Soft tissue regeneration company, Aroa Biosurgery, is set to list on the ASX at the end of the month. The company is looking to raise $45m at an offer price of $0.75, ultimately giving the Auckland-based company a proposed market capitalisation of $225m.
Aroa’s technology is centred around soft tissue regeneration and the complex wound market to improve quality and healing time in wounds and soft tissue reconstructive surgeries. The ‘complex’ wound market is the focus of Aroa’s ‘Endoform’ products, with the term defined as wounds which are generally hard to heal or take a long time to do so. Soft tissue regeneration covers hernia repairs, breast reconstructions, and reconstructive surgeries attained through trauma.
The company primarily operates in the U.S with additional plans to release additional products based on the Endoform technology. Revenue will be generated through product sales facilitated by various distributor affiliations to clients such as hospitals, ambulances, and outpatient clinics.
The company reports that ageing populations, growing diabetes rates, and increased obesity will drive demand for complex wound and soft tissue injury care. The US represents 30% of the global wound care market, estimated to be US$12.35B last year and forecasted to grow to US$13B in 2020. The ‘active’ wound care segment represents an estimated US$1B of that sector.
Aroa grew their total revenue from $9.9M in FY18, to over $25m in FY20, indicating the company is achieving greater market adoption of their products. However, like most pre-IPO’s, they are still not profitable, posting a $6.1m loss last financial year. The current COVID-19 pandemic may halt elective surgeries for the short term which could be a significant concern for the company.
The company reports that they intend to use over 27% of the funds raised to repay borrowings, or NZ$13.1m. An additional $16m will go to payments to selling shareholders (33.3%). The remaining funds will be split equally across investment in expanding US sales and marketing operations, additional manufacturing capacity and capital expenditure, working capital and operating costs (10.5%), and costs of the offer itself (7.5%).
Aroa Bisosurgery intends to trade under the ticker ASX: ARX.
Bronte Moore is a business journalist at Emerald Financial whilst also completing a JD at the University of Melbourne.
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