Tissue Regenix PLC (LON:TRX) has splashed out US$30mln on a Texas-based rival, Cellright Technologies, to catapult it to the front of the growing US market for regenerative medicine and bone grafts.
Antony Odell, Tissue’s chief executive, said CellRight has a synergistic regenerative technology focused on bone that will complement its own dCELL soft tissue platform.
“Furthermore, a broad development pipeline of innovative products, multiple established distribution channels and a state of the art US-based manufacturing facility will enable us to increase our growth and market penetration, cementing our presence in the key US market, as well as providing an opportunity to enter new geographies.”
Tissue Regenix is funding the acquisition with a placing at 10p to raise £40mln. Woodford Asset Management took up almost 35% of the new shares issued, Invesco 31% and Perpetual 12.5% alongside a number of Tissue’s directors.
Tissue is developing skin graft, cartilage, ligament and valve replacement products based around its cell washing technology, which effectively eliminates the possibility of rejection by the body.
Cellright, meanwhile, has developed a technology that transforms human bone into a mouldable matrix that can be made into different shapes of malleable bone collagen scaffolds for a variety of graft purposes.
13 products to add to the portfolio
In particular, Cellright’s products are guaranteed to be osteo-inductive, or form new bone, and retain regenerative properties post-implantation.
CellRight has launched 13 products since 2012 and will increase Tissue’s US sales by 2.5 times.
The San Antonio-based company posted revenues US$5.42mln in 2016 and underlying profits that year were US$1.58mln.
Access to US$1.7bn market
The research House Hardman said the acquisition of CellRight gives Tissue Regenix immediate access to the US$1.7bn North American bone graft and substitutes market.
“Although the market is dominated by the large players – Medtronic, De Puy Synthes, Stryker – there is opportunity for new entrants with differentiated offerings,” said analyst Martin Hall.
“In addition, the existing products and commercial relationships of CellRight will pave the way for Tissue’s entrance to the US orthopaedic soft tissue market, valued at US$2bn, with OrthoPure in 2018.”