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By Team Ace Investors
COMPANY OVERVIEW
Orthocell Limited (“OCC” or the “Company”) is a regenerative medicine company focused on regenerating mobility for patients by developing products for the repair of a variety of bone and soft tissue injuries. Orthocell’s portfolio of products includes a Collagen Medical Device platform, which facilitates tissue reconstruction and healing in various and orthopaedic reconstructive applications.
Striate+™ was the first product approved for dental GBR applications, is cleared for use in the US, Canada, Australia, New Zealand, UK and Europe and is distributed globally by BioHorizons Implant Systems Inc. Remplir™, for peripheral nerve reconstruction, recently received approval and reimbursement in Australia and is distributed exclusively by Device Technologies in the Australian and New Zealand markets. SmrtGraft™, for tendon repair, is available in Australia under the Special Access Scheme or participation in a clinical trial.
The Company’s other major products are autologous cell therapies which aim to regenerate damaged tendon and cartilage tissue. Orthocell is accelerating the development of its tendon cell therapy in the US with technology transfer and FDA engagement to confirm the path to the US market and prepare for partnering discussions.
On 6th September 2024, the Company announced global distribution partner BioHorizons has recorded a fast transition to the first sales of Striate+™ in the key market of Canada, following recent regulatory approval in early July. Striate+ can now be used in dental-guided bone and tissue regeneration procedures in Canada. Strong sales traction for Striate+ in existing markets has resulted from BioHorizon’s comprehensive marketing and medical education program and the outstanding 98.6% success rate observed in the Striate+ post-market clinical study. Striate+’s high-quality performance is driving BioHorizons’ pursuit of other large, attractive markets where they have established accounts and/or distribution networks. Orthocell is currently working with BioHorizons to expand regulatory approvals of Striate+ in multiple new markets.
Source – Company’s Report
The strategic partnership has resulted in significant revenue growth for Orthocell, with increasing quarterly revenue and record annual total revenue in FY24 of $6.76 million, up 30.76% from the previous year (FY23) of $5.17 million. This revenue growth is evidence that Orthocell’s products are achieving strong uptake in their respective markets. Orthocell is well positioned to drive Striate+ into global markets, with a strong cash position of $20.6mi, a focused regulatory program targeting multiple strategic markets and a global distribution partner driving product marketing and sales.
INVESTMENT RATIONALE
- Strong Quarterly Update – Increasing quarterly revenue of $1.84 million in Q4 FY24, up 14.41% from $1.61 million in Q3 FY24 and up 9.2% from $1.68 million for the same period last year (Q4 FY23). This was driven by continued growth in new product sales and its consistent contract revenue from BioHorizons. Cash receipts received from customers, inclusive of GST, for the quarter ended 30 June 2024 were $976k. This is in line with the Company’s expectations. Net cash inflow from operating activities for the quarter was $790k. Expenditure focused on commercial and R&D-related activities. At the end of the quarter, Orthocell held a cash balance of A$20.60m. Orthocell’s cash balance places the Company in a strong position to continue its strategy to expand into the USA in 2025 and continue its lodgement of international regulatory applications. Continued revenue growth from the Australian market with Remplir highlights the significant revenue potential of global markets.
- BioHorizon’s USA update – Striate+™ continues to impress with momentum building – BioHorizons completed a US product launch of Striate+ in November 2022, with a focus on supplying existing Key Opinion Leader (KOL) accounts and other major customers. Since the market launch, the BioHorizons marketing and sales team has actively promoted Striate+ at key industry conferences and various educational meetings and workshops. This has resulted in a successful ramp-up of product sold which is continuing to build momentum.
- BioHorizons Camlog EU/UK update – gaining traction and expanding into other key jurisdictions – BioHorizons Camlog is gaining traction in Striate+ sales since the recent official launch of Striate+ in Belgium, France, Ireland, Italy, Netherlands, Portugal, Spain and the United Kingdom. BioHorizons Camlog is actively promoting the use of Striate+ in the EU stating that the “product strengthens its position as a global provider of regenerative solutions for implant dentistry, meeting the needs of a large portion of clinicians.
- Remplir™ US Market Authorisation Study Update – Orthocell recently reported successful completion of all nerve repair surgeries in the Remplir US market authorisation study. Completion of the first stage enables the Company to progress with the final two stages of the study and provides further confidence that the safety and effectiveness outcomes will be consistent with the pilot study. Top-line results from this study are expected in Q4 CY24, and Orthocell remains on schedule to submit its US 510(K) market authorisation application in Q4 CY24 and progress into sales soon thereafter.
Source – Company’s Report
- OrthoATI™ is a world-leading cell therapy in development for the treatment of chronic degenerative tendon injuries (tendinopathy/tendonitis). OrthoATI can be used in both surgical and nonsurgical applications and is at the forefront of a large and increasing market opportunity, estimated to be worth >US$7.7bn and growing.
ACE’s RECOMMENDATION
The commencement of sales in Canada is further validation of Orthocell’s expanding global footprint. Its valued partner BioHorizons has executed a rapid transition from approval to first sales. This reaffirms the high-quality nature of product and partnership. Once Singapore and Brazil applications are approved, Striate+ will be available for use in guided bone and tissue repair in seven large and attractive markets and the Company will continue to accelerate approvals in what is a significant AU$1 billion annual global market.
Orthocell’s cash balance, market leading products and experienced management team place the Company in a strong position to grow product sales alongside its distribution partners, BioHorizons and Device Technologies. Orthocell is now well positioned to explore the next stage of development of the product for US FDA registration and is working with its US-based corporate adviser to identify potential strategic partners to progress OrthoATI without the need for significant investment in the near term. We recommend the stock as BUY at the closing price of $0.46.
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