- Growing tissues business
- Potentially breakthrough knee cartilage advance
- Recent outside investment provides third-part validation of the firm's model
What the company does…
Collagen Solutions PLC (LON:COS) specialises in regenerative medicines and biomaterials. It uses collagen and other tissue – such as pericardium – to make everything from heart valves to bone grafts right through to wound dressings: it all depends on what the customer wants.
Collagen has another string to its bow in the form of a lead product called ChondroMimetic. This is a minimally-invasive, surgically-placed scaffold which helps repair knee cartilage.
Last February, results from an eight-year clinical extension study showed ChondroMimetic was able to regenerate cartilage to a structural quality almost identical to native cartilage. Work on a CE Mark, which would signify that the product has passed European safety, health and environmental protection requirements, began almost straight after those results came in.
Collagen had hoped to hear whether or not it had been successful by the end of March, but, with the process out of its hands, it admitted recently the timing of any award was “uncertain”. Currently, ChondroMimetic is not approved for sale in any market, but Collagen has been working hard behind the scenes so that it is ready for sale as soon as the CE Mark is awarded.
“While there is no news on the regulatory front, we are gearing up for ChondroMimetic,” said Jamal Rushdy on May 20.
Fundraiser provides third-party validation
On that same day, Collagen said it was to raise £6mln at a premium to its share price, with a multi-billion-dollar US agriculture company agreeing to pump in the majority of the cash. Rosen’s Diversified, the fifth largest beef processor in the US and valued by Forbes at over £2.4bn (US$3bn), invested £4.2mln into Collagen. A separate placing and open offer at the same price among existing investors was launched raise up to a further £1.8mln.
The Rosen’s investment followed a tissue collaboration with Scientific Life Solutions, which is part of the American combine. “The conversation expanded as we saw a tremendous opportunity to work together,” said CEO Rushdy.
Deploying the cash
Chief financial officer Hilary Spence said the funds would be invested as follows:
- £3mln will be invested in product and customer development
- £1mln will be spent on expanding manufacturing capabilities
- £2mln go towards paying down debt and funding ongoing capital requirements
In the six months to September 30, sales were up 14.4% to £2.23mln, while it won four new customer contracts and 10 new customers.
- New agreements from healthy deal pipeline
- Milestones from development agreements
- Customer product launches
- Tissue business acceleration
- Limited user release
- Additional distribution
- Partnering product
What the bosses say: Jamal Rushdy, chief executive, and Hilary Spence, chief financial officer
"The amount of work that we are doing in contract product development, that ultimately leads into contract product manufacturing, has gone up substantially, in fact about 76%, and now represents about a third of our business."
"Once those products get approved by regulators and launched with our partners, that means moving up the value chain, and in terms of contract manufacturing, getting more of the value of the products."