Tissue Repair Ltd IPO 2021, page-157

Been meaning to do a quick dive into this company since they listed. I believe there's positives and negatives to what TRP has to offer. The tech is interesting and definitely has a place on the market, but the main thing I'm wary of is the timeline and how vague they've been about their target markets and future revenue. Excuse the length, but figured for discussions sake some might be interested in the overview (my sentiment is neutral).

In the most recent price sensitive announcement they said they have $27m cash reserves on hand, and that their planned Phase III trial is fully funded. This wording is key, they have not said all business activities (eg. the costs of commercial roll-out of the post-cosmetics). This means you can’t rule out future CRs. It will probably come down to partnership deals.

They have not launched the post-cosmetic product yet, and they have indicated that when they do, they will only be doing so in Australia first to refine their strategy before entering international markets. There will be significant costs involved in this (sales reps, marketing, manufacturing upscaling etc.) and they’re still in the process of exploring partnerships for distribution. On their website they indicate the targets of the internal sales team will be Australian cosmetic surgeons, clinics and potentially beauticians. This to me suggests it’s going to be a very small and slow rollout into a small market (Australia’s cosmetic procedures costs estimated at $341m compared to the US market at $3.4b).

They’ve given no indication of what their sales figures could look like in the launch year, or years following that. Those market values given are the costs on the procedures themselves, not the aftercare products. You could assume the market for aftercare products would be fractional, no one is going to spend the equivalent amount on aftercare products as they did on the surgery itself. So, what is the true market size that they’re targeting?? They’ve also not clarified how long this process of refining their commercialisation strategy will take, or when they plan on trying to enter international markets.

On their website they list their history timeline. Having a look at this gives you a good indication of what their future timeline could look like as well. In 2016 they began their Phase IIB clinical trials. They recruited 82 patients in the chronic wound trial. They completed this trial in 2020. Given it’s now the end of 2021 we can say it’s taken at least 1 year from completing this trial, to reaching a point where they’re still in discussions with the FDA and awaiting approval to move on to Phase III trials. Now having a look at the clinical program page on their website, they state they plan to commence Phase III in 2022 "to replicate the results of Phase IIB in a larger cohort". At the bottom of the table on that page there’s a dot point that states “Phase III powering analysis suggests statistical significance achieved at n=300-400 patients”. That will be the target number of patients they will be looking to recruit in the Phase III trial. It took them 3-4 years to complete the previous trial with 82 patients.

Realistically, it’s unlikely that a larger trial with at least 4x the number of patients will be done any quicker. Even optimistically if they recruited 300 patients in the same time it took them to recruit 82 patients, they would still be looking at 3-4 years before completing the Phase III trial. If the results are positive, they would then have to pursue a BLA with the FDA, await approval from them (which takes 6-12 months itself), and if approved move on to the commercialisation stage. Given that’s where they’re at now with their post-cosmetic, you don’t have to speculate how long that will take. Adding all of that up, if they commence the Phase III trial in 2022 and experience no delays, they’re looking at market launch of their chronic wound product at earliest around 2027 (mid-2022 start, 3-4 year trial, 6-12 months BLA, 6-12 months market rollout).

There will be milestone events announced in between, approval of phase III trial, commencement of trial, enrolment of first patients in trial.Related to post-cosmetic the announcements will include potential distribution partnership, market launch, first quarter sales, recurrent quarter sales growth.There’s also the chance of pipeline announcements with any of their future market targets. It’s going to take at least 5 years in my opinion for them to generate any significant revenue from their post-cosmetic product, dependent on when they enter international markets. Even at the end of the pipeline runway, biotechs can take many years to reach the end goalposts.

I’ll be watching TRP but will wait for further updates, especially relating to true sales figures in the cosmetics before I consider investing. Especially with the market’s recent shaky view on speculative companies that have yet to make a profit and will likely be years from breaking even on their net spend from the costs involved in trials. All of the information I’ve pulled regarding the company is available on their website and the prospect they released at IPO. Good luck to holders