Auckland-based medical technology company Aroa Biosurgery appears to be firming up plans for an Australian Stock Exchange listing.
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The startup makes a wound-care product - a kind of artificial skin or "bioscaffold" which helps surgeons deal with serious tissue injuries - and has around 120 local staff, plus another 30 through a product-development partnership with a US company.
Late last year, chief executive and co-founder Brian Ward told the Herald his company would seek to raise "tens of millions". His preference was to list on the ASX rather than NZX. He saw the Australian bourse as more fertile ground for medtech listings.
The AFR reports stockbrokers Wilsons and Bell Potter have now been appointed for a pending ASX listing. The IPO will reportedly seek Aroa seek A$50 million at a A$300m (NZ$311m) valuation.
Potential investors were told at a Tuesday briefing that Aroa is ebitda-positive, the report says.
Ward kept things general when approached by the Herald this morning, offering only, "We have been very open over the past year that Aroa is experiencing growth and will be looking at options to raise further capital in 2020. No decision has been made on the final form of any capital raising. We will continue to investigate options for raising capital and will update the market accordingly."
Earlier, the CEO said Aroa made a maiden profit "in the single-digit millions" for its 2019 financial year on revenue that increased 118 per cent to $24.2m.
While a A$300m valuation would equate to some giddy multiples on trailing financials (24x revenue and perhaps 100x profit), brokers spruiking Aroa can point to another hot Kiwi medtech with similar early stage financials: Volpara - which after a muted start on the ASX has recently been on a bull run, reaching a market cap of A$390m.
Volpara boss Ralph Highnam said before his company's IPO that Australian investors had more risk appetite for medtech startups.
Ward had predicted revenue would double in 2019 - with the key catalyst being his company regaining full control of its signature product.
Between 2011 and 2014, US healthcare company Hollister bought global distribution and marketing rights to Aroa's Endoform wound-care solution.
Last year, Aroa bought back control. Ward would not put a value on the deal, but did allow that his company had to pay "considerably more" to buy back marketing rights.
Aroa's current share register includes a who's who of the New Zealand venture capital scene including Phil McCaw, Sir Stephen Tindall, Movac and NZVIF.
Volpara man joins Aroa board
Just before Christmas, Aroa made another step towards its major capital raise by appointing Australian John Diddams to its board.
Diddams is also a director of Volpara, and Aroa chairman Jim Mclean was not shy of talking up the Australian's experience in managing secondary capital raisings and IPOs.
"Aroa continues to grow strongly and is considering its options for a possible IPO and capital raising in 2020, as it looks to grow to the next level of scale, consolidate its footprint in the US, broaden into other markets and introduce new products," Mclean said. as Diddams appointment was announced.
Aroa's Endoform wound-care solution was developed in partnership with US company Tela Bio.
Ward said Endoform attracted a patient's cells, helping to heal a surface or internal wound. Over time, the Endoform "bioscaffold" was completely replaced by the patient's own cells.
Last year, as the same time it bought back marketing rights, Aroa teamed with a second US company, Hydrofera, to form a joint venture called Appulse for marketing to North America. The joint-venture recently hired five more people as it opened an office in San Diego. The JV's sales staff now number 30.
Ward said the two companies have complementary products.
Aroa has also recently gained regulatory approval in Europe and is looking to expand into that market, plus Asia.
"Our products have now been used in well over five million applications in the US for complex wounds and soft-tissue surgery. With a growing weight of supporting clinical evidence, we are very well placed to scale up in what is globally a $5 billion per annum, addressable market," he said
Aroa is beginning to pursue incremental growth from outside the US.
In the last year alone, the company has seen rapid growth off a low base in Germany, Austria, Thailand, Canada, Jordan, India and South America, and has further distribution agreements in the pipeline, the CEO said.