TIDMTRX
RNS Number : 5578A
Tissue Regenix Group PLC
22 January 2020
This announcement contains inside information
Tissue Regenix Group plc
Trading Update
-- Group revenue growth of 12% year on year
-- Cash position of GBP2.4m provides cash runway until at least the end of April 2020
-- Board continues to evaluate various funding options
Leeds, 22 January 2020 - Tissue Regenix Group (AIM:TRX) ("Tissue
Regenix" or the "Company") the regenerative medical devices
company, provides an unaudited trading update for the year ended 31
December 2019.
John Samuel, Executive Chairman, commented: "During 2019, the
Company has faced various operational challenges. However, we have
increased utilisation and throughput of our US facility to meet the
expected increase in demand for our products. Through both organic
growth and collaboration with strategic partners, we remain
confident in our ability to reach profitability, once our new
facility becomes available."
Financial Performance Overview
The Group expects to deliver revenue and EBITDA in line with its
revised expectations as reported on 17 October 2019. Revenue is
anticipated to be GBP13m (2018: GBP11.6m), representing an annual
increase of 12%.
Division 2019 GBP'm Actual, 2018 Percentage Percentage
GBP'm change (GBP) change
(constant
currency)
Orthopaedics & Dental
(CellRight) 6.7 6.4 3% 1%
----------- ------------- -------------- -----------
Biosurgery (DermaPure) 4.2 3.4 24% 18%
----------- ------------- -------------- -----------
GBM-v 2.1 1.8 16% 13%
----------- ------------- -------------- -----------
Total 13.0 11.6 12% 8%
----------- ------------- -------------- -----------
As previously reported on 10 September 2019, H1 2019 was
impacted by the limited availability of donor material together
with poorer yields, which impacted H2 product availability and
sales performance. Various operational initiatives have been
implemented and our US management has been strengthened by the
appointment of Danny Lee (as President of US Operations) who has
improved throughput significantly. The recruitment of a VP of donor
services has delivered an improvement in donor sourcing,
availability and improved yields.
We increased the throughput of our five clean rooms in San
Antonio through the commencement of a second shift during H2 2019.
As a result of the recruitment of additional new staff, together
with subsequent training, we expect this second shift to reach full
productivity by the end of H1 2020. In addition, we are assessing
the potential for the introduction of a third shift.
As a result of these various initiatives, the average number of
orthopaedic donors processed monthly at our San Antonio facility
has more than doubled from Q1 to Q4. It is important to note that
there is typically at least a three-month lag between increased
donor processing and increased product available for sale for our
orthopaedic products. Therefore, towards the end of H2 2019 we
began to see the first commercial benefits of these
improvements.
The facility also processes donor material for DermaPure and
during H2 2019 we outsourced some DermaPure production to Community
Tissue Services (CTS) in order to alleviate pressure on our
cleanrooms. We continue to work closely with CTS with a view to
realising additional yield improvements. In September 2019 we also
launched a non-oriented version of the DermaPure product
specifically for the urogynaecology market. Initial feedback from
surgeons has been very encouraging. It is important to note that
until recently this market was served by synthetic mesh which has
now been largely withdrawn from the market, and where the Company
expects to realise significant commercial opportunities.
Due to a restructuring of the employee base undertaken in Q4
2019, a number of redundancies were carried out resulting in a
reduction of our headcount by 18. These changes along with other
cash management initiatives have allowed the cash runway of the
business to be extended.
During 2019 we leased a new building adjacent to our existing
San Antonio facility which, subject to financing, will enable the
building of new clean rooms in order to satisfy anticipated demand
from our current customer base and potential future partners.
Whilst the Company has made good strides towards addressing its
manufacturing capacity constraints, the Board believes that these
will not be fully addressed until the Company is able to bring
onstream some of the additional facility. The fit out of the first
phase of the Facility, planned to begin in 2020, will be primarily
for the CellRight product range and is subject to the Company
securing the necessary funding.
Our joint venture, GBM-V saw continued growth of its corneal
business and has become financially self-sufficient.
Funding Update
As announced on 14 November 2019, the Group repaid $5.5m of a
term loan to Midcap Financial Trust ("MidCap") after a
renegotiation of the terms of the financing agreement (the "MidCap
Financing Agreement"). MidCap remains supportive of the Company and
access to Tranches 2 and Tranches 3 of the debt remains available,
subject to lenders discretion and the satisfactory recapitalisation
of the Company.
As at 31 December 2019 the Group had a cash position of GBP2.4m,
which includes GBP1m of a revolving credit facility available under
the MidCap Financing Agreement. As discussed above a number of
changes in the headcount were implemented during the year to
increase processing throughput and reduce staff costs elsewhere in
the business.
The Company continues to experience significant constraints on
its working capital however the Board believes that the available
cash runway will continue to support the working capital
requirement of the Company until the end of April 2020. As a result
of this, as previously announced, the Board is seeking to secure
alternative funding in the near future which may or may not be
forthcoming.
Further announcements will be made at the appropriate time.
The person responsible for this announcement is John Samuel,
Executive Chairman. For more Information:
Tissue Regenix Group plc Tel: 0330 430 3073
Caitlin Pearson Head of Communications
--------------------------------------------- --------------------
Stifel Nicolaus Europe Limited (Nominated Tel: 0207 710 7600
Adviser and Broker)
Jonathan Senior / Alex Price / Ben Maddison
--------------------------------------------- --------------------
FTI Consulting Tel: 0203 727 1000
Simon Conway / Victoria Foster Mitchell
/ Mary Whittow
============================================= ====================
About Tissue Regenix
Tissue Regenix is a leading medical devices company in the field
of regenerative medicine. Tissue Regenix was formed in 2006 when it
was spun-out from the University of Leeds, UK. 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 November 2012 Tissue Regenix Group plc set up a subsidiary
company in the United States - 'Tissue Regenix Wound Care Inc.',
January 2016 saw the establishment of joint venture GBM-V, a multi-
tissue bank based in Rostock, Germany.
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 orthopedic, foot & ankle,
dental, and sports medicine surgical procedures.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
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