A New Zealand biotech company is turning guts into a potential goldmine, using part of sheep stomachs to create high-tech soft-tissue healing products for humans.
Aroa Bioscience has sold more than five million of its medical “devices” derived from sheep stomachs since winning FDA approval in the United States in 2014.
Once a veterinary surgeon, managing director Brian Ward started the business in Wellington in 2008 before moving to Auckland around six years later, where Aroa is still based.
Ward worked at various medical device and pharmaceutical companies overseas before returning to New Zealand, where a nascent biotech investment scene was beginning to take off.
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When Ward launched Aroa, he attracted funding from tech investor Movac and investment firm Sparkbox, as well as backing from Industrial Research Ltd, now Callaghan Innovation.
Fourteen years later, Aroa is listed on the Australian Stock Exchange and debt-free with $62.9 million in cash. It expects its revenue to rise from $22m last year to between $34m and $37m, despite Covid disruptions to its sales teams.
The products are made from a layer in the sheep’s fore stomach and provide a platform for tissue regeneration. The material is processed and stripped but retains biological molecules that aid wound healing.
“When we started the company, there was a real interest in scaffolds for soft tissue regeneration, and the science behind it came from transplanting human tissue and using human tissue to help regenerate tissues in people,” Ward said.
“It sounds gross, but it was cadaver-based tissue in tissue transplantation.
“The big breakthrough was really that the scientists realized that certain animal tissues could be used in the same way if treated, so they removed the molecules that were triggering an immune response.
“You end up with this scaffolding that has good architecture, but it also has all this biochemistry that is conducive to building new tissue. So it sounds a bit like science fiction, but then it becomes the cornerstone of a range of different devices for soft tissue repair.
Aroa has just expanded its Auckland-based manufacturing capacity with a second factory near Auckland Airport and plans to triple annual sales to around $100 million.
Disliking the word ‘cheap’, with its connotations of poor quality, Ward and New Zealand sales specialist Cecilia Chote say the products pay off, especially in terms of time spent in the hospital or in the system. health, and faster healing time for patients.
“Current technology used internationally has been extremely expensive, making it inaccessible,” Chote said.
“So I think the best word to use would be accessible products.”
Initially, the products were designed with a simple application in mind, for diabetic and venous ulcers which are difficult to heal wounds in the elderly. Over time, the design has evolved and the products can be used for different soft tissue regenerations, ranging from hernia repair to breast reconstruction and wounds.
The company offered to help after the Whakaari/White Island eruption in December 2019, but its products were not well known at the time.
Of the 47 people on the island, 22 died and the rest were injured.
“Clinicians dealing with the White Island situation were in an unprecedented situation where they were dealing with both thermal and chemical burns. Now was not the time for them to look for other options, they had to keep things very simple with this disaster,” Chote said.
Breaking into the New Zealand market has taken longer than expected, with shutdowns limiting access to district health boards and clinicians.
The product was seen as expensive and unique, and the company needed to sit down with DHBs to explain the advancement and profitability, Chote said.
However, several DHBs across the country were now on board, seeing “phenomenal results” in managing chronic wounds that were costing the healthcare system and a burden on the patients themselves.
“The momentum is now where I would have liked to be a year ago,” she said.
Aroa aimed to become a world-leading company in the field of tissue regeneration, and not just for patients in difficult circumstances.
“These products can have a huge impact on people’s lives in terms of healing wounds, but they’re being rationed globally because they’re so expensive,” Ward said.
“So what we’ve done is make a very high quality product available at a much more affordable price so that a lot more patients can access it. And we do it globally.
Easy access to sheep anchored Aroa’s manufacturing in New Zealand and the company planned to remain based here, while continuing to expand some overseas operations, he said.
“Sales and marketing will still be based in different countries, but we can serve that. We’re used to racking up a lot of airline miles and I think that’s going to continue.