Portland Orthopaedics to raise up to $5 million, list on ASX

Hip replacement specialist Portland Orthopaedics has joined the growing list of companies who have lodged a prospectus to list on the ASX before Christmas.

The company is planning to raise up to $5 million to expand its business from a single product focus into a multi-product orthopaedics company.

Portland was established in 1991 to commercialise the DTC hip replacement system developed by Prof Ron Sekel, from St George Hospital, Sydney. The company implanted its first hip, in Australia in 1997, and in the USA in 2000 and to date has sold more than 1500 implants in the US and Australia alone. The product also has approval in Europe, New Zealand and Israel and the company is preparing to launch into Asia and Europe via its own distribution network.

Portland has also received regulatory approval for its Equator Plus cup in the US and is expecting approval for a second complementary range of primary hip replacements, the M-COR stem system in the first quarter of 2006. A fourth product range for Portland, a total knee replacement system, is due for completion in mid-2006.

"We plan to use the capital to fund the extension of the business in the US and to allow us to build inventory for the expansion program," said MD David Sekel. "We have been working hard over the last few years to put in place our distribution network in the US and are now looking forward to being able to supply that network with our new and proprietary products."

"The global market for orthopaedics last year was estimated to be valued at US$17.9 billion, for hips and knees alone it is around US$8 billion per annum. We are well positioned to take advantage of demographic trends as individuals are at risk of requiring hip or knee surgery whether they live an active or indeed a sedentary lifestyle. Obesity is a major contributor to joint replacement as individuals who are just 4kg overweight have a high arthritis risk especially in weight bearing joints such as knees," he said.

Portland's IPO opens on November 16 and closes on December 9, with a minimum 16 million fully paid ordinary shares offered at an issue price of $0.25. The offer includes one option for every four shares subscribed. Oversubscriptions of up to a further $1 million will also be accepted. Portland is expected to list on the ASX on December 21, with a market capitalisation of $33 million.

The company has a high-profile chairman in Ronald Rowland, who served as the group managing director and CEO of Australian Pharmaceutical Industries from October 1978 until December 2000.

"We are proud and privileged to have a man of Ron's experience in the life sciences as our chairman," said Sekel. "Not only was he rated as one of the top CEOs in Australia for taking Australian Pharmaceutical Industries from a cooperative to a successfully public listed company with sales exceeding $3.5 billion per annum, he has also provided a good deal of mentoring and tutelage to emerging companies. For this he was honoured with an Order of Australia for services to the pharmaceutical industry and to the community."

Sekel said Portland's management team had extensive orthopaedic and device industry experience, and its clinical advisory board comprised eminent people in the US, including the head of joint replacement at UCLA and a professor of orthopaedics at Yale University.

Portland is headquartered and has a manufacturing facility at Matraville, in Sydney and has a US sales office in Michigan.

The financial adviser and broker to the issue is AXIS Financial Group.