," Highnam said. GE helps Volpara get into clinics and "We help drive customers to their equipment."
Staff numbers (26 in 2016) are also on the rise. Volpara now has around 20 sales staff dotted around the US, and 55 in Wellington working in admin and R&D.
The outlook is looking bright, but is it bright enough to justify the recent share runup, which has seen Volpara - which is fast-growing but still anticipating revenue of around $12m next year - hit a market cap of just under A$350m ($370m).
One Australian commentator called that valuation "scarily high".
The counter-argument: Most startups have high multiples at this stage of their life and Volpara, while gaining customers fast, still sees its software used in just 7.1 per cent of US breast screenings and has no direct competition with the same level of FDA certification.
Highnam also has hopes that Volpara will be adopted by the National Health Service in the UK, where it is now undergoing a secondary trial - having outlasted other potential providers in an earlier four-year trial.
But again, it's a long game. It could be a couple more years until the outcome is clear, Highnam said.
Grass greener across the ditch
In the meantime, Volpara's founder says he's happy with his decision to list across the Tasman.
In the early days, with Volpara's stock only nudging along, and surrounded by Kiwi ASX strike-outs like Powerhouse Ventures, Tomizone and Martin Aircraft, the benefits of listing across the Tasman - being a small fish in a bigger pond, as Rod Drury put it - was obviously the right decision.
Today, with Straker Translations successful 2018 IPO and Xero hitting historic highs after going ASX-only, it's more clearcut that it was a good call.
"We chose the ASX over the NZX because of Australian investors' greater knowledge about biotech, and the fact NZ investors are very able to invest on the ASX - so we didn't penalise NZ investors by going that way," Highnam said.