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Allied Healthcare Secures CE Mark For CardioCel® Regenerative Tissue Product

Allied Healthcare (ASX: AHZ) shares are set to rise after it received the CE Mark approval for its CardioCel® regenerative tissue repair product for repairing and reconstructing heart defects, allowing it to launch and market it in Europe.

Sales of CardioCel® to both adults and children are expected to begin in the fourth quarter of this year.

"The CE mark approval for our lead regenerative product CardioCel® is a key milestone for Allied," chief executive officer Lee Rodne said.

"As we continue to roll-out CardioCel® in different markets, we can look forward to increased revenue streams and we expect to see a significant lift in company revenue over the coming years.

"CardioCel®'s approval in Europe provides the surgeons with an important addition to their treatment in the repair of cardiac defects, and offers children and adults suffering from cardiac defects and disease a promising new technology that displays strong levels of regeneration and long term benefits,"

The CE mark for CardioCel® allows for the repair and reconstruction of heart defects including treating congenital heart disease and repairing heart valves in both children and adults.

It also offers a platform to launch additional cardiovascular products, as well as regenerative tissue products for the repair and reconstruction of other defects and diseases.

This includes vascular reconstructions, hernia repair and pelvic floor reconstructions.

Allied Healthcare Group is also pursuing approval for CardioCel® in the U.S. and anticipates approval in 2014.

CardioCel®

CardioCel® is a regenerative tissue product currently used to repair heart deformities including repairing and reconstructing heart valves.

It offers key benefits for patients and surgeons including showing strong levels of regeneration of self-tissue without needing external stem cells or growth factors and no cytotoxicity at the site of repair, thereby reducing the issue of calcification which can often lead patients to have repeat surgeries.

CardioCel® is also ready to use, off the shelf, saving time during surgery.

The company had also announced in February that a joint study with Australia's national science agency CSIRO had found CardioCel® tissue patches to be superior for seeding, growing and sustaining stem cells over current tissue products.

This offers the potential to use the ADAPT® process, which is used to make CardioCel®, to support true tissue regeneration, treating a number of diseases and conditions.

Studies using ADAPT®-treated tissue had also demonstrated positive results of tissue repair in abdominal hernia and pelvic floor reconstructions.

CardioCel® is currently available in Australia for use under the Authorised Prescriber Scheme (APS) and Investigator initiated study scheme (IIS) with six surgeons approved to use it under early access schemes.

Research Reports

RBS Morgans had earlier this month noted that securing the CE Mark for CardioCel® would increase its valuation by A$0.01. It had previously set a price target of $0.09 for the company.

It estimated that the selling price per CardioCel® is about $1,200 and that initially, 2,800 patches will be sold in the 2014 financial year. This is expected to grow to 36,000 units by 2018.

Analysis

Securing the CE Mark Approval for CardioCel® is a major milestone for the company, paving the way for it to establish cashflow through the sale of the product in Europe.

It also allows the company to launch additional cardiovascular products and other regenerative tissue products, which would further increase cashflow.

We expect shares in the company to rise today on this news.

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