US food group pumps £4.2m into Glasgow collagen firm
● Life sciences group to supply US firm as part of deal ● Investment part of a wider funding round to raise £6m
Collagen Solutions is to raise £6 million from investors, including more than £4m through a strategic partnership with a major US food group, as it aims to boost its manufacturing and commercialisation capabilities.
The Glasgow-based life sciences company announced that multi-billion dollar group Rosen’s Diversified Inc (RDI) is investing £4.2 mas part of a share offer.
Collagen has entered into an agreement to supply tis - sue to RDI’S subsidiary Scientific Life Solutions, a supplier of critical components in the bio research and biomedical products, as part of the deal.
Family-owned RD I also operates American Foods Group, the fifth largest beef processing company in the US.
Collagen, which develops and manufactures collagen-based products and biomaterials used by the medical device industry, announced the US investment as part of a funding round it hopes will raise up to £6 min total.
The life sciences firm, which is quoted on London’s junior Alternative Investment Market, aims to generate £1.8m via an equity placing and open offer at 5p per share, a premium of 23.5 per cent to its closing price on 17 May, subject to shareholder approval.
Funds raised will be used to expand manufacturing contracts, drive product development, reduce debt and commercialise ChrondroMimetic – a collagen-based implant for the treatment of small cartilage and underlying bone defects which could be used to treat arthritis.
The group is awaiting feedback regarding the status of the CE mark for the implant, which it views as a “near-term opportunity” with the potential to add significant revenue.
This comes after Collagen released a market update stating that full-year revenues are expected to come in ahead of market expectations at £4.2m, representing an increase of 18 per cent from 2018.
Chief executive Jamal Rushdy said: “We are pleased to welcome Rosen’s Diversified Inc as our strategic partner and anchor investor in this round.
“This funding will support continued growth of our core business, including our supply of collagen and tissue biomaterials as well as new product development contracts activity, providing the company a solid foundation over the next several years.
“In addition, the funding will support our launch of Chondromimetic following review and approval of the data we previously submitted to our notified body.”
Market analysts at Cenkos upgraded full-year forecasts on the back of the update, adding :“We believe this investment supports the growth we see developing in the company and significantly de-risks the near-term cash position. The momentum we see in the company supports our forecasts and ‘buy’ recommendation.”