An Auckland-based company that makes a wound healing product from sheep guts is set to join the ASX biotech ranks next month following a $45 million initial public offering.
Aroa Biosurgery Limited made $NZ22 million ($A20.5 million) in revenue in the 12 months to March 31 selling its Endoform soft tissue regeneration platform, which acts as a scaffold for new cells to grow.
“We isolate this very specific layer from the sheep, it’s something called an extracellular matrix,” said Aroa chief executive and founder Brian Ward, who admitted he’d heard his share of jokes about kiwis and sheep.
“It’s kind of predictable,” he said. “You expect this from a New Zealand company.”
But Aroa’s five commercial products have been used by over 600 US hospitals on over four million patients on complex wounds such as diabetic ulcers, hernias and breast reconstruction.
The sheep forestomachs used in developing Endoform are a byproduct of meat processing and Aroa sources them locally.
Aroa says Endoform is 20 to 60 per cent cheaper than competing biological products, and is the result of 12 years of research and development and is backed by peer-reviewed studies and more than 10 patents.
Endoform has regulatory approval in 37 states but Aroa is primarily aiming sales at the United States, which it sees as a $US1.5 billion ($A2.2 billion) market for its products.
Mr Ward said listing on the ASX rather than the hometown NZX was obvious.
On the Sydney exchange it will join the likes of Polynovo and Avita Medical, which make somewhat similar synthetic products that work as a regenerative scaffolding for healing wounds and burns.
Aroa has been partnering with NASDAQ-listed Tela Bio of Pennsylvania, US, which exclusively sells Aroa licensed products.
Aroa’s offering, managed by Bell Potter Securities and Wilsons, values the 140-employee company at $225 million.
Forty million new shares will be sold, raising $30 million, and existing shareholders are selling off $15 million.
The IPO will be the ASX’s biggest so far this year, in what has been a quiet year for new listings amid the pandemic.
The new shares are expected to begin trading on July 30 under the ASX code ARX.