Next Science Navigates Sales Dip Amid $50M Asset Sale Deal

Sales Performance and Product Mix

Next Science Limited (ASX – NXS), a medical technology company specialising in biofilm infection solutions, reported a 10% decline in product sales for the June quarter, totalling US$5.2 million. This downturn was driven primarily by a significant drop in sales through the Durable Medical Equipment (DME) channel, which is undergoing a transition to a variable cost model and indirect sales force. However, the company saw encouraging growth in direct sales of its flagship products XPERIENCE and BLASTX, with surgical sales rising 30% year-on-year.

The gross margin improved to 82%, up from 80% in the prior corresponding period, reflecting a favourable shift in product mix towards higher-margin XPERIENCE sales. Despite the sales decline, this margin expansion suggests operational efficiencies and product portfolio strength.

Liquidity and Cash Flow Challenges

Next Science’s cash position weakened slightly, with a closing balance of US$1.0 million, down from US$1.3 million the previous quarter. The company carries US$4.5 million in debt, having drawn US$1.5 million from a US$5 million unsecured loan facility arranged with Thorney Investment Group in July 2024. Operating cash outflows increased to US$1.5 million for the quarter, impacted by the timing of customer receipts and ongoing legal expenses.

The company’s cash runway is under pressure, with available funding estimated to cover less than one quarter of operating cash outflows at current levels. This liquidity constraint underscores the urgency behind strategic initiatives to stabilise finances.

Strategic Asset Sale Agreement

In a significant development, Next Science announced on 1 July 2025 that it entered into a binding asset purchase agreement with Italian-based Demetra Holdings S.p.A. The deal proposes the sale of substantially all of Next Science’s assets, excluding its DME business, for US$50 million in cash, subject to shareholder approval and customary conditions. This transaction includes regulatory approvals, intellectual property, contracts, inventory, and goodwill.

The asset sale represents a strategic pivot, potentially providing the company with much-needed capital and enabling Demetra to expand its footprint in the medical technology sector. Shareholder approval will be a critical next step, with the outcome likely to shape Next Science’s future operational and financial trajectory.

Clinical and Legal Updates

On the clinical front, recruitment continues steadily for the large-scale Periprosthetic Joint Infection study in Canada, with over 2,000 patients enrolled to date. This trial is pivotal for validating the efficacy of Next Science’s XPERIENCE Advanced Surgical Irrigation product.

Meanwhile, litigation involving former employees persists, although a derivative complaint was recently dismissed for lack of standing. The company remains engaged in ongoing legal actions, which continue to contribute to operating costs.

Outlook

Next Science faces a challenging near-term outlook with pressured sales and cash flow, but the asset sale agreement offers a potential lifeline. The company’s ability to execute this transaction and stabilise its financial position will be closely watched by investors and market observers alike.