[November 21, 2014]

Collagen Solutions To Acquire Leading NZ Based Providers of Medical Grade Collagen for £6 Million

Collagen Solutions plc (AIM: COS), the developer and manufacturer of medical grade collagen components for use in regenerative medicine, medical devices and in-vitro diagnostics, today announced the proposed acquisition of New Zealand based Southern Lights Biomaterials) for a total maximum consideration of NZ$12m (c. £6m) in cash and shares. The acquisition represents a logical strategic extension and complementary acquisition that provides additional security of supply of high grade collagen as COS aims to build a significant global biomaterials business.

Southern Lights was co-founded in 2003, by Geoffrey Bennett after BSE discoveries in US and Canada left a gap in the market for a New Zealand-based bovine supply chain for medical device manufacturers. It is based in the North Island of New Zealand, and benefits from the logistical advantage of being close to a readily available and consistent supply of source tissue from a country rnked by the World Organisation for Animal Health as a "negligible BSE risk" country. Operating from an ISO 13485 certified production and engineering facility Southern Lights supplies the following products:

• Processed biomaterials - mainly Type 1 Collagen, a 'rope-forming' collagen that can be found almost everywhere in the body, making it a logical choice for implantable tissue scaffolds;

• Preserved pericardium - a tough double layered membrane which covers and protects the heart from external shock, providing strength and extensibility and used for manufacturing the operational parts in bioprosthetic heart valves; and

• Semi-processed biomaterials - this primarily relates to pericardium and tendon, but to a lesser degree includes hide, bone, tendon, glands and blood vessels.

According to Collagen CEO Dr Stewart White, the acquisition of Southern Lights will further de-risk the Collagen's business model: "We see it as a logical strategic extension and complementary in nature to our existing business as well as providing security of supply of high grade collagen from a negligible BSE risk country. Southern Lights Biomaterials is established in the direct sourcing and primary processing of biomaterials, including collagen from New Zealand, whilst we focus on converting sourced collagen into higher value formulations and devices for its customers. Southern Lights' sourcing of pericardium biomaterials brings an added product and service capability to the group. The Enlarged Group will have operational activities at either end of the supply chain with other benefits expected to be increased capacity close to sources of raw material, a wider international customer base with ability to access Asia, and increased IP and know-how associated with the processing of biomaterials."

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