Aroa Biosurgery forecasts business growth of up to 30% annually with product revenue guidance of NZ$73-$76 million in FY24
\nNew study highlights positive outcomes using Myriad Matrix and Myriad Morcells in complex traumatic wounds
\nAroa focused on growth in US with 95% of sales coming from world\u2019s largest healthcare market<\/p>\n
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Soft tissue repair company Aroa Biosurgery is focused on building its product offering, gaining a foothold in key markets, and transitioning to a high profitability business with forecast growth of up to 30% annually. <\/strong><\/p>\n Aroa Biosurgery (ASX:ARX)<\/strong><\/a> was founded in 2008 by veterinarian and now CEO Dr Brian Ward after he discovered extracellular matrix (ECM), a tissue scaffold found in the forestomach of sheep, closely resembled human tissue in structure and contained more than 150 essential proteins crucial for healing.<\/p>\n Listing on the ASX in July 2020, the New Zealand-headquartered ARX is one of a trio of soft tissue repair companies on the Australian bourse including Polynovo (ASX:PNV)<\/strong><\/a> and \u00a0Avita Medical (ASX:AVH)<\/strong><\/a><\/p>\n AROA ECM is ARX\u2019s proprietary extracellular matrix (ECM) biomaterial, containing a complex mix of biological molecules and form the building block for its range of soft tissue repair products.<\/p>\n \u201cWe isolate a very specific layer of tissue from the forestomach of sheep and purify that in a way that can be implanted into people and be used as a basis for soft tissue regeneration,\u201d he says.<\/p>\n \u201cWhat we\u2019ve seen with this material clinically is it rapidly forms new tissue, \u00a0its relatively resistant to infection, and we don\u2019t have adverse immune responses, so it\u2019s become the building block for all our technology and products.\u201d<\/p>\n The company focuses on trauma, post cancer surgery and chronic complex wounds.<\/p>\n Earlier this year ARX received US Food and Drug Administration (FDA) 510k approval for \u00a0<\/p>\n ARX recently announced a new study highlighting positive outcomes using Myriad Matrix and Myriad Morcells in complex traumatic wounds.<\/p>\n The\u00a0 peer\u00a0 reviewed\u00a0 study was published\u00a0 in\u00a0 the\u00a0 September\u00a0 issue\u00a0 of\u00a0 industry\u00a0 leading\u00a0 journal ePlasty<\/em> and outlines the clinical effectiveness of Myriad Matrix and Myriad Morcells in complex traumatic wound reconstruction procedures.<\/p>\n The\u00a0 retrospective\u00a0 case\u00a0 series\u00a0 assessed\u00a0 13\u00a0 complex\u00a0 traumatic\u00a0 wounds\u00a0 across\u00a0 10 patients,\u00a0 including injuries\u00a0 from\u00a0 motor\u00a0 vehicle\u00a0 accidents,\u00a0 abdominal\u00a0 dehiscence\u00a0 following\u00a0 hernia\u00a0 repair,\u00a0 Fournier\u2019s Gangrene, compartment syndrome and pressure injuries, at a single US Level 1 trauma centre, between January 2021 and February 2023.<\/p>\n The\u00a0 study\u00a0 found\u00a0 the\u00a0 average\u00a0 time\u00a0 to\u00a0 soft\u00a0 tissue\u00a0 coverage\u00a0 and\u00a0 fill\u00a0 was\u00a0 23.4\u00b19.2\u00a0 days,\u00a0 with\u00a0 a\u00a0 median product application of 1.0 with no complications reported from the cohort.<\/p>\n The study builds on an increasing body of evidence demonstrating that ARX\u2019s ECM products can be used to facilitate formation of well vascularized soft tissue in patients with trauma injuries.<\/p>\n \u00a0<\/p>\n ARX has a strong focus on the US market with 95% of its sales focused on the world\u2019s largest healthcare market.<\/p>\n The company sells in the US through its own direct sales team of 45, which is set to grow to 50 by the end of FY24.<\/p>\n It also sells through a distribution agreement with TELA Bio, which has 80 sales reps focused on breast reconstruction and hernia surgery.<\/p>\n Ward says when first established the business was focused on development and manufacturing so formed distribution partnerships, including with TELA Bio.<\/p>\n \u201cWe didn\u2019t initially \u00a0have our own infrastructure in the US and over time we have built our own sales organisation and that\u2019s enabled us to sell directly,\u201d he says.<\/p>\n \u201cThe sales model with TELA bio has helped in getting us established with their markets but outside of that there\u2019s plenty of opportunities in other areas so we\u2019ve got our own sales teams to target those areas.<\/p>\n Ward says sales from TELA bio have proven to be lucrative for the company.<\/p>\n He says the total soft tissue regeneration market across all its products is more than US$3 billion annually.<\/p>\n The company\u2019s first product Endoform for acute and chronic wound care is less at ~US$70 million.<\/p>\n \u201cWhile that product got us started it is not really the driver of growth for the future,\u201d he says.<\/p>\n \u00a0<\/p>\n ARX recorded audited full year product revenue of NZ$60.5 million, a 55% increase on FY22. Total revenue\u00a0 (inclusive\u00a0 of\u00a0 project and\u00a0 license\u00a0 fees)\u00a0 was\u00a0 NZ$63.4 million, representing 60% growth on FY22.<\/p>\n The company has provided product revenue guidance of NZ$72-$75 million for FY24 delivering a 25-30% constant currency growth on FY23 and total revenue of NZ$73 to 76 million.<\/p>\n \u201cWe see we can continue to grow the business at 25 to 30% per year and it\u2019s a high gross margin business with guidance for this year 85%,\u201d Ward says.<\/p>\n The company forecasts to be EBITDA positive in FY24 in the vicinity of $1 million to $2 million.<\/p>\n \u201cOver the next couple of years, we should transition to be a highly profitable business,\u201d he says.<\/p>\n \u201cOne of the things that has held us back is we\u2019ve had a big investment in development and particularly our Enivo platform so that\u2019s probably stalled that transition to profitability by a couple of years.\u201d<\/p>\n Ward says ARX has been well supported by institutional supporters since its listing.<\/p>\n \u201cWe\u2019ve got a really good register of probably the top tier small cap investors in Australia who participated at the IPO and have continued to buy,\u201d he says.<\/p>\n \u00a0<\/p>\n\n \ufeff<\/span>\u00a0<\/p>\n This article was developed in collaboration with Aroa Biosurgery, a Stockhead advertiser at the time of publishing. <\/em><\/p>\n \u00a0<\/em><\/p>\n This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.<\/em><\/p>\n <\/span><\/p>\n The post Wound wizard Aroa forecasts 30pc annual growth as it transitions to \u2018highly profitable business\u2019<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"
\nits Enivo pump and catheter, which are key components of its new Enivo Tissue Apposition Platform, designed for dead space management.<\/p>\nPositive results for Myriad in new study<\/strong><\/h2>\n
US a key target market<\/strong><\/h2>\n
Strong growth, profitability & support<\/strong><\/h2>\n