viewTissue Regenix Group PLC

Tissue Regenix rings changes after Cellright acquisition

Tissue Regenix is funding the acquisition with a placing at 10p to raise £40mln

picture of human skeleton
Any shape you want with Cellright's matrix

Changes have taken place at regenerative med-tech Tissue Regenix PLC (LON:TRX) in the wake of its acquisition of Texas-based rival Cellright.

Steve Couldwell has been appointed as new chief executive having been on the board as a non-executive since 2013. Prior to that he worked more than 25 years in the pharmaceutical and medical device industry inlcding teh role of chief operating officer at Global Sanofi Biosurgery with responsibility for global strategy and execution.

READ: Tissue Regenix sees revenues double in ‘transformational’ first half

"Since being appointed to the board in 2013 I have been impressed with the great commercial potential of our dCELL platform. The recent acquisition of CellRight Technologies has increased the market potential and provided a highly complementary product range in the $1.7bn US bone graft and substitute market,” Couldwell said when appointed.

Cellright was acquired in 2017 for US$30mln in a move designed to lift Tissue to the front of the growing US market for regenerative medicine and bone grafts.

The Texas firm has a synergistic regenerative technology focused on bone that will complement Tissue’s 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,” said Tissue.

Big beasts backs the deal

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 has developed 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 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.

Thirteen 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

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.”

Revenues up, losses down

Tissue saw revenues double in the first half of the year, driven by a strong performance of its GBM-V multi-tissue bank and higher sales of its DermaPure wound treatments.

Total revenues at the medical devices firm grew 118% in the six months ended 30 June to £1.37mln (H1 2016: £631,000).

The increased revenues helped Tissue to narrow its loss after tax to £4.77mln (H1 2016: £5.16mln).

In August, after period end, Tissue raised £40mln from investors, of which £25mln was used to complete the acquisition of CellRight.

At 8.8p, Tissue is valued at £102mln.

Quick facts: Tissue Regenix Group PLC

Price: 0.33 GBX

Market: AIM
Market Cap: £23.21 m

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