Aegros pockets license from TGA and flags capital raising, as it aims to disrupt the $19bn plasma market

Unlisted company Aegros is set to disrupt the global plasma market using its patent-protected process, HaemaFrac.

An innovative bio-pharma company based in Sydney is about to tap investors for fresh capital, after promising to disrupt the US$19B global plasma market.

Unlisted Aegros is set to become one of only two companies allowed to manufacture therapeutic plasma in Australia, after being granted a license from the Therapeutics Goods Administration (TGA).

The company will now embark on a bookbuild to fund a shortfall in its convertible note program, with investors now being invited back to participate in the issue at $2.30 per share.

The shortfall of funds is due to Aegros buying back the convertible notes that were issued in October last year.

Investors will also be given one $2.30 option expiring in March 2023, for every share that they have applied for.

In October, the TGA granted Aegros a license to manufacture hyperimmunes for clinical trials using the company’s unique, patent-protected HaemaFrac process.

With this good manufacturing practice (GMP) license secured, Aegros is the country’s second fractionator alongside giant CSL, which is currently the sole fractionator of Australian plasma using a decade-old technology.

Using its unique HaemaFracprocess, Aegros has successfully devised an alternative method to produce hyperimmunes that could disrupt the existing therapeutic plasma market dominated by CSL, and companies such as Takeda and Grifols.

Aegros is also about to begin trials on its first product called the Covimmune, a Covid-19 hyperimmune produced using the HaemaFrac process.

It aims to put Covimmune on Australian shelves as early as Q2 next year, with trials and associated stability studies currently being rapidly progressed.

To support these initiatives, Aegros has now reached out to investors to participate in a private placement of ordinary shares at $2.30 per share with an attacehd free $2.30 share option.

Aegros’ unique HaemaFrac process

Current fractionators are using a process evolved from the original Cohn process developed by Dr. Edwin J Cohn, first used to treat US servicemen attacked in December 1941 at Pearl Harbor.

While improvements have been made the backbone of this process has remained the same over the ensuing 75 years.

Over the last 30 years, Aegros has developed its HaemaFrac process which enables it to fractionation all the human plasma products, including Albumin and IVIG.

The HaemaFrac separates in a single step using electrical charge across a membrane, compared to the existing multiple step processes. This significantly increases process yield while reducing both capex and opex.

Production costs for pharma companies generally represent 10% of the selling price, but in the case of plasma fractionators, production costs represent 50%. The HaemaFrac produces plasma products more in line with the general pharma cost structure, providing Aegros with a significant cost advantage.

The granting of a GMP license is a significant milestone, not just for Aegros, but for the therapeutic plasma industry globally, as it’s the first regulatory approval for a new capture step of immunoglobulins in the last 90 years.

As noted above the HaemaFrac fundamentally disrupts this industry as it reduces the manufacturing cost by over 50%, while effectively doubling process yields to over 85%.

It also offers a number of other advantages including additional viral safety, reduced process time and a significantly reduced environmental cost.

It’s estimated that CSL produces its products based on 5,000 liters of blood, whilst Aegros can use as little as 20 liters. This is important when fractionating small volumes such as convalescent plasma.

This, Aegros believes, is a game-changer that could produce products faster at a much cheaper cost, potentially disrupting the $470m Australian and $19B world market for therapeutic products right away.

The TGA approval of a GMP registration also means an internationally recognised regulatory body has reviewed the production process – which provides HaemaFrac with a regulatory validation potentially enabling the replication of the process in other countries.

Path to revenue

The revenue potential for Aegros could be huge, as there is a shortage of therapeutic plasma products worldwide.

In Australia currently, there has been a steady decline in our self-sufficiency of plasma over the last decade, driven by an inability by CSL to increase their process yields.

100% of the plasma collected by Lifeblood (Red Cross) in Australia is given to CSL to process, under an agreement managed by the National Blood Authority (NBA).

According to the NBA’s annual report, in 2020 CSL charged the NBA $426m to provide these products, with a further $44m provided by Grifols.

As part of its agreement with the NBA CSL charges an additional $42m to process free Lifeblood supplied plasma compared to products supplied using its overseas plasma.

This is but the first cost the HaemaFrac can save the NBA.

As part of its MMI (Modern Manufacturing Initiative) grant application, Aegros has received letters of support from both the Queensland and NSW governments to build a 1m litre HaemaFrac facility in either Queensland or NSW.

If successful, the $70m grant application could result in a $45.5m grant from the Federal and State Governments, with $24.5m to be funded by Aegros.

Overseas, there is also a shortage of therapeutic plasma products, which is particularly prevalent outside of the First World markets.

The TGA approval will enable Aegros to supply most of these markets, with some already approaching Aegros to undertake toll manufacturing contracts, with the objective to replicate the HaemaFrac at a future time.

The company has made progress in the Middle East, where a US$65m joint venture to build a plasma fractionation plant is well advanced, with the goal of supplying therapeutic human plasma throughout the region.

In the bigger picture, Aegros intends to establish a series of HaemaFrac manufacturing points from which it can supply surrounding countries.

Aegros also expects significant sales of its COVID-19 hyperimmune product, Covimmune over the short term.

As we’ve seen, viruses like the coronavirus mutate and it takes time for new vaccines to be produced and adapted.

Aegros’ hyperimmunes meanwhile can be created in as little as 4 days using only 10 litres of infected blood, and could be the answer for 10% of the world population who can’t take vaccines.

Aegros is currently undertaking a two arm clinical trial of its Covimmune hyperimmune for Covid-19, which it expects to complete in Q1 of 2022.

LifeBlood provided the Convalescent plasma for the first arm of this trial which was completed in September this year.

There are multiple paths to revenue for Aegros – including sales of the Covimmune product and the franchising of its technology to overseas clients.

These revenues could be significant as Aegros’ technology rapidly disrupts markets around the world.

Further information on the Aegros capital raising can be found here https://ssinsight.com.au/project/aegros/

This article was developed in collaboration with Aegros, a Stockhead advertiser at the time of publishing.

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