Bio Curious: Nerve repair house plans to break the IPO drought

Bio Curious is renowned healthcare and biotech journalist Tim Boreham’s weekly deep dive into the complex, challenging and often inspiring world of medtech innovation on the ASX.

Renerve will seek to raise $5-7 million in a proposed IPO
The company has one approved product in the US, with two more in commercial development
Renerve plans to take on the sector leader, the Nasdaq-listed Axogen

In what would be only the second life-sciences IPO on the ASX this year, a nerve-repair company plans to list in November with the benefit of an approved product in the US market.

Currently raising up to $1 million in a seed round, Renerve plans to go to the well for $5-7 million in the proposed IPO, valuing the entity at $24-28 million.

Renerve is developing porcine collagen-based products to repair and regenerate damaged peripheral nerves and related soft tissue.

Peripheral nerves are any of the blood conduits apart from the central nervous system.

“They make us walk, run, jump and eat and they get damaged quite a lot,” says Renerve CEO Dr Julian Chick.

As is almost always the case with medical products the US is the biggest opportunity – an estimated peripheral nerve repair market of US$1.6 billion per annum – and not just because of the size of the population and the availability of reimbursement.

“In the US, there are an estimated 900,000 nerve traumas per annum – and it doesn’t help they have guns and no helmet laws,” Chick quips.

‘A Band-Aid for nerves’

Renerve’s approved, commercialised product is called Nervalign, a cuff to prevent scarring and inflammation when a nerve is being fixed.

Chick describes Nervalign, approved by the US Food & Drug Administration (FDA) in 2022, as a “a Band-Aid for nerves” that is absorbed by the body, obviating the need for further surgery.

“A few people have gone into the nerve space with just a generic version of something,” he says. “Our cuff is specifically designed around the idea that it is there for two to four months to protect the nerve and then naturally absorbed.”

Next off the rank is a nerve conduit to ensure that nerves grow in a straight line, rather than branching out like a tree. This one is applicable for small gaps of about one centimetre.

The company expects to submit an FDA approval application for the conduit in the first half of 2024, under the 510k (predicate device) route.

Graft work

But the company’s “rainmaker” product is a graft product for really damaged nerves, such as those caused by shotgun wounds.

Under current practice, either the patient’s skin is used – with unsightly results – or a frozen animal-derived material is deployed.

The grafts need to be stored at minus 40 degrees and defrosted over five to six hours – and more than half of US hospitals don’t have freezers that are cold enough.

Chick says a surgeon in Maine told him he can’t do surgery on Mondays, because there’s no-one around to thaw the product on Sundays. In some cases, patients are prepped and ready to go and then kept on the gurney for hours.

The Renerve graft can be stored at room temperature. “It will be ready to go. Like a Danone yoghurt you rip it open and they can suture it straight in,” Chick says.

‘This is a money game’

Chick says Renerve’s primary aim is to improve patient care, but he doesn’t exactly dispel stereotypes about surgeons and their financial motivations (and love of golf for that matter).

“This is a money game,” Chick says.

“Every surgeon we talk to will tell you down to the last cent what each procedure gets them.

“A Texan surgeon [he was meeting] at 11.40 am had already done 15 surgeries. He knew exactly what he was going to get paid for that day.”

Initially, Renerve has avoided having on-the-ground sales reps – they’re too expensive – and instead uses commission-only third parties.

The company’s strategy also entails accessing key hospitals and surgeons to sing the praises of the products.

“The benefit of this business will be having a portfolio of products that answers all of the surgeons’ requests, giving them all the options and convenience.”

Healthy competition

Renerve was founded by Chick and Royal Melbourne Hospital neurosurgeon Dr Alex Adamides, based on tech incubated by the venerable CSIRO.

With a PhD in neuromuscular physiology, Chick has been involved in 16 start-ups and launched four tissue products in the US.

He also helmed the ASX-listed Avexa, which tried to develop an HIV drug but eventually went coal mining in Alabama after a board ruction.

Chick is also the chairman of pot play Cann Group (ASX:CAN) and co-founded erectile dysfunction house LTR Pharma (ASX:LTP). He is a director of the latter.

Renerve aims to usurp the leading market position of the Florida-based, Nasdaq-listed Axogen, which turns over about US$200 million a year.

It’s also in the same game as the ASX-listed Orthocell (ASX:OCC), which has an approved product (Striate) for dental reconstructions.

The $90 million market cap Orthocell also has a collagen-wrap nerve-repair product called Remplir, approved here but not yet in the US. So expect plenty of industry super-style ‘compare the pair’ comparisons after Renerve’s debut.

The lead manager for the Renerve IPO is Alpine Capital, which also backed LTR Pharma’s ASX debut last year.

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decision.