Admedus (ASX: AHZ), formerly Allied Healthcare Group, is set to scale up manufacturing of its lead regenerative tissue product CardioCel® with its agreement to acquire an established manufacturing site from Genzyme Australasia.
The share price could well open higher on the news today.
The share purchase agreement for the site in Malaga, Western Australia, will also provide a highly skilled and experienced production team.
The transaction is expected to be completed by 31 December 2013.
“This established site is an important acquisition for us as it allows Admedus to accelerate its manufacturing capabilities in anticipation of growing CardioCel® sales over the next 12 months and beyond,” chief executive officer Lee Rodne said.
He added the acquisition gave the company immediate access to fully functional facility, the necessary equipment and trained, experienced staff.
“As a result this will accelerate our ability to increase the manufacturing of CardioCel® as market demand grows.”
Admedus is acquiring the recently completed multi-million dollar facility from Genzyme, a Sanofi Company, for a nominal price that includes all existing equipment on site.
This is fully fitted with the required clean room facilities and supporting infrastructure that will facilitate scaled-up production of CardioCel® and to meet future growth in demand for the product.
It will also provide additional facilities to support the development and commercial manufacture of additional regenerative tissue products currently in the Admedus pipeline that utilise its platform ADAPT® tissue engineering process.
Notably, the acquisition provides access to highly skilled staff to support both manufacturing requirements and new product development. The staff retained are trained in operating clean room facilities as well as experienced in producing medical products for human treatments.
The move to ramp up production of CardioCel® comes as the company made its first European sale in November 2013 after receiving the CE Mark in August that cleared it for launch and marketing.
U.S. marketing approval is expected in 2014.
CardioCel® is a regenerative tissue product currently used to repair heart deformities including repairing and reconstructing heart valves.
It offers key benefits for patients and surgeons including showing strong levels of regeneration of self-tissue without needing external stem cells or growth factors; no cytotoxicity at the site of repair; and availability off the shelf.
Importantly, its ongoing Phase II extension study has confirmed no signs of calcification, a major issue with other existing tissue products, in all five patients monitored over a five year period post-surgery.
Supporting this, no signs of calcification have been seen in a further six patients monitored over four years and eight beyond three years.
Its success opens up the potential for the development of other tissue repair product based on the same ADAPT® tissue engineering process.
Admedus is putting in place the pieces to CardioCel® and other regenerative tissue products based on the ADAPT® process globally.
With marketing approval and the first sale already made in Europe and U.S. marketing approval expected in 2014, demand for CardioCel® is certain to pick up.
This increased demand will in turn be met by the new Western Australia manufacturing site, which comes equipped and staffed.
Also noteworthy is the blue sky upside if Professor Ian Frazer and his Coridon team return a success with Phase 1 herpes therapeutic vaccine trial, an outcome that seems likely in our opinion.
Success will open up a massive market given that no cure currently exists for herpes with current antiviral drugs only reducing, but not eliminating outbreaks.
Proactive Investors continues to believe there is ample scope for Allied to grow its revenues and gain market share and have our share price target of $0.24 to $0.28 over the next six months.
Share price catalysts ahead include:
- Further results from the Phase 1 herpes therapeutic vaccine trial;
- U.S. approval for CardioCel®; and
- Further sales of CardioCel®.
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