Collagen Solutions PLC (LON:COS) shares rose on Tuesday as the firm said it expects full-year revenue to rise more than market forecasts, driven by deals to develop collagen products on behalf of third parties.
The company, which uses collagen and/or tissue to make everything from heart valves to bone grafts through to wound dressings, estimates revenue will rise 18% to £4.15mln for the year ended March 31, up from £3.50mln last year, as growth seen in the first half continued.
In reaction, shares jumped 8.8% to 3.7p in morning trading.
READ: Collagen Solutions raises around £215,000 from sale of small stake in private marine biotechnology firm, Jellagen
The group predicts the loss before tax will be lower than expected on the back of an improved top line and the £215,000 sale of its stake in Jellagen Ltd., the private marine biotechnology company focused on developing collagen biomaterials from jellyfish.
The cash balance at the end of the year was also better than anticipated at £1.7mln.
Collagen said it is still awaiting feedback on its application for a CE Mark for ChondroMimetic, minimally-invasive surgically placed scaffold that helps to repair knee cartilage.
A CE Mark would signify that the product has passed safety, health and environmental protection requirements.
ChondroMimetic is not approved for sale in any market yet but Collagen has established several distribution partners in Europe and Asia so it is ready when it gets the green light to proceed.
Trading in line since year-end
Collagen said since the end of the financial year, it has been trading in line with management’s expectations and “continues to build on the progress made in FY 2019, supported by the new business gained in the second half of the last financial year and current pipeline of new deals in process”.
"We are pleased with our delivery of high double-digit growth within our core business representing a substantial turn-around of performance from our prior financial year,” chief executive Jamal Rushdy.
“In addition, our increased mix of development services is a positive leading indicator of success in our strategy to move up the value chain. We look forward to providing a further update when we announce our preliminary results in July."
In late morning trading, Collagen Solutions' shares were 8.8% higher at 3.7p.
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