Collagen Solutions ‘is on target’ as it narrows first-half loss to £1m
BIOMATERIALS manufacturer Collagen Solutions has declared it is on track to meet market forecasts for the year as it booked a first-half loss of £1.06 million.
The Glasgow-based firm said pre-tax losses narrowed from £1.38m for the same period last year in its interim results for the six months ended September 30, 2018.
The company highlighted new distribution agreements in Europe and Asia and the progress of restructuring its New Zealand operation, which is seeing it consolidate manufacturing in Scotland.
While one significant Asia Pacific contract has ended, sales in North America have grown by 86 per cent to £1.45m.
Jamal Rushdy, Collagen chief executive, said: “We are very pleased with our commercial and financial results in the first six months. Revenue came in at £2.1m, representing 13% growth.
“The reason that is significant is that it is inclusive of a contract termination we talked about last year of a South Korean customer supply agreement.
“That agreement has expired until they are ready to re-order again, so, despite that downturn, we grew by 13%.”
He said: “If you take that out we actually grew 55%, so the commercial organisation has done a fantastic job of not only sourcing deals but executing on prior opportunities that we had in the pipeline for a while and we see a lot of new business coming through.”
Nine new customers against eight for the same period last year is the company’s best batch of new deals over six months to date.
Mr Rushdy said: “The other headline is that we are happy with new business initiatives.
“On the tissue side, we have diversified our tissue species. We now offer different types of tissues. That has helped drive some of the new accounts we’ve got.”
He said that “because of the long cycle of getting a new tissue customer on in terms of validation and so forth we expect that more new business will come through at the end of this year and more so into next year”.
The final submissions on Chondromimetic, the company’s collagen-based implant for the treatment of small cartilage and underlying bone defects, are due for market approval.
Mr Rushdy said: “We’ve been in consultation for a while so we don’t expect any surprises. We will see.”
He added: “Financially, from a revenue perspective, we are on track, from a margins perspective, we are actually a little ahead of where we thought we were going to be, as we are with cash.
“Revenue, margins and cash have all come together to put us in a very good position for the first six months and a good position for hitting our expectations for this full year.”
The North America results came after a sales push.
Mr Rushdy said: “A lot of the deals we’ve been working on happen in the North American market – in fact most of the development deals – and these will then translate into contract manufacturing out of Scotland to supply the North American market once those products get approved, so it has been a focus of ours to grow North America.”
Hilary Spence, Collagen chief financial officer, said: “We want to be part of Scotland’s life sciences aspirations and we are very much hooked into growing the business in Scotland. It’s great for the Scottish economy.”
Collagen was initially formed as part of Glasgow sausage skin maker Devro in 2008, and develops, manufactures and supplies medical grade biomaterials for research, medical devices and regenerative medicine.
Shares closed up 1.5% at 3.3p.
A lot of the deals we’ve worked on happen in the North American market