Rhythm Biosciences (ASX:RHY): Since picking up Genetype, its never looked back and is more than a one-trick pony!

Investors may remember Rhythm Biosciences (ASX:RHY) for its ColoSTAT test, but it is Genetype that is arguably more exciting. The company now has a substantially larger market awaiting us, and while its commercialisation strategy for ColoSTAT has changed, this strategy has been successful.

Wait, has Rhythm received TGA approval? Yes and no – it’s a long story, but it has gone far enough to pursue commercialisation through a similar pathway that Lumos Diagnostics (ASX:LDX) is pursuing with its FebriDx test.

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Rhythm Biosciences: Did you know it even had GeneType?

We think many investors may not have heard of it (at least not until very recently). It used to be owned by Genetic Technologies which entered into administration in mid-2024, enabling RHY to pick it up for just over $600k.

The first sales, a legacy of former ownership, were recorded in early 2025. The Company’s opportunity is to take GeneType to the next level, now that the hard work of developing the technology and taking it to the point of first sales has been done.

The bringing of Genetype into the fold quadrupled the addressable market from 121m to ~500m.

Why Genetype is so special

Genetype is a simple cheek swab and measures several risk factors to conceive a percentage chance of developing particular diseases and this is called a Polygenic Risk Score (PRS). These risk factors include polygenic risk, parity, BMI, lipid levels, breast density, blood pressure and cholesterol levels.

Now these do not indicate the disease, but identify the risk of the disease. This could enable lifestyle changes and/or other interventions which may delay or even prevent disease from occurring. In doing so, this prevents societal burdens that come with the diseases.

Currently, Rhythm Biosciences is focused on 6 kinds of cancer: Breast, Prostate, Colorectal, Ovarian, Melanoma and Pancreatic. GeneType is expected to expand to other indications (cancer and non-cancerous) over time – one potential opportunity is Type 2 diabetes.

2025 was a year of modest revenues from legacy commercial arrangements with previous owners, but Rhythm Biosciences entered into several key distribution and collaboration partnerships that will take revenues to the next level such as with Know Your Lemons and Catch Bio). The Company has promised significant quarter on quarter revenue growth milestones (over 100% in Q1 of FY26) and its sales pipeline is growing rapidly.

ColoSTAT commercialisation Take 2: More successful than Take 1

Investors following the company would know about ColoSTAT and its potential. It is a blood test that measure protein levels in the blood. The concentrations of these proteins would then be weighted using an algorithm, which in turn generates a colorectal cancer risk score that gets inputted into a diagnostic report readily for the GP to discuss with the patient.

Colorectal cancer is difficult to detect by physical signs in the way that other cancers are – at least not until later stages when treatment may be difficult if at all possible. The current government screening program is cumbersome (to put it mildly), is a triage test rather than diagnostic and only searches for blood in the stool. All it does is recommend people for colonoscopies and take ups are below 50%. ColoSTAT is simpler and less nauseating, is lower cost, more likely to be preferred, can operate at scale and has a superior performance.

ColoSTAT can help detecting cancers earlier as well as avoid unnecessary colonoscopies. It is unlikely to replace the government funded FIT altogether (at least under RHY’s current commercialisation model) but still fulfil an important role in bowel cancer screening. Doctors could use both tests to identify patients who could be prioritised for colonoscopies as well as rule out those who have no need for them at all (if you are negative, there’s a 99% chance you do not have it).

Investors may remember Rhythm sought TGA approval via the conventional pathway but was unsuccessful – it withdrew the submission following regulatory feedback. There was no problem with ColoSTAT’s efficacy, but more independent production batches were needed than the Company possessed at that time.

Made it to market, but a different pathway

ColoSTAT is on the market now, via RHY’s own laboratory initially to selected clinical leaders who choose ColoSTAT under their own judgement. ColoSTAT is being provided not as a product but as a clinical laboratory service offered by an ISO-accredited lab (RHY’s lab has ISO15189:2022 Accreditation). The risks and control are being managed by the lab’s quality system, and these quality systems are approved. Currently Rhythm offers ColoSTAT for use in individuals with symptoms consistent with colorectal cancer, particularly where stool-based testing is unsuitable or not preferred.

But within weeks, Rhythm hopes ColoSTAT to be formally added to be an accredited laboratory service. The facility will no longer be just a general lab service but a lab service with ColoSTAT. This would support broader clinician use and commercial rollout beyond initial limited programs and strengthen clinical confidence with formal accreditation.

As we noted in our introduction, accredited labs pathway is essentially the same CLIA pathway that Lumos Diagnostics (ASX: LDX) has pursued for American commercialisation in that tests can be sold through accredited labs. The blood samples will be sent to Rhythm’s laboratory directly and the results will be sent back to the patient’s referring GP. ColoSTAT will not (yet) be a stand-alone product sold externally – it is only used within the accredited lab, handled by trained professionals only in that lab.

Down the track, Rhythm Biosciences may seek TGA approval (i.e. inclusion on the ARTG as an In Vitro Diagnostic Medical Device ) and this would cover non-laboratory users or environments not controlled by ISO 15189. But the Company does not need ARTG inclusion to support the current business model and it may find a sufficient business with having ColoSTAT offered as a lab-service only.

Whether or not Rhythm Biosciences eventually seeks a more conventional TGA approval, it is not irrelevant to observe that approval through the NATA pathway is effectively a kind of TGA approval because NATA and the TGA collaborate.

There’s significant upside coming

Our friends at Pitt Street Research published a note on Rhythm Biosciences earlier today, valuing the company at $0.45 per share in a base case scenario and $0.69 per share in an optimistic (or bull) case scenario. We encourage investors interested to read the report for further information.

But investors should not have to wait too long to realise upside. There are plenty of catalysts awaiting including increased revenues from ColoSTAT and Genetype, the securing of partnerships to advance their development and continued clinical work validating their efficiency. And when ColoSTAT is formally added to be an accredited laboratory service, this could be a crucial moment in the company’s history.

Rhythm Biosciences is a research client of Pitt Street Research. Pitt Street directors own shares.