Colltech begins work on extraction plant

If Australia rides on the sheep’s back, new Perth biotech CollTech (ASX:CAU) is capitalising on what lies just beneath the golden fleece: collagen-rich sheepskin.

CollTech raised AUD$5 million from its IPO when it debuted on the ASX in February, and this week announced a $948,264 loss in the year to June 30.

It reported revenues of $218,153, comprising $105,000 from a Biotechnology Innovation Grant, and interest of $113,153 from funds on deposit from its IPO.

The company had $4.3 million cash on hand at June 30, a net increase of $3.9 million. It spent $144,907 ordering plant and equipment for its new collagen extraction and purification facility, now under construction in – where else? – Collie, WA.

CEO Michael Pixley said the company is confident of bringing the plant on line on time, and under budget – it aims to begin production of ovine-sourced collagen for sale by the first quarter of next year.

Among its operational highlights, the company listed its appointment of a sales agent for its products in northern Asia, to market its high grade collagen products to region’s cosmetic and food industries.

The company, to be known as CollTech Asia, will be owned and operated by companies associated with Taiwanese businessman Mr David Chiu, executive director of the Australian Taiwan Business Association.

Pixley said CollTech Asia is expected to generate orders for at least a third of all the collagen produced from the new Collie plant in its first year of operation.

CollTech has also secured a sheepskin supply contract through Fletcher International Exports, Australia’s largest sheep-meat processor, which processes more than 90,000 sheep and lambs a week.

The new Collie plant is only two hours north of Fletcher’s abattoir at Albany, and the company says the supply agreement has allowed it to reduce the capital cost of construction and equipment, as well as to access an immediate supply of feedstock to speed up commissioning on the plant.

Each kilogram of sheepskin pelt processed with the company’s proprietary technology yields up to 200 grams of insoluble collagen, in aqueous solution, suitable for making sausage casings, and as a bulking and binding agent in the general food industry. The company says it has already identified ready markets for the product.

The extraction process will also produce up to 35g/kg of acid-soluble collagen, which will be purified to meet the ISO 9001 quality-assurance standard for the plant’s accreditation as a GMP-certified facility. The product can be used either as food-grade collagen, or to manufacture cosmetics and ‘cosmeceuticals’.

CollTech also plans to further purify small quantities of its cosmetic-grade collagen to remove salt and pepsin residues, to produce a high-value, high-purity, research-grade collagen.

The company plans to create value from the high-purity product through collaborations with medical-device and medical products manufacturers, but says its current focus is on marketing and selling food-grade and cosmetic-grade collagen.