Tissue Regenix Group PLC Trading Update (5578A)

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: [phone] 
  Caitlin Pearson Head of Communications 
---------------------------------------------  -------------------- 
 
 Stifel Nicolaus Europe Limited (Nominated      Tel: [phone] 
  Adviser and Broker) 
  Jonathan Senior / Alex Price / Ben Maddison 
---------------------------------------------  -------------------- 
 
 FTI Consulting                                 Tel: [phone] 
  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 [e-mail] or visit www.rns.com.

END

TSTFIFLRLLIFFII

(END) Dow Jones Newswires

January 22, 2020 02:00 ET (07:00 GMT)