ChondroMimetic, a collagen-based scaffold for the treatment of small defects in the articular surface of the knee joint, has been on trial with 15 patients since 2009/10.
The company expects to report key clinical data this quarter and assuming a positive outcome, will apply for a European regulatory CE mark and look for additional partners for the product later in the year, Cenkos said.
A first partnership agreement was signed with a South Korean company towards the end of 2017.
Third revenue arm
ChondroMimetic will be the start of a third leg to the business if approved.
Currently, Collagen derives its revenues from two sources: the supply of tissue and biomaterials to a medical use standard for implants and research; and development work on customer-specific products.
Margins have been falling lately, but Cenkos believes this reflects bespoke development work being undertaken ahead of future revenues.
“The development cycle from initial customer identification through to first market sales of the customer’s medical device can take up to four to five years, during which Collagen will move through periods when revenues are received and periods with no income.”
With a developing customer pipeline, Cenkos, the house broker, also forecasts growth in the biomaterials business going forward.
Sales this year (March 2018) are forecast at £4.3mln, rising to £5.7mln in 2019 and £10.2mln in 2020 when Cenkos forecasts a first profit.
“We believe the company is also strengthening its existing business stating its sales pipeline is ‘the strongest it has been’. We maintain our Buy recommendation.”
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