Collagen Solutions buys knee implant for ‘bargain’

Stewart White, MD of Collagen Solutions. Picture: Contributed

The acquisition of the assets and intellectual property (IP) for ChondroMimetic is the last in a string of announcements by the Glasgow-based firm as it looks to grow to a £100 million business in the next five years.

ChondroMimetic is a collagen-based implant for the treatment of small cartilage and underlying bone defects. The market it is aimed at is estimated to be worth more than $500m (£325m).

Collagen Solutions chief executive Stewart White said the deal to buy the product from its owners, Cambridge University spin-out Orthomimetics and Cambridge Enterprise, was an important next step for the company as it was the first acquisition of a medical device.

White, pictured, said: “Having established Collagen Solutions as the go to company for providing novel medical grade collagens, we were in a position to look at acquiring products that are collagen related and would give us the opportunity to not only provide part of the product, but to add value.

“ChondroMimetic is an ideal first medical device acquisition as it brings us both an established product as well as access to a portfolio of additional IP we can exploit in the future.”

The acquisition is being funded through the issue of 869,900 shares – about £100,000 at the current share price – with half of the consideration being paid now and the rest over the next two years. Royalties will also be payable to the vendors on future sales.

Analyst Mike Mitchell of house broker Panmure Gordon estimates that the total value of the deal will be “low hundreds of thousands”. He viewed the acquisition as “something of a bargain” given the background to the product.

“ChrondroMimetic was Orthomimetics’ key product and investors familiar with this space will recall Belgium-based TiGenix acquiring Orthomimetics in 2009 in a deal valuing the company at €16m (£11.75m),” he pointed out.

Mitchell said that any product launch by Collagen Solutions based on the acquisition was some way off as a number of regulatory and manufacturing challenges would need to be navigated.

“But we consider the market opportunity to be attractive, playing well with respect to population demographics and increasing demand for effective early interventions which avoid or reduce the need for more expensive treatments in later life.”

Ian Harris, director of Orthomimetics, said Collagen Solutions “had the resources and knowledge-base to see ChondroMimetic build on its early promise”. Earlier this month Collagen Solutions said one of its long-term clients had gained US approval for a new device that makes collagen products easier to use. In September it was chosen to take part in a €4m European research project aimed at developing new treatments for Parkinson’s disease.