Aroa Biosurgery plans ASX listing to corner complex wound healing market

Aroa Biosurgery IPO ASX Endoform ARX Brian Ward
Aroa Biosurgery will have an indicative market cap of $225 million upon listing.

Auckland-based soft tissue regeneration company Aroa Biosurgery is set to list on the Australian Stock Exchange next month following an initial public offering aimed at raising $45 million from investors.

The offer will comprise $30 million in primary capital through the issue of 40 million new shares at $0.75 each, while the remaining $15 million will form part of a sell-down by existing shareholders.

The IPO values Aroa at $225 million upon listing and will be jointly managed by Bell Potter Securities and Wilsons.

Funds raised will be used to invest in sales and marketing, increase manufacturing capacity to meet anticipated demand and facilitate product development, cover operating costs and repayment of borrowings.

Aroa will trade under the code ‘ARX’.

Healing technology

Aroa’s technology is focused on improving the rate and quality of healing in complex wounds and soft tissue reconstruction procedures including hernia repair, breast reconstruction and surgery for trauma, limb salvage and tumour resections.

After more than a decade of research and development, the company developed its proprietary soft tissue regeneration platform Endoform as a scaffold to grow new tissue lost or damaged through disease or injury.

The product is derived from ovine (sheep) forestomach and includes a basement membrane layer and propria-submucosa (supportive connective tissue), allowing the patient’s own cells to gradually grow into the matrix to build new tissue and re-establish blood supply.

As the patient continues to heal, Endoform is replaced by their own tissue.

Wound market

Aroa’s Endoform technology is focused on the complex wound market, which targets wounds with difficult or delayed healing.

Over 3.3 million people in the US alone are believed to suffer from complex wounds, while the global wound care market was estimated in 2019 to be $17.77 billion.

This market is forecast to reach $18.7 billion by year end, at a compound annual growth rate of 5.7%.

The US is estimated to comprise 30% of the global market, with US market size estimated in 2019 to be $5.18 billion.

Commercial products

Aroa has five commercial products approved for sale in the US based on Endoform technology, which is covered by a portfolio of 10 patents and 25 pending applications across six patent families.

The products have been granted regulatory approvals in over 37 countries, including US Food and Drug Administration clearance and European CE marking.

Aroa Biosurgery Endoform IPO ASX wound healing
Aroa designs and manufactures medical products which enable surgeons and clinicians to repair serious tissue injuries.

To date, Aroa has achieved sales with more than 600 US hospitals and is on contract with major group purchasing organisations and surgical distributors.

Its products have been used in more than 4 million procedures targeting chronic wounds, hernia, soft tissue and breast reconstruction.

Aroa said its range is typically up to 60% less expensive than competing biological products and often at a small price premium over synthetic ones.

The company’s total addressable market for its current line-up exceeds $2.16 billion in the US, with an additional pipeline of new products adding another $1.44 billion.

Growth strategy

Aroa founder and chief executive officer Brian Ward said the company would be looking to grow its market into Canada, Europe and select Asian countries where it has made early in-roads.

“We have developed Endoform to deliver clinically-effective products and a strong pipeline which places our business in an ideal position for continued growth across the US and other global markets,” he said.

“We have a proprietary technology that is scalable and efficient, targeting significant addressable markets [and] we are excited to share the growth in value of the business with new and current investors as part of this IPO.”

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