A few days ago, the small regenerative medicine company Aziyo Biologics reported to the SEC that it had raised $12 million, just as it was in the process of buying out a small, Georgia-based company called CorMatrix Cardiovascular.
The deal put together some very familiar faces in the regenerative medicine world with close ties to Osiris Therapeutics, one of the pioneers in regenerative medicine which has been struggling to restate several years of earnings — a struggle that spurred Nasdaq recently to kick the stock over to the Pink Sheets.
The soon-to-depart head of the California Institute for Regenerative Medicine, C. Randal Mills, is one of the directors at Aziyo, according to their SEC filing. He was CEO at Osiris for 10 years, and in 2013 he handed the reins to Lode Debrabandere, who abruptly departed from Osiris in February, 2016, as the accounting mess began to heat up and after its auditor pulled out citing its unreliable numbers. The stock was being decimated in the process, dropping 40% in a matter of weeks.
Now, Debrabandere is CEO at the privately held Aziyo.
Backed by New York equity firm HighCape Partners’ Kevin Rakin, Aziyo was a spinoff of a nonprofit group called Tissue Banks International. With funding from HighCape as well as Deerfield, Aziyo started out with TBI’s musculoskeletal division in late 2015, looking to commercialize the work. That’s when the chairman of TBI, C. Randal Mills, joined the board at Aziyo, 18 months after he was named chief of CIRM, a taxpayer supported effort that has invested billions in stem cell research work.
Early last year, Debrabandere was forced to take the defensive as Osiris was hit with a short attack on Seeking Alpha. That followed the December 14, 2015 resignation of BDO. According to an SEC filing:
BDO advised that their opinion on the effectiveness of the Company’s internal controls over financial reporting as of December 31, 2014 should no longer be relied upon due to management’s identification of a material weakness in internal controls over financial reporting related to the timing of revenue recognition under certain distribution contracts.
Mills has said he’ll be leaving CIRM at the end of this month, a little more than three years after taking the helm. CIRM’s future is uncertain as criticism builds over the lack of much tangible success in developing new stem cell therapies. Osiris has restated its 2014 numbers and is now working on finishing that task under a new CEO.
Aziyo’s Debrabandere, though, says that company is just getting started.
“Since Aziyo Biologics was created late 2015, we have focused on creating a new breed of regenerative medicine company,” Debrabandere said in a statement after the CorMatrix deal. “Our goal has always been to take leading edge research and science and make it commercially viable. By combining our existing manufacturing, commercial and research capabilities with the CorMatrix people and products, we have made a huge step towards that goal, literally overnight.”
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