Equity Mates podcast with Michael Frazis mentions OCC at 28mins (transcript) and an announcement of two new executive US appointments from Axogen who are the incumbent in the field of nerve repair.

Orthocell has appointed two experienced US-based executives, John Walker and Phillip Edmondson, to

drive the market launch and sales of Remplir™ following the expected US FDA approval in the first

quarter of 2025.

John Walker, Vice President - Sales 

Mr Walker is a high-performing sales executive with over 25 years’ experience in various senior salesforce

leadership and operational roles in the orthopaedic, primarily peripheral nerve repair, medical device sector. 

Most recently, Mr Walker was the Area Vice President and Director of Sales for USA and Europe at Axogen. 

Mr Walker was one of the highly awarded leaders at Axogen, leading the growth of nerve repair device sales. 

Mr Walker is based in Texas and will commence US launch preparations immediately. 

Phillip Edmondson, Vice President - Medical Affairs

Mr Edmondson is an experienced medical affairs and sales executive with over 18 years’ experience in various

senior medical device sales and education roles in the medical device, pharmaceutical, and biologics sectors. 

Mr Edmondson was the Senior Medical Affairs Manager and Sales Account Manager at Axogen where he

developed, implemented, and monitored Axogen’s academic program strategy. Mr Edmondson was the

primary liaison with academic institutions, Residency and Fellowship Directors, surgical trainees and key

opinion leaders (KOLs) and received multiple awards and recognition for his outstanding sales growth

performance and leadership. Mr Edmondson is based in Florida and will commence US launch preparations

immediately.

Haven't updated on OCC in a while but a few things have been announced recently. 4C, Annual report and $17M placement.

The placement followed a rise in the SP after the Singapore approval to a 52 week high of 76c. The SP fell back to the placement price (60c) after the announcement but has risen slightly. This should be all the funding that is needed.

The $7.2M loss for FY 24 should be offset by the $6.9M coming from the BioHorizons contract in FY25 and with increased sales there is potential for FY25 to be a break even year. AGM coming on the 29th Nov and will be interesting to see what outlook is provided.

Further regulatory approvals should see more SP appreciation in FY25

Quarterly Report – September 2024

Key highlights for the quarter: 

1. Orthocell achieved a second consecutive quarter of record revenue, reporting $2.03m in the September 24 Quarter 

• Revenue grew by 7.96% on the $1.88 million achieved in the June 24 Quarter 

• Quarterly revenue has grown by an average of 9.10%, compounded for the last eight quarters, following Striate+™ USA and Remplir™ AUS product launches in November 2022

• Sales growth shows clear traction with new and existing surgeons, underpinned by the excellent performance of Striate+ and Remplir in clinical practice.

2. Orthocell received first major international regulatory approval for Remplir in the key market of Singapore 

• Orthocell is in advanced discussions with an experienced international medical device distributor ahead of the Singapore market launch and first sales anticipated for Q1 CY25. 

3. Global market expansion of Striate+ continues with regulatory approval and first sales in Canada 

• Orthocell’s exclusive global distribution partner BioHorizons recorded first sales of Striate+ in the key market of Canada, after receiving regulatory approval only 2 months earlier in July 

• Striate+, for use in dental guided bone and tissue regeneration, is gaining excellent traction and growing revenue in US, Europe, UK and Australia, supported by an outstanding 98.6% success rate from the Striate+ dental implant post-market clinical study and BioHorizon’s established network of distributors and customers.

4. Orthocell accelerates market expansion of Striate+ and Remplir with further regulatory applications submitted and planned 

• With Striate+ gaining traction with surgeons in the US, Europe/UK and Australia and recently approved in Canada, the Company is accelerating market access into Brazil and Singapore with regulatory approval anticipated within 6-12 months. Further applications are planned. 

• With Remplir gaining traction with surgeons in Australia, regulatory clearance achieved in Singapore and the USA anticipated in Q1 2025, the Company is accelerating market access into other new markets with a further three applications in Canada, Thailand and EU/UK planned in the next 6-12 months. 

5. Top-line results from Remplir US market authorisation study expected in Q4 CY24 

• Orthocell remains on schedule to submit its US 510(K) market authorisation application in Q4 CY24 and progression into US FDA Approval and then sales soon thereafter.

Orthocell’s regulatory team progressed its global market expansion program and remains on track to achieve approvals in the large and strategic markets of Brazil and Singapore by the June 25 Quarter.

$17 million placement to fund US launch of Remplir™ and drive further growth 

• Funds raised are expected to fully fund the launch of Remplir into the key US$1.6 Billion US Market, along with expansion into other key markets including Singapore, Southeast Asia, Canada and the EU + UK 

• Post completion of the Placement, the Company will emerge with over $35 million in cash and will be very well funded for its global market expansion strategy which includes the pivotal US FDA product registration for Remplir expected in Q1 CY25

The Placement will result in the issue of up to 28,333,333 new fully paid ordinary shares (“Shares”) at an issue price of A$0.60 to raise $17 million (before costs). Orthocell Chair, Mr John Van Der Wielen has subscribed for $100,000 in the Placement, which is subject to shareholder approval.

Orthocell Chair, John Van Der Wielen, said: “This successful capital raise represents strong market validation of Orthocell’s growth potential and commercial strategy. This allows us to grow the USA market quicker, invest in volume manufacturing, and also speed up the progress of our promising pipeline products. The Board and I would like to welcome the new investors to the register.”

BioHorizons funds transferred to revenue

Disc: held in SM (11%) and RL (8%)

Singapore approval for Remplir. Not really new news as this was expected but suggests that approval in other jurisdictions is likely to be forthcoming. Should be a catalyst for revenue growth over the next 12-18 months.

Orthocell has received regulatory approval from the Health Sciences Authority (HSA) in Singapore, allowing the Company to commence sales of its market leading nerve repair product, Remplir™

Singapore is a strategic regulatory jurisdiction, both as a destination for sophisticated medical treatments in the region and as a regulatory gateway to other substantial ASEAN markets

Orthocell is in advanced discussions with an experienced international medical device distributor ahead of the Singapore market launch anticipated for Q1 CY25

The Company continues to accelerate its regulatory program for other jurisdictions, including the key US market, along with Canada, UK, Europe and other ASEAN markets

Remplir is gaining significant traction with new and existing surgeons in Australia and New Zealand driven by Remplir’s unique qualities that enable the reduction of damaging sutures, creation of an optimal healing microenvironment and facilitation of free gliding within the repair site during the critical healing period.

Singapore is a strategic regulatory market and can be used as a stepping stone to approvals in other ASEAN markets (e.g. Thailand, Malaysia, Vietnam, Indonesia and Philippines).

Orthocell’s global regulatory strategy for Remplir continues to progress, with the Company on track to receive regulatory clearance from the US FDA in 1Q CY25 and applications are planned for Canada, Thailand and EU and UK within the next 6-12 months. 

Another positive revenue announcement for OCC. Probably not going to have a significant impact on the SP. FDA approval for the nerve repair cuff Remplir is expected in 2025 followed by US sales likely to act as a catalyst.

A competitor product to OCC's Remplir, Nervealign is another collagen cuff for nerve repair and the company Renerve is planning an IPO in November valuing the company at $24-28M. OCC currently valued at $96M but with additional products. From their website:

ReNerve has developed a unique approach to nerve replacement products by customizing products to specific nerve replacement procedures. Products are manufactured using proprietary technology and development is in the final stages, of filing for an FDA application, with clinical studies being performed with Melbourne hospitals, Australia. Initial readouts show presentation and protection of the nerves with no negative effects.

For anyone looking to go deep there is a good but outdated article from the Royal Society on biomaterial nerve repair.

Axogen is the existing standard of care and all three use a porcine collagen matrix. They have an updated bibliography of research on their site.

Veritas published research in April 2023 on Orthocell which provides further detail on Remplir:

"Orthocell believes that Remplir’s similarity to normal human epineurium is a key differentiator to other devices in this market. The comparator devices, like Integra’s NeuraWrap or Axogen’s Axoguard Nerve Protector devices are designed to bridge gaps at the site of peripheral nerve injury, hence they are designed to be more rigid.

The absence of a fit for purpose nerve repair device in the US creates a unique opportunity for Orthocell – to bring a nerve repair device that assists the surgeons perform surgical repairs while providing consistent high-quality return of muscle function.

Bioactive: The longitudinally aligned porous channels of the inner layer of the membrane creates a bioactive chamber which maximises and guides cell growth. No competitor products promote cell growth to the same extent according to our review of the published literature."

Orthocell has achieved a second consecutive quarter of record revenue, reporting $2.03m in the September 24 Quarter

• Revenue is up 7.82% on the $1.88 million achieved in the June 24 Quarter and up 14.84% from $1.76 million for the same period last year showing clear traction with new and existing surgeons, translating to growing sales of the Company’s market-leading products Striate+™ and Remplir™

Of key importance is the expected near term FDA approval of Remplir in the US, which will open up a USA nerve repair market opportunity estimated to be worth in excess of US$1.6 billion

• Final data for the FDA approval process is due Q4 CY24, followed by the formal submission and anticipated FDA approval in Q1 2025 and progression into sales soon thereafter. 

First Striate+ sales in to Canada by BioHorizons following approval in July. Following the recent statement of aiming for 20% market share OCC have estimated that the Canadian market is estimated to be worth $60M, so potential for $12M in coming years. Still not attracting much market interest.

"Company is accelerating market access into multiple new large markets"

"Brazil and Singapore approvals anticipated within 6-12 months."

Announcement light on detail but trending in the right direction.

Record revenue of $1.84m has been achieved for the June 24 Quarter, which is up 14.41% from $1.61 million in Q3 FY24 and up 9% from $1.68 million for the same period last year, Q4 FY23.

The continued growth will see record FY24 revenue of $6.72 million, up 30.40% from the previous year (FY23) of $5.15 million, demonstrating clear traction in existing markets. 

Company spin

Orthocell aims to secure a 20% market share for Striate+, which would generate approximately AU$50 million in recurring revenue. A similar marketshare for Remplir would generate AU$255 million recurring revenue. Expansion into other markets would see an increase in these projections, demonstrating enormous growth potential for the Company in the immediate future.

Quarterly revenue has grown on average by 9% compounded for the last seven quarters, following Striate+ US and Remplir AUS product launches in November 2022. (9% p/q = 40%p/a compounded)

The reality

Last year's loss before income tax benefit was $9.4M ($6.25M after) on $1.9M from sales and $2.3M from The BioHorizons contract where annual amounts from the lump sum of $23M are transferred to revenue. This will increase to $6.9M for the next three years.

If the sales revenue increases at 30% ( 40% p/a so far off a low base) which is being optimistic then FY25 could see break even on paper. Another licensing agreement for Remplir post approval could change things dramatically (US product registration for Remplir expected in Q1 CY25). Patent life on Striate appx 10 years.

I am still puzzled as to why OCC has not gained traction with the market but I assume that they fall into the loss-making microcap ignore section for most. $20M in the bank as of the last quarter to fund ongoing development and now a third revenue-generating product launch. SP has been basically flat for the last year other than the odd blip trading in the 35-40c range. Currently at the bottom of this range and should really be topping up.

OCC to Launch Third Revenue Generating Product in SmrtGraft™ for Tendon Repair

Orthocell submits TGA application for approval to commence sales of its SmrtGraft™ Product in Australia, which is used for tendon repair and regeneration applications

Submission follows positive results from its tendon regeneration study indicating that SmrtGraft reduces the rate of treatment failure and the need for revision surgeries. All patients in the study achieved successful tendon repair, with significant improvements in pain, function and quality of life. None of the participants required further surgery for a re-tear of the rotator cuff tendon – an important finding since revision surgeries for re-tears is reported to occur in up to 57% of cases. 

SmrtGraft will be the third revenue generating product to be launched by the Company, in addition to Striate+™ (for dental bone regeneration) and Remplir™ (for peripheral nerve repair) which are already in market

While the SmrtGraft study focussed on repairs to the rotator cuff tendon, the product has the potential to be used in multiple tendon applications in addition to the rotator cuff, including tendons in the knee, hip, ankle, elbow, wrist and hands. 

Significant addressable market for SmrtGraft, estimated to be worth more than US$1.2 billion annually, with >800,000 surgical repairs of RC tendons alone completed in just the AUS, USA and EU per year

Geographical roll-out strategy for tendon and ligament repair devices in progress, starting with Australia and other key regulatory jurisdictions to follow

Held

OSX (up 10%) another ASX regenerative microcap announced a big research deal with Singaporean institutions that looks to be in direct competition to OCC’s dental striate product.

Osteopore secures lead role in Clinical-industrial Partnership with National Dental Centre Singapore and A*STAR research institutes through A$19m project, develops next generation jaw implant to access the A$1.26b dental bone graft and membrane market

Further progress on the ACL collagen rope development. Next trial on sheep for closer model to humans. Avoids hamstring tendon harvest to simplify procedure. 

“Approximately 15,000 ACL knee reconstructions are done annually in Australia and up to 200,000 per year in the United States,” 

“harvesting the patient’s tendon significantly extends surgery time, introduces donor site pain, morbidity and potentially nerve damage. Tendon harvest can result in donor-site tendon tears and/or rupture during rehabilitation, prolonging recovery time. There is also a limited amount of healthy graft tissue available, which may compromise the repair or inhibit the opportunity for subsequent repairs.”

Promising data for CelGro® collagen rope for Anterior Cruciate Ligament reconstruction
• Pre-clinical study data in rabbits indicate that a novel CelGro® collagen ‘rope’ is a viable alternative to conventional autologous tendon grafts for Anterior Cruciate Ligament (ACL) reconstruction
• CelGro® collagen rope promoted ligamentisation and exhibited tissue architecture that mimics native ACL
• CelGro® collagen rope integrated with the host bone tunnel and was biomechanically comparable to hamstring tendon autograft
• Results position CelGro® collagen rope as the potential first off-the-shelf biological device for ACL reconstruction
• In light of these results, Orthocell plans to advance development of this technology and will commence a larger animal study followed by first-in-human trials

Orthocell receives new US patent for CelGro®

~ New US divisional patent granted for CelGro®

~ Patent covers the method of manufacture of collagen medical devices and as an aid in the surgical repair of soft tissue injuries

~ CelGro® patents have been previously granted in the US, Canada, Europe, China, Japan, Singapore, Australia and New Zealand

~ CelGro® dental (recently renamed Striate+) approved for use in US, Europe and Australia

~ Global addressable market for CelGro® is in excess of >US$10bn1 and growing.

DISC: I Hold