It may sound like something straight from Frankenstein's laboratory, but a Wellington company's use of sheep gut in reconstructive surgery exposes it to a multi-million-dollar market.

After two years of research and development, Mesynthes is ready to launch a tissue substitute to replace weak or damaged tissue.

The company's first product, Endoform, which received US Food and Drug Administration approval this year, sources its patented tissue from the forestomach of sheep.

The applications for Endoform range from dealing with traumatic injury and surgical sites to assisting in the healing of chronic wounds.

Chief executive Brian Ward said the off-the-shelf product was a replacement for the traditional technique of cutting and pasting human tissue from another site.

Using animal tissue had the benefit of being a lot quicker, leaving only one wound site to deal with.

"Our technology has some distinct advantages in terms of the rate and level of vasculisation [blood flow] within the material - and that is really important," said Ward.

"It's very strong and very adaptable to a range of different formats, so that gives it some unique characteristics."

He estimates the market for the wound application product to be worth US$200 million ($254 million) a year.

But Ward said the development of a wider range of devices for applications such as hernia repair, breast reconstructions and some pelvic diseases could see it tapping into a market valued at more than US$1 billion.

"It's a big opportunity." Revenues of $40 million to $50 million within five years was an achievable goal.

Since the company received the all- important FDA approval, it has been gearing up to manufacture the product and courting potential distributors and partners in the United States.

"We don't have the resources or scale to sell on our own. We have to partner with other companies."

Mesynthes is one of 10 finalists in the University of Auckland Business School Entrepreneurs' Challenge which, if successful, would give the company access to up to $1 million in growth funding and mentoring.

Ward said any extra funding would form part of its planned expansion into the United States.

Challenge winners will be announced on Thursday.