Collagen Solutions plc (LSE:COS) CEO Stewart White caught up with DirectorsTalk for an exclusive interview to discuss their Southern Lights Biomaterials acquisition and their outlook for 2015
Q1: How are things going at Collagen Solutions? We’ve spoken quite regular in the past, are there any updates you want to tell the market about?
A1: Yes, the largest and most obvious would be the acquisition of Southern Lights Biomaterials, this has been very exciting opportunity for us to partner with a company that has been in existence for a good ten years and has a great reputation for collagen biomaterials and also the pericardium supply.
Q2: For those who don’t understand the science, what does the acquisition company do and how is it going to help you in terms of your existing business?
A2: Like Collagen Solutions, Southern Lights supply collagen biomaterials to the medical device and regenerative medicine industry. Everything about this acquisition has been complimentary and additive, we have a very motivated team in New Zealand with expert market knowledge in addition to an additive customer base, this also gives us longitudinal reach into Asia which we’re very excited about. Southern Lights themselves have a significant customer base there that we’re looking forward to gauging with.
Q3: So you’ve been partnered and working with this company for a while now?
A3: Yes, the collagen space in terms of players is not massive but the markets are very attractive so in terms of companies that are active in this space, we think we know most of those companies and Southern Lights are quite additively justly located in our country, New Zealand, which is one of the safest sourcing assessments for medical grade materials such as collagen and pericardium so the advantages of this acquisition are many.
Q4: I presume you’ll be building up your air miles or have been building up your air miles in the run up to this deal?
A4: A little bit, yes. One has to go do due diligence in New Zealand which is always a very nice place to go but in terms of the opportunity for the business, it really is significant.
Q5: You were speaking about Asia but what about the American market, are there inroads you can make there as well?
A5: Absolutely. After Asia, the customer base for Southern Lights that’s the next biggest market for them. We already have our own facility in California as Collagen Solutions so there’s many aspects to this that are complimentary in nature. Just simple things like being able to hold a range of samples of the Southern Lights materials local in California so we can get them into the hands of customers quicker is a very simple thing but what that gives us is the opportunity to have a wider customer base and a much higher touch on customers than we had before.
Q6: You’ve made the acquisition now, is that it for the time being? Are we going for a 2015 organic growth for your company?
A6: Certainly, an acquisition of this size is not a small thing for us. We did do significant forward planning in order to manage the in configuration so that’s going to fill our time for the foreseeable future.
Q7: In terms of the outlook for your sector, is it still a much of a growth area as it appeared to be last year? What’s the prognosis on that front?
A7: Yes, I think despite some issues in the sector around reimbursement in the US, I think it’s been very positive and one of the things would point people to is the floatation of 25% of Innocoll’s stock on NASDAQ. Certainly the interest in the space we operate in around biomaterials and medical devices is absolutely there and the interest that we’re seeing from customers large and small across the globe is not going away so we’re very excited about the opportunities and we’ve been working on some existing opportunities for quite some time and look forward to telling the market at the appropriate time.
Q8: From a layperson’s point of view, is it right to say that there’s a connection between your area and also just biotech as a whole being a hot sector in the stock market?
A8: I think so although I’d never describe us as biotech but certainly in the life science sector, I think there’s a necessity of invention around personalised medicine and I think what we do by supplying functional materials that can add value and add efficiency to existing therapies and products is something that is certainly coming to the floor.
