# Tissue Regenix Restructured to satisfy product demand

- Link: https://www.directorstalkinterviews.com/tissue-regenix-restructured-to-satisfy-product-demand/412804912
- Published: 2020-02-06T07:48:52+00:00
- Author: Amilia Stone

**Tissue Regenix** **Group** (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 2017, TRX revised
its commercial strategy, to service the strong demand for its products. However,
this necessitated capacity expansion and realignment of its supply chain, which 
affected 2019 trading and forced renegotiation of its MidCap loan arrangement. In
our view, the current share price reflects TRX’s need for a capital injection.

 * **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.
 * **Forecasts:** Sales forecasts have been revised to reflect the investment in
   new manufacturing capacity to satisfy demand. However, refinements in the commercial
   model, coupled with some cost savings, have limited the impact on operating losses.
   Gross cash at 31 December 2019 was £2.4m.
 * **Expansion:** Extra staff were employed to enable two-shift manufacturing. However,
   training time, coupled with the natural business cycle, meant the tangible benefit
   of this only became apparent towards the year-end. Investment in an adjacent 
   building in San Antonio will free up space for further clean rooms.
 * **Risks:** Although demand for its products is very positive, the above has caused
   some challenges, notably reorganisation of the manufacturing facility – to the
   short-term detriment of BioSurgery sales. The current Tissue Regenix Group share
   price, in our opinion, is reflecting the urgent need for more capital.
 * **Investment summary:** The strategy to focus on maximising sales potential has
   paid off through increased demand for products. However, this has resulted in
   the need for an expansion of capital. Two major shareholders have sold down their
   holdings recently, and the ex-Woodford holding has been temporarily transferred
   to Link Fund Solutions. The shares are trading at a discount of 87% to the £95.8m(
   8.2p per share) that has been invested in the company to date.

[DOWNLOAD THE FULL REPORT](https://www.hardmanandco.com/wp-content/uploads/2020/02/TRX-Corp-update-6-Feb-2020.pdf)

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