While Orthocell Ltd (ASX: OCC) has captured the majority of the market's attention in the biomedical sector recently, there's another company that has also been exploding in price. Its shares have risen 19.3% today to trade at 6.8 cents while it is up 106% over the last two-and-a-half weeks.
Tissue Therapies Limited (ASX: TIS) is a micro-cap company that is developing treatments for acute and chronic wound healing applications, with a particular focus on chronic skin ulcers and burns through its VitroGro ECM product.
This morning, the company announced that it was changing its strategic plan to develop VitroGro ECM as a pharmaceutical for wound healing. It will concurrently seek approval from the Food and Drug Administration (FDA) in the United States as well as the European Medicines Agency (EMA).
It said: "After a detailed assessment of the market opportunity and regulatory risk, the Board has concluded a pharmaceutical pathway offers the most attractive outcomes for VitroGro and TIS (Tissue Therapies) with a lesser level of approval risk."
It added that a meeting with the FDA for guidance on development and review is now being sought as a priority given the business opportunity in the US market. The company must also seek a development partner which it sees as a "critical priority" which could also allow the group to target new valuable opportunities and markets.
With a market value of just over $20 million, Tissue Therapies could generate substantial returns for shareholders if its products can continue to gain traction in the global market, although it is by no means a risk-free prospect.
When you invest in the biomedical or biotechnology sectors, you must acknowledge the risks associated with lack of funding (Tissue Therapies remains cash flow negative, as confirmed yesterday); technological advances and bad trial results. Indeed, even bigger companies such as Sirtex Medical Limited (ASX: SRX) and ResMed Inc. (CHESS) (ASX: RMD) have found this out the hard way.
As such, investors looking to make a speculative investment should only ever invest an amount they can comfortably afford to lose whilst ensuring they maintain a diversified portfolio at all times.
