TIDMTRX
RNS Number : 2347O
Tissue Regenix Group PLC
08 February 2021
Tissue Regenix Group plc
("Tissue Regenix" or the "Group")
Trading update
Leeds, 8 February 2021 - Tissue Regenix Group (AIM:TRX), the
regenerative medical devices company, provides a trading update for
the year ended 31 December 2020.
Highlights
-- Total Group revenue of GBP12.8m delivers performance in line
with previous year despite the impact of COVID-19
-- Strong cash position of GBP9.5m following successful fundraise in June 2020
-- Capacity expansion project continues on schedule
-- Additional commercial partnerships and product launches undertaken throughout the period
The overall financial performance of the Group is expected to be
in line with market expectations* with anticipated revenue of
GBP12.8m (2019: GBP13.0m). Following the successful fundraise
completed in June 2020, the Group has a strong cash position of
GBP9.5m at 31 December 2020, to support the working capital
requirements and further investment into the planned capacity
expansion programme.
Division 2020 GBP'm 2019 Actual Percentage Percentage
GBP'm Change Change (constant
currency)
Orthopaedics
& Dental (CellRight) 7.4 6.7 10% 13%
----------- ------------ ----------- ------------------
BioSurgery
(DermaPure(R)) 3.3 4.2 -21% -20%
----------- ------------ ----------- ------------------
GBM-V 2.1 2.1 0% 0%
----------- ------------ ----------- ------------------
Total 12.8 13.0 -2% 0%
----------- ------------ ----------- ------------------
* Market expectations are for FY20 revenue of GBP12.5m, Adjusted
EBDITA of GBP(4.0)m and cash of GBP10m based on Stifel's
forecasts
Daniel Lee, Chief Executive Officer, Tissue Regenix, commented:
"The Group returned a strong performance for 2020 against the
challenging backdrop of the ongoing COVID-19 pandemic. We were
successful in maintaining a sales line consistent with previous
years and additionally securing further strategic partners and
private label agreements in an industry where many companies
experienced a downturn in demand as hospital resources were
redirected. With two new products launched during the year and the
commencement of our capacity expansion programme following the
fundraise completed in June 2020, the Group is well positioned to
address market demand and new opportunities as market conditions
normalise."
Financial performance
The financial performance for the year was impacted by the
ongoing coronavirus pandemic which became evident from Q2 onwards,
together with material cash constraints that the business
experienced in the first half of the period. Notwithstanding this,
the Orthopaedics and Dental (CellRight) division successfully grew
top line sales by 10%, largely driven by a strong Q1 performance.
In addition, it maintained strong relationships with strategic
partners and saw an increase in the utilisation of a newer, growth
product line, AmnioWorks(TM), which will be utilised in surgical
specialties such as ophthalmology.
Revenue from DermaPure(R), under the BioSurgery division, was
more significantly impacted by the pandemic and associated
restrictions, as US hospitals postponed elective surgical
procedures, such as urogynaecology and soft tissue orthopaedics,
where the DermaPure(R) products would be utilised, resulting in a
21% decrease in revenues for this division. There is beginning to
be a slight uptick in the recommencement of these procedures as the
US vaccine roll-out continues and patient confidence returns,
however, it remains difficult to predict at what pace a return to
pre-pandemic procedure levels will occur.
The Group's joint venture, GBM-V, based in Rostock, has been
impacted by the German lockdown restrictions that were in place for
much of the last year, however, they have continued to service the
cornea market where possible and maintained revenues of GBP2.1m, in
line with the 2019 revenue figure (2019: GBP2.1m).
Furthermore, the Group has remained committed to appropriately
sizing its overhead cost base and expenditure. To this end, further
re-structuring of the US business was undertaken in January 2021 to
rationalise resources across the business which is expected to
reduce the overhead cost base by c.$700k on an annualised
basis.
Operations
An important milestone for the Group during 2020 was the
commencement of the manufacturing capacity expansion programme in
San Antonio, as historically capacity constraints have impinged on
the growth of the business. Phase 1 of the build out began in July
and remains on schedule to come onstream during H1 2021. This will
allow for a c.50% increase in the Group's BioRinse(R) (CellRight)
processing capacity, as well as allowing improvements in the Dermis
and Amnion throughput. Throughout the build process optimisations
were identified and implemented meaning that some elements of the
second phase of the expansion programme were brought forward where
those elements could either reduce the capital outlay and impact on
operations, or time requirements later in the project. This has not
changed the overall budgeted spend however, it meant that there was
an initial increase in the phase 1 costs of c.$700k which will be
offset as the project continues.
The Group was able to successfully implement the required
guidelines and protocols to prevent the spread of COVID-19 at the
facility in San Antonio which meant that there was minimal direct
impact on the ability to process the BioRinse(R), DermaPure(R) and
AmnioWorks(TM) product portfolios in-house. However, it did result
in delays to the sourcing of donors required which was addressed
through broadening relationships with donor sourcing agencies,
taking into consideration aspects such as geography and recovery
structures. These agreements will also be a key factor in the
ability to ramp-up processing as additional capacity becomes
operational and allowed for a 16% year-on-year increase in the
processing throughput for the CellRight and BioSurgery sides of the
business. Alongside this, processing for the Amnion product
quadrupled in line with the growing market demand and increased
private label agreements. With processing levels at the San Antonio
facility successfully maintained, it is expected to meet demand
once elective hospital procedure levels return. This production,
coupled with phase 1 of the capacity expansion, will alleviate any
near-term capacity constraints and will allow the Board to evaluate
the timing of the commencement for phase 2 of the expansion,
ensuring the efficient deployment of capital.
In the UK, the decision was made to relocate the manufacturing
facility to smaller premises in nearby Garforth which was
undertaken in October 2020 with many aspects of the OrthoPure(R) XT
production process successfully outsourced, and it is expected this
will provide annualised overhead cost savings of c.GBP400k. It is
anticipated that the new facility will complete the regulatory
audits and inspections required to become operational during Q1
2021.
Commercial
The Group was successful in securing a number of commercial
opportunities throughout the year, most significantly in May, when
a white label manufacturing agreement was concluded with a top 10
global healthcare company for the launch of a new soft tissue
orthopaedic product. The initial feedback for this product has been
very positive and it is expected that sales traction will increase
throughout 2021 as levels of procedures begin to normalise.
Alongside this, a number of additional, smaller private label
agreements for the AmnioWorks(TM) portfolio were secured during
2020. This will diversify the spectrum of products available and
enhance revenue generating opportunities for the Group as they are
further commercialised during 2021 and beyond.
In Europe, the Group achieved CE mark approval for OrthoPure(R)
XT, a decellularised porcine tendon for use in the repair or
reconstruction of knee ligaments, and the first products were
shipped in December 2020. Distribution partners have been secured
in the UK and Poland and the Group is actively engaged in a number
of discussions with partners in other key European territories
which are expected to materialise during 2021.
Outlook
The Board and Executive Management team have undergone a number
of changes in recent months to provide the leadership and
experience required to guide the Group through the next stages of
its commercial development.
Following the successful fundraise completed in June 2020 the
Group has a strong balance sheet to support both working capital
requirements and allow for future investment into the capacity
expansion project when required. This coupled with successfully
securing new strategic partnerships and distribution agreements
throughout 2020, as well as maintaining a comparative revenue
performance year-on-year despite the impact COVID-19 has had on the
Global healthcare markets, allows the Board to have every
confidence in the future prospects of the Group.
For more Information:
Tissue Regenix Group plc Tel: 0330 430 3052
Caitlin Pearson Head of Communications
------------------------------------------ ------------------------------
Stifel Nicolaus Europe Limited (Nominated Tel: 0207 710 7600
Adviser and Broker)
Ben Maddison / Alex Price
------------------------------------------ ------------------------------
Walbrook PR Ltd Tel: +44 (0)20 7933
Paul McManus / Alice Woodings / Lianne 8780
Cawthorne TissueRegenix@walbrookpr.com
------------------------------------------ ------------------------------
About Tissue Regenix (www.tissuergenix.com)
Tissue Regenix is a leading medical devices company in the field
of regenerative medicine. The company's patented decellularisation
('dCELL(R)') technology removes DNA and other cellular material
from animal and human soft tissue leaving an acellular tissue
scaffold which is not rejected by the patient's body and can then
be used to repair diseased or worn out body parts. Current
applications address many critical clinical needs such as sports
medicine, heart valve replacement and wound care.
In August 2017 Tissue Regenix acquired CellRight
Technologies(R), a biotech company that specializes in regenerative
medicine and is dedicated to the development of innovative
osteoinductive and wound care scaffolds that enhance healing
opportunities of defects created by trauma and disease. CellRight's
human osteobiologics may be used in spine, trauma, general
orthopaedic, foot & ankle, dental, and sports medicine surgical
procedures.
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END
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