This listing should be a winner IMO. Keep an eye on it. Ill be...

This listing should be a winner IMO. Keep an eye on it.

Ill be looking to get in at some point today!!

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Regeneus extracts stem cells from fat tissue for orthopedic surgeons and sports physicians, who then re-inject the cells into joints or tendons to aid recovery. Photo: Nic Walker

IPO watch

Jake Mitchell

Regeneus is hoping to capitalise on a golden run for healthcare stocks, as the regenerative medicine company eyes a $10 million float and listing on the Australian Securities Exchange.

Sydney-based Regeneus provides services extracting stem cells from fat tissue for orthopedic surgeons and sports physicians, who then reinject the cells into joints or tendons to promote recovery.

The company is hoping to raise $10 million, the minimum subscription, at 25¢ a share, and is able to take a further $2 million in oversubscription.

If $10 million is raised, new shareholders will control 22 per cent of the company, meaning the market capitalisation will be $45 million.

The timing of the float is opportunistic as ASX-listed healthcare stocks have surged by 40 per cent over the past year.

An investment in Regeneus would be speculative, considering the size of the company and its earnings record.

The company is yet to turn a profit and lost $3.6 million in the first half of financial year 2013, after losing $3.2 million in the prior 12 months.

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No further raising planned

Biotechnology companies are notorious for burning through cash, but Regeneus claims it will have enough funds after the float to last two years, with no further capital raising planned in that period.

“We had to increase our cost base to grow the business, but spending is not likely to continue to increase at this rate,” said Regeneus executive chairman John Martin. “We would only look to raise capital within the next two years if a very exciting opportunity came up.”

The company’s main source of revenue is licensing and service fees realised each time its treatment is performed by a medical specialist.

Medical practice Sydney Sportsmed Specialists introduced the Regeneus HiQ cell treatment into commerciality in 2011.

Regeneus technology is also used to treat domestic animals.

Unique service
It is the only Australian company of note focusing on the extraction of stem cells from fat tissue for therapeutic use.

The more traditional source of stem cells is bone marrow, an area that Mesoblast, the major ­­ASX-listed stem cell play, already focuses on.

Mr Martin is a lawyer and has specialised in advising and working with emerging companies for the past 12 years.

He previously served as chief executive of Babcock and Brown Communities, a retirement village operator, before it was bought by Lend Lease in 2009. The company’s chief executive is co-founder Graham Vesey.

Professor Vesey has a long history in biotechnology, founding microbiological testing provider BTF in 1999.

French multinational BioMérieux bought BTF in 2007.

Regeneus made headlines last year when The Daily Telegraph published an article detailing how National Rugby League player Anthony Tupou underwent stem cell therapy treatment in the off-season to regenerate cartilage in his knee.

Mr Tupou credited the Regeneus HiQ cell procedure with saving him from an early retirement.

Joint-lead managers on the IPO are Sydney-based Peloton Capital and BBY Limited. Both will pocket 5 per cent of the funds raised, as well as a 1 per cent management fee.

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The Australian Financial Review

Regeneus raising targets $10m

The Australian

19 August 2013

STEM cell firm Regeneus is seeking to raise $10 million in an IPO, valuing the Sydney-based outfit at $45m.

"We are not a poor man's anyone -- we have our own story," Mr Martin said, adding "There's no doubt Mesoblast has done a good job priming the Australian market about stem-cell therapies."

In the first non-device biotech listing in more than two years, Regeneus principals are seeking to raise $10 million in an IPO, valuing the Sydney-based human and veterinary therapy outfit at $45m.

Regeneus has developed treatments for osteoarthritis and other inflammatory conditions such as tendinopathy and ligament injuries, based on a patented method of extracting mesenchymal stem cells (MSCs) from the patient's own fat tissue.

The group's human therapy, HiQCell, is being used in three medical facilities in Sydney and one on the Gold Coast, with more than 700 joints in 335 patients treated so far.

Regeneus also sells two products, AdiCell and CryoShot, to treat similar musculoskeletal conditions in dogs and horses.

Mr Martin said osteoarthritis, which was incurable, usually resulted in the need for a hip replacement. "There's a real treatment gap," he said.

On the vet side, one in five dogs suffer from osteoarthritis and are usually put down.

Because the human therapy is autologous -- only the patient's own cells are used -- approval is not required from drug gatekeepers such as the local Therapeutic Goods Administration and the US Food and Drug Administration.

However, CryoShot, an off-the-shelf product using donor cells, requires regulatory approval for veterinary use.

The raising is partly aimed at securing registration for CryoShot in the US and Europe, as well as rolling out more HiQCell processing labs and day surgeries in Australia, Singapore and Britain.

According to the prospectus, Regeneus lost $1.7m in 2010-11, $3.25m in 2011-12 and $3.6m in the six months to December 2012.

Mr Martin said the company did not expect a "rapid increase" in costs and had the "necessary resources to kick on to the next stage".

Founder and chief executive Graham Vesey owns 14 per cent of the company on a pre-diluted basis. The board includes veteran biotech director Roger Aston, who is chief executive of Mayne Pharma and sits on a number of biotech boards.

Mr Martin said management was happy with the level of interest in the raising, mainly from specialist fund managers and wealthy individuals.