Collagen Solutions plc (LSE:COS) Chief Executive Officer Stewart White caught up with DirectorsTalk for an exclusive interview to discuss the trading update, the NovaBone announcement and expectations of £100 million
Q1: I believe that things are on the move at Collagen Solutions, what’s the trading update as you see it?
A1: It’s just referring back to a recent announcement. We’ve gone through a very busy period with the acquisition, we’ve tried to give focus of some of the challenges we’ve experienced in recent times. We have great engagement from a customer base, I think that’s really been echoed by the NovaBone announcement and also in our trading update. The range of obstacles that our customers have to overcome, fortunately we’re diversified enough that this isn’t a major issue for us but things like regulatory approvals, clinical trials and indeed commercial renegotiation of supply, all take time and most of this is out of our control despite the fact we’re obviously moving towards year-end etc. Just to give a feel of the range of things that we’re involved in. The good news is that all these customers are engaged, they haven’t gone anywhere, and they’re just not beholden to year-end such as ourselves.
Q2: For people who are not familiar with the company, the big news is the move to New Zealand or the activities you have in New Zealand, could you just also remind us what your market is and the size of the market you’re involved in?
A2: The biomaterials market is worth $50 million and the collagen end-user part of that is about $17 million so we’re very diversified across a range of medical devices and regenerative medicine products and one of those, is NovaBone which is also a separate announcement from ourselves. Very pleased to say that NovaBone will be associated with both Collagen and Solutions and Southern Lights and our collagen materials are used to manufacture NovaBone’s wound care and bone graft products, 2 of those products have recently received the approval in the US and so we’re looking forward to a long and commercial-meaningful relationship with NovaBone moving forward.
Q3: In terms of the acquisition integration update, what can you tell us about that?
A3: It’s very interesting for us to go through the last several months of coming together as 2 significant companies in the collagen biomaterials basin, and then to present together the combined entity to customers has really been received very well. I think everything about the acquisition is additive and complementary in terms of expediting opportunities and accessing capacity etc. but also simple things like global reach into the Asian region where Southern Lights are very strong and Collagen Solutions have been more focussed in the US and Europe so there’s some very simple things that we think will add significant benefit to the company.
Q4: Many investors aren’t clued up on the science of what you do but on a longer view in terms of the upside, is it possible in 3-5 years’ time, you could be a FTSE 250 company? Are we looking at something like that? Is that how things could pan out given the size of the market that you’re in and the technology and the demand etc.?
A4: I think we’d always like to exceed the expectations, the number we’ve stated publicly is that we would expect to be £100 million valuation by 2020. We believe that kind of reflects something like £16-20 million in revenue and EBITDA of perhaps £8-10 million and certainly we’ve got the traction and the more straight forward commercial opportunities to realise that in addition to the significant IP that we have now as a combined global biomaterials supplier. We will absolutely monetise in partnership.
