Coronavirus: Glasgow life sciences firm Collagen Solutions flags £900,000 hit and widening losses

Life sciences firm Collagen Solutions has warned over widening full-year losses due to supply delays and the hesitancy of customers to commit to new orders as a result of the coronavirus outbreak.

Jamal Rushdy is CEO at Collagen Solutions, where Covid-19 uncertainty has hit supply

The Glasgow company, which develops and manufactures collagen-based products and biomaterials used by the medical device industry, has flagged a £900,000 write-down due to increased costs from a development and manufacturing contract which has experienced delays.

Collagen added that this related to the development stage of the contract and that it didn’t affect its commercial view on the manufacturing phase.

However, the company cautioned that it is facing “multiple uncertainties” that may also impact year-end revenues by pushing some sales into the next financial year.

Collagen blamed economic and business uncertainty amid the Covid-19 outbreak, noting that some customers are delaying their investment decisions as a direct cause of this.

The group highlighted the detrimental impact on its supply chain as well as the difficulties in closing a number of sales contracts that are “currently in late-stage discussions”.

In a stock market update the business said: “The company expects the loss for the year will be materially greater than anticipated.

“The delivery of collagen and tissue products is at risk due to evolving government travel and transport restrictions and potential reduced capacity of import and export offices, testing services, and other aspects of the supply chain.”

Shares in the firm, which is quoted on the Alternative Investment Market (Aim), plunged more than 41 per cent in early trading on the back of the update.

Collagen is expected to provide a trading update with preliminary year-end revenue and cash balances by mid-April.

In December the group posted pre-tax losses of £1.2 million for the first half, along with improving group revenues of £2.2m.

The company, which operates from Nova Business Park, was spun out from sausage skin maker Devro in 2008 to exploit biomedical applications for medical-grade collagen.

In addition to its manufacturing base in Glasgow it also operates a research and development centre in the US.