Beaufort Securities view of Collagen Solutions: Collagen Solutions made considerable progress in the fiscal year gone by following the acquisition of Southern Lights Ventures 2002 Limited, as the latter has a strong customer base that generates recurring revenues. The acquisition comes at an exciting juncture when the company is trying to make a mark, through its fibrous collagen powder, in the field of regenerative medicine, medical devices and in-vitro diagnostics. The other advantages of the tie-up include the surety of supply of high grade collagen from negligible BSE risk sources, and IP and know-how from which strategic value may be created. In addition, the company is also paving the way for strong and long standing partnerships with its customers including Globus Medical and Novabone, by entering into several strategic arrangements at an early stage. Meanwhile, the company continues to invest in people and facilities as it expands its sales pipeline. Eyeing the above, we remain confident that the company is likely to experience significant upside and therefore reiterate a Speculative Buy rating.
Yesterday, Collagen Solutions announced its final results for the year ended 31st March 2015. During the period, the company’s revenues and other income increased to £1.04m compared to £0.02m in 2014. Adjusted operating loss without separately identifiable items widened to £689,816 from £388,269 and the pre-tax losses expanded to £947,246 from £405,229. Consequently, the basic loss per share widened to 1.17p from 1.10p. In December 2014, the company raised £5.4m though an equity placement and the net cash balances at the year end stood at £3.4m. On the operational front, the New Zealand based Southern Lights Ventures 2002 Limited was also acquired by the company and the management teams in Glasgow, San Jose and New Zealand were successfully integrated. The company won business from US-based customers including Globus Medical and Novabone, who use its materials in FDA-approved products. Beyond the period, a new patent was granted to the Sounthern Lights Biomateials for the new processing of pericardium that may provide certain benefits to the heart surgery patients. The company also received the Innovate UK Grant Award with the Electrospinning Company Limited to develop a novel bio-synthetic substance for internal wound healing. In addition, Mr Tom Hyland was appointed as Chief Operating Officer. Other board appointments during period included Mr Geoff Bennett as Chief Business Officer and Prof. Robert Brown, as the exclusive consultant and member of Scientific Advisory Board. The company will hold its AGM on 24th August 2015 in Glasgow.
