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Hardman & Co

Tissue Regenix Credit facilities expand cash runway to 2021

Tissue Regenix plc (LON: TRX) has a broad portfolio of regenerative medicine products for the biosurgery, orthopaedics, dental and cardiac markets. It has two proprietary decellularisation technology platforms for repair of soft tissue (dCELL) and bone (BioRinse). Following the acquisition of CellRight in the US in 2017, TRX embarked on a revised commercialisation strategy, which is clearly gaining traction. Sales grew 47% in 2018, reflecting strong demand, particularly for DermaPure in the US. To support further business expansion, including investment in facilities and working capital, credit facilities of up to $20m/£16m have been secured.

  • Strategy: TRX is building an international regenerative medicine business with a product portfolio using proprietary dCELL and BioRinse technology platforms, underpinned by compelling clinical outcomes. It aims to expand its global distribution network, via strategic partnerships, to drive sales momentum.
  • Credit facilities: TRX has entered into an agreement with MidCap Financial Trust to access credit facilities composed of a term loan of $15.0m and a revolving credit line of up to $5m. The loan is structured into three tranches, providing cash until 2021 on current forecasts. The first $7.5m/£5.9m tranche has been drawn down.
  • 2018 results: Sales grew 47% to £11.6m (£7.9m 2017 pro forma), largely driven by the US performance of DermaPure (+79%). The EBIT loss, at -£8.32m, was 14% lower helped by an overall increase in DermaPure margins. Period-end cash of £7.8m was achieved by tight control of both operating costs and working capital.
  • Risks: TRX is exposed to many of the risks common to medical device companies, including the regulatory hurdles based on the manufacture and distribution of human tissue products, and the commercial risks of operating in a highly competitive market. A hybrid sales strategy, however, mitigates the latter.
  • Investment summary: Tissue Regenix plc has three near-term value drivers: sales of BioSurgery products in the US; expansion of CellRight and TRX technologies into the orthopaedics/spine and dental markets; and preparation for the EU launch of OrthoPure XT in 2019. Management has been prudent in securing a US dollar loan that relieves some of the working capital pressure during this growth period and is non-dilutive for shareholders.


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