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Tissue Regenix one to watch next year, says Jefferies

Published: 10:33 16 Dec 2015 EST

knee
Tissue's tendons are used in ACL repairs

Tissue Regenix (LON:TRX) has made it onto Jefferies’ list of top drug industry buys for 2016, with the broker saying it could be a takeover target.

The firm, which has created a porcine tendon for use in anterior cruciate ligament (ACL) and meniscus surgery, has a number of catalysts for shares in the new year, the broker said.

Tissue has also developed a skin graft product using human tissue, as well as heart valves.

The broker said after raising £19mln in February to help develop its meniscus and ligament product - OrthoPure – that it expects the product to be launched by the end of next year.

This has led to a rise in its forecasts for the year, with sales expected to be around £18mln rather than £13mln, while earnings [EBITDA] losses are likely to be reduced to £17mln from previous estimates of £22mln, with the firm swinging to a profit by 2017.

Meanwhile, “the company sees promising data coming through from its cardiac product (heart valve), which is another large attractive market, in our view,” Jefferies said.

It also notes, that with larger firms always on the look-out for new products, “it is not unlikely that Tissue Regenix could become a takeover target.”

“The large medical device companies are grappling with how to move beyond traditional solutions, and TRX is positioned to deliver a neat product that is affordable to bring to market and cost-effective for the payer,” Jefferies said.

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