Interview Questions

Introduction 

Aroa Biosurgery (ASX: ARX) is ASX’s 57th New Zealand IPO and listed with a market capitalisation of $225 million. Aroa is an Auckland-based soft tissue regeneration company that manufactures medical products from the forestomach of sheep. Its products are used worldwide to repair difficult to heal wounds like diabetic and venous ulcers. Brian Ward, founder and CEO sits down to share some of his observations of going public on ASX. 

What is Aroa and the founding story behind the company’s success?  

The company started 12 years ago. At the end of 2007, it really came out of the observation that there's this whole new field of regenerative medicine, and biological matrices were really important to provide the architecture for healing. So I had a real interest in forestomach extracellular matrices, and did some work with universities to look at that as a platform for regenerative medicine-based medical devices. And so that was really the beginning of it. I started in my kitchen with my wife helping me, and over time, moved into a research institute to start the company.
 

Regenerating sheep stomachs - how unique does that make Aroa compared to other competitors in the world?

What we're doing is we're using tissue isolated from the forestomach of the sheep. We are purifying that in a way that it can used as a scaffold to implant into people and regenerate tissue. So it's a very unique medical product - what's really interesting about this tissue is that it has some very interesting regenerative properties. It has a very open structure so cells can move into it quickly, but it's also laden with the signals that are important for healing as well. So it's a very unique technology which has a wide range of different applications.
 

Aroa means ‘to understand’ in Māori. How is that instilled within the business? 

When we first got started the company was called Mesynthes. It was a little bit technical… a little bit hard to say. So Aroa was the name that we landed on, and that's really obviously a Māori name, and it means ‘understanding’. We believe that understanding is critical to success in this field, not just of the technology but of the patients and the clinical conditions. That underpins everything we do. 
 

What was the driving force behind Aroa’s decision to list? 

We have been through a series of funding rounds with angel investors, then moving onto venture investors and then a small amount of money coming through funds. And within New Zealand, we pretty much had funding from all of the major venture investors- and that was one part of it. The other part was that we really needed to be able to access much more capital. When we looked at how to access much more capital, as in really financing the company for the next stage of growth, the options would have been private equity or an ASX listing. When we looked at an ASX listing, we felt like the company was at a stage where we had built out a really good platform for growth. And so ASX made sense to us in terms of funding that next stage of accelerated growth. 
 

Why ASX? 

For us, the ASX being a local exchange made sense. When we looked at the depth of capital, there is adequate capital to finance our type of company, but also a good peer group. We’re a life sciences company and a little bit different from your typical industrial stocks, and there's a strong peer group of life science companies on ASX. So we felt that not only would we have that peer group, but there's also analysts that follow that peer group and that is important in the aftermarket.
 

What do you think the key ingredients have been to the success to your IPO?

I think we've been patient in waiting to get listed. We've taken the time to build out the company and have done many things that we needed for that success. We've taken a lot of uncertainty out of the business, and we have a good, strong portfolio of commercial products that we're selling. It's also it's an inflection point for the company as well. We're now at a stage where the money that comes into the company will be used for expanding our commercial presence in the US. So there's some really tangible value that can be built on the back of raising capital. I think that's been a key part of it.
 

A lot of your IPO had to be done in a virtual way, which is of course the first time that that had to be done. Can you tell us how that came about, how that played out, and how the experience was? 

We decided to go public in the middle of 2019 and we’d done a lot of work getting ourselves ready for that. We did a roadshow in February and met Australian institutional investors via physical meetings. We almost got the IPO done before COVID-19 came along, and once COVID-19 hit, we paused and then meetings flipped into virtual meetings. We did a pre-IPO round during June, and then we did the IPO in July. So the meetings with the institutional investors were all done via Zoom. It worked really surprisingly well- it was incredibly efficient. Rather than having to move from office to office and have a 60 minute meeting, you now get the full 60 minutes to talk about the business. And, you know, within three days, we pretty much had most of the meetings done for each time for both of those different rounds. So quite interesting rather than going to offices, we went to people's offices at home. 
 

How is it now being a listed company? 

We're still getting used to it. I think certainly what we've seen is that we're obviously much more in the public eye. In terms of building profile for the company, that's been great. I think in terms of credibility with other parties, that's really lifted the level as well. Employees take a lot of pride in the company now being public. As we look forward, our ability to raise capital in the future has certainly increased. And, you know, the success that we had at the IPO has given us a huge amount of encouragement in terms of our ability to raise capital in the future. So I think it's a great change, and it's exciting.

What advice would you give to anyone who is considering to go through the IPO process and become a listed company?

I think, taking their time, getting to a stage whereby the company has a lot of certainty about what the future looks like- I think that's helped and set us up well. Secondly, bring in good advisers. We had very good advisers, and we appointed a new director who had considerable experience listing companies. Take some time to work your way through the process of becoming public. I was surprised by the length of those timeframes, such as getting your financials in order, writing the prospectus etc. It is a journey. There's quite a lot of detail that needs to be sorted out. 

I'd like to think we've retained a lot of the things that we had as a private company, in terms of how we operate. There's some disciplines that are imposed by going through that public company process and I think a lot of those things are good. So obviously, around governance, HR, shares and stuff like that - there's quite a few things that come out of it that are good.