US Government backed loan extends cash runway

RNS Number : 6529J

Tissue Regenix Group PLC

15 April 2020

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR)

Tissue Regenix Group plc

US Government backed loan secured and trading and operational update and commentary on the potential impact of COVID-19 pandemic

US Government backed loan extends Tissue Regenix's cash runway

Leeds, 15 April 2020 - Tissue Regenix Group (AIM:TRX) ("Tissue Regenix", the "Group" or the "Company"), the regenerative medical devices company, announces that it has secured a US Government backed loan to assist with the potential impact of the ongoing COVID-19 pandemic.  The Group also provides a trading update to 31 March 2020 and an operational update on the impact of COVID-19.

US Government backed loan

A US Government backed loan of $629,000 has been agreed, and funds received, through one of the Company's banking providers to assist with overhead costs experienced in the US during the COVID-19 pandemic (the "Loan"). The Loan has a two year term and carries a 1% annual interest rate deferred for 6 months, however, under the Loan agreement, the total amount of the Loan will not require repayment if the funds are used to support employee payroll, healthcare, utilities and rent payments within the US during the next two months. The Company intends to use the funds to support these activities and therefore expects the Loan to meet the criteria and not require repayment in the future.

Trading update to 31 March 2020

Q1 revenues as at 31 March increased by 18% year-on-year, confirming no material impact on sales following the cyber security incident experienced at the San Antonio facility in January 2020. 

The Group had a cash position of £1.7m as at 31 March 2020.  The Company previously announced, on 30 March 2020, that its available cash would fund the working capital requirements of the Company until at least the end of the second week of May 2020.  Following receipt of the Loan, as well as ongoing implementation of cost saving initiatives, the Board now expects the cash runway to extend to at least the second week of July 2020.

The Board continues to be encouraged by discussions with potential investors however, there is no guarantee that any such discussions will result in near-term funding being made available to the Company. Should this funding not be forthcoming before the Company's available cash runway expires then the Board will be required to take action to protect the interests of creditors and which, if necessary, is likely to result in a material reduction in any resulting value attributable to shareholders.

COVID-19 Update

As first announced on 30 March 2020, during this pandemic, the Company implemented UK and US government-led policies in relation to the COVID-19 pandemic, and by undertaking certain initiatives, has ensured the continuation of processing functions at its facility in San Antonio, Texas.

To date, the Company continues to experience no disruption in its supply chain and there is sufficient inventory of all required equipment and donor materials, which has meant there has been no disruption to processing at this facility.

At the Company's UK facility in Leeds, where the processing of the porcine product portfolio is undertaken, sufficient inventory to meet near-term demand has been manufactured and therefore, production has been halted and technical staff furloughed until the advice from the UK Government is amended.

The continued re-prioritisation of health care professionals has led to a notable decline in the number of elective procedures undertaken at hospitals, which to date has been most evident in urogynaecology and dental applications. Timing remains unclear as to when elective procedures will recommence in a more normalised manner, however, the Company is working closely with partners and distributors to ensure that once procedures are recommenced, sufficient inventory will be available to meet demand.

As a result of these uncertainties surrounding the level and duration of disruption from COVID-19, the Group is unable to determine how long it will take to catch-up on postponed surgical procedures thereafter. Therefore, whilst sales have not been materially impacted to date, the Board is currently not in a position to provide clarity on the outlook for 2020 or beyond.  Further updates will be provided once there is greater visibility on the trading environment.

Gareth Jones, Interim Chief Executive Officer of Tissue Regenix Group, commented:

"The COVID-19 pandemic is a difficult and uncertain time for a number of businesses. However, we are encouraged by our ability to implement initiatives to address government advice and ensure the health and well-being of our employees and stakeholders, whilst continuing to process our product portfolio at our facility in San Antonio. Securing additional funds through the US Government backed loan offers a level of financial security during these uncertain times, and provides an extended cash runway, allowing for the continuation of ongoing discussions with potential investors."

The person responsible for this announcement is, Gareth Jones, Interim CEO.

For more Information:

Tissue Regenix Group plc Caitlin Pearson   Head of Communications	Tel: [phone]
Stifel Nicolaus Europe Limited (Nominated Adviser and Broker) Jonathan Senior / Alex Price / Ben Maddison	Tel:  [phone]
FTI Consulting  Simon Conway / Victoria Foster Mitchell / Mary Whittow	Tel: [phone]

About Tissue Regenix

Tissue Regenix is a leading medical devices company in the field of regenerative medicine. Tissue Regenix was formed in 2006 when it was spun-out from the University of Leeds, UK. The company's patented decellularisation ('dCELL^®') technology removes DNA and other cellular material from animal and human soft tissue leaving an acellular tissue scaffold which is not rejected by the patient's body and can then be used to repair diseased or worn out body parts. Current applications address many critical clinical needs such as sports medicine, heart valve replacement and wound care.

In November 2012 Tissue Regenix Group plc set up a subsidiary company in the United States - 'Tissue Regenix Wound Care Inc.', January 2016 saw the establishment of joint venture GBM-V, a multi- tissue bank based in Rostock, Germany.

In August 2017 Tissue Regenix acquired CellRight Technologies^®, a biotech company that specializes in regenerative medicine and is dedicated to the development of innovative osteoinductive and wound care scaffolds that enhance healing opportunities of defects created by trauma and disease. CellRight's human osteobiologics may be used in spine, trauma, general orthopedic, foot & ankle, dental, and sports medicine surgical procedures.

 

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