Collagen expanding Glasgow labs amid widening losses
The Glasgow facility is being expanded
Collagen Solutions, the stem cell company, saw its shares fall sharply after it reported widening losses.
Shares closed 5.63% lower at 3.35p after it announced a £1.19m pre-tax loss for the six month to 30 September against a £1.06m loss in the corresponding period last year.
Revenue increased 14.4% to £2.23m from £1.95m, the third consecutive six-month period of double-digit sales growth, but this was offset by a 14% increase in selling & marketing costs and a rise in amortisation & depreciation.
During the period the company, whose regional headquarters is in Glasgow, landed four new contracts and began supplying 10 customers with average contract size rising compared to the prior year.
However, it said it had been affected by capacity constraints within the collagen manufacturing operation. It was also held back by the timing of delivery of development contract milestones.
The group said it remained in talks with the regulatory authorities as it bids to gain European health and safety sign-off in the form of a CE Mark for its ChondroMimetic cartilage repair technology. However, it said it remains “cautious over the timing for approval”.
Collagen said it had invested in expanding its Glasgow facility to support increased demand, while the second half will involve “delivery of additional technical capacity and space” to enable the firm to meet its anticipated financial 2021 demand both from its existing and from new supply customers, as well as to fulfil manufacturing contracts.
Chief Executive Jamal Rushdy said: “As we previously announced, we are pleased to report the third consecutive six-month period of double-digit sales growth.
“We have shown particularly strong growth from our tissue business and also are continuing to bring on new customers and contracts from our global sales team.
“Our product development teams remain focused on development projects for customers, providing a solid platform for future contract manufacturing business. Finally, we are investing in our manufacturing capacity to ensure we can continue to support future growth and we look forward to a successful remainder of the year.”