Micro-X Discontinues Argus, Betting Big on Medical CT with $25M US Contract

Strategic Shift to Medical Imaging

Micro-X Ltd (ASX:MX1), an Australian innovator in cold cathode x-ray technology, has announced a decisive strategic realignment focusing on medical imaging, particularly computed tomography (CT). This pivot is underpinned by a significant development contract awarded by the US Advanced Research Projects Agency for Health (ARPA-H), valued at up to $25 million over five years. The contract aims to fund the creation of a portable, ruggedised Full Body CT scanner, a project that builds on Micro-X’s proprietary carbon nanotube (CNT) emitter technology and recent advances in Head CT imaging.

CEO Kingsley Hall highlighted the quarter as pivotal, emphasizing the company’s commitment to becoming a leading provider of medical imaging solutions. The ARPA-H contract, which includes an initial $12.5 million tranche over two years with an option for a further $12.5 million, represents a non-dilutive funding source that will accelerate Micro-X’s product development and clinical validation efforts.

Key Milestones and Product Progress

During the quarter, Micro-X achieved a critical milestone by delivering the first full 3D CT images from its Head CT test bench. These images, depicting detailed brain anatomy, were reviewed and accepted by the Australia Stroke Alliance (ASA), unlocking a $0.5 million milestone payment. This validation paves the way for upcoming human imaging studies at the Royal Melbourne Hospital, subject to ethics approval.

Simultaneously, the company’s Mobile Digital Radiology product, Rover Plus, is advancing through final evaluation stages with a major US hospital operator and a significant Group Purchasing Organisation. While commercial outcomes remain uncertain, this represents a promising avenue for scaling sales within the US healthcare system.

Discontinuation of Argus Operations and Cost Savings

Reflecting a sharper focus on medical imaging, Micro-X has decided to discontinue its Argus IED x-ray camera operations. Despite initial military support and product enhancements, slow sales and evolving global security dynamics have rendered the Argus commercially unviable in its current form. The shutdown is expected to yield annual cost savings of approximately $0.7 million, following one-off write-downs and staff reductions.

Micro-X intends to explore partnerships or monetisation opportunities for the Argus imaging technology on a cost-neutral basis, ensuring that any residual value is leveraged without further cash outflows.

Financial Position and Capital Raising

As of 31 December 2024, Micro-X held $2.39 million in cash, with overall quarterly cash outflows of $0.63 million. The company received a substantial $6.41 million R&D tax incentive refund during the quarter, bolstering liquidity. However, to fund ongoing operations and the expanded medical imaging programs, Micro-X is in advanced stages of preparing a capital raising, details of which will be announced in due course.

In a show of leadership commitment, the Board has waived fees and senior management has taken voluntary salary reductions to extend the company’s cash runway.

Board Changes and Outlook

Governance changes include the appointment of Patrick O'Brien as Chair, replacing David Knox who retired after nearly five years. O'Brien brings prior experience as Chair from 2015 to 2021, supporting continuity amid strategic transformation.

Looking ahead, Micro-X is actively engaging with potential strategic partners to monetise its security applications, including Checkpoints and Miniature Baggage Scanner projects, while maintaining momentum on its medical imaging pipeline. The company’s upcoming investor call on 5 February 2025 will provide further insights into progress and outlook.