Full-year 2017: what to look for

TRX has a broad portfolio of regenerative medicine products developed from decellularised human and porcine soft tissues for the wound care, orthopaedics, and cardiac markets. Since the launch of DermaPure, focus has been on expanding in the US wound care and orthopaedic markets: in August 2017, TRX acquired CellRight Technologies, providing synergistic bone regeneration technology. Full-year 2017 results will be the first to reflect the acquisition and will include five months of the enlarged entity. Sales from all three business segments are forecast to be strong (total £5.15m). We set out our underlying growth expectations below.

• Strategy:  To build a regenerative medicine business with a portfolio of products using proprietary dCELL and CellRight technology, underpinned by compelling clinical and economic outcomes to drive adoption rates, while retaining strategic and corporate flexibility with three therapeutic corporate entities.
• Full-year expectations:  The next set of results, due 19th March, are important for two reasons: i) they will be the first clean set of comparative numbers based on a December reporting period; ii) they will provide the first indication of how CellRight is performing. Overall, we have no reason to adjust forecasts.
• Integration of CellRight:  TRX moved quickly to integrate its existing small San Antonio operation into established facilities acquired with CellRight. However, we believe this was simply the initial step of what is likely to be a 12-18-month process to fully integrate management, manufacturing, and infrastructure.
• Management:  Changes at the top of TRX have resulted in Steve Couldwell being appointed CEO, having been a NED since 2013. He is working closely with Jesús Hernández to implement the correct US structure to maximise commercial opportunities. The search for a new CFO is under way; a temporary FD is in place.
• Investment summary:  TRX is building commercial momentum through three value drivers: sales of DermaPure in the US; regulatory submission of OrthoPure XT in Europe; agreement of a JV for commercialisation of woundcare and cardiac products in Europe. 2017 numbers will benefit from the CellRight acquisition, which should also hasten the time to reach sustainable profitability.