Pentracor: IPO would be a logical step – FMC among investors

Pentracor plans to bring up to 15 million euros into the company these days with the help of a bond that is to be placed with institutional investors. Investors receive 8.5 percent interest annually. The bond has a term of five years, but there could be an IPO or an exit at Pentracor before that. In an interview with our editorial team, Pentracor boss Ahmed Sheriff and CFO Sven Haevernick explain the background to their plans. Pentracor is a company unknown to investors. Who are they, what are they doing?

Sheriff: Pentracor GmbH is a spin-off from the university sector and has been operational since 2010. With our PentraSorb CRP solution, we offer a new therapeutic, extracorporeal treatment method to sustainably contain progressive internal tissue damage in patients after acute events such as a heart attack. PentraSorb CRP, CE-certified and patent-protected, is reimbursed by all health insurance companies in Germany and already sold. You want to help stop inflammation. To do this, they use CRP blood wash. Is this comparable to dialysis for the layperson?

Sheriff: Yes. PentraSorb CRP is a filter that can be used in hospitals in existing dialysis-like systems outside the body. PentraSorb CRP curbs organ damage caused by the C-reactive protein produced in the liver, i.e. CRP. The CRP is filtered out of the body. It is a dialysis-like blood wash that is already being carried out in hospitals for other target molecules. Can you save lives with your PentraSorb medical product or do you make life easier?

Sheriff: As well … as. First, of course we want to save lives, we’re talking about acute, life-threatening events. Secondly, we want to curb tissue damage and thus partial insufficiency of organs and subsequently enable patients to have a sustainably improved quality of life thanks to organs that are only partially damaged or healed – so that sequential, continuous treatments are also superfluous. PentraSorb CRP can do that. There is no drug for this application. What is the global market potential of PentraSorb?

Haevernick: In relation to Germany, the EU and North America, a market potential of around 11 billion euros has been identified, which includes the use cases of heart attack and stroke. PentraSorb CRP can also be used for acute inflammation of the pancreas and intestines, rheumatic diseases, postoperative systemic inflammatory reactions of the organism or global cerebral ischemia. The possible uses of our product are multifaceted and thus also the growth opportunities for our company. How much money has gone into the development work so far?

Haevernick: So far, we have invested almost a double-digit million euro amount in the development work. That was done with equity. On the one hand, Pentracor was able to attract renowned investors, on the other hand, the management is committed. In addition to a heart attack and stroke, you mentioned other possible uses for PentraSorb. How long does it take from the declaration of intent to use in these new areas of application?

Sheriff: We are already active in the other fields of application, corresponding studies are underway. A general answer is not possible, but I will say three years as a rule of thumb. Is an IPO the next step for Pentracor?

Haevernick: This is an option and would be a good, logical step in corporate development. So we have given our bond a possible conversion right. FMC holds around 5.8 percent of the company. Could there be a complete takeover here?

Haevernick: A sale of Pentracor is also an option and is also fixed in the bond terms. Of course, we have no influence on business decisions at FMC and therefore cannot comment on them. In any case, we are very happy to know FMC and its expertise among our investors. The fresh money from the bond should primarily be used for new studies. Where do you currently need to take action?

Sheriff: We want to finalize current studies and carry out further clinical studies, the uses for our PentraSorb product are multifaceted. In addition, we will use the proceeds from the transaction to enter the American market, expand production, as well as marketing and sales. As you said, there are also plans to expand production. Where should it go? And what do the current capacities look like?

Sheriff: Meanwhile, we have a production capacity of 8,000 filters a year, which we implement in our own clean rooms at the company headquarters in Hennigsdorf near Berlin. In cooperation with external partners, the number will be around 40,000 in 2025. From 2022, you expect black numbers and profit margins of well over 30 percent. Isn’t that really ambitious?

Haevernick: We have a product already on sale. With the proceeds from the issue, we will initiate a large-scale roll-out. There is no other medical device or drug that can deliver the performance of PentraSorb CRP. The development of an alternative, pharmaceutical therapy approach is very unlikely and expensive and would take around 10 years. Our innovation is reimbursed by all health insurance companies and is scalable. So our plans are rather conservative. Your product is currently in use in six hospitals, where do you want to be at the end of 2020?

Haevernick: We are currently in contact with ten other institutions in Germany. The large-scale roll-out will be based on the proceeds from the bond issue. How do you approach the sales topic?

Haevernick: We will work with our own sales in Germany and will primarily be active outside Germany through license sales. Do health insurance companies pay to use PentraSorb?

Sheriff: The use of PentraSorb CRP is reimbursed by an additional fee from all health insurance companies in Germany. Pentracor and Corona. Could that fit?

Sheriff: SARS-CoV-2 knows no boundaries and obviously fits everywhere. But to the core of your question: In the Corona case, PentraSorb CRP could be used therapeutically and could, in particular, stop the destruction of the lungs and thus save human lives. I’m talking about the therapy for COVID-19, not a vaccine against SARS-CoV-2. But how long it takes for a vaccine to be available is questionable and, by the way, whether there will ever be one. So we are also concerned with this topic and we are having discussions about it.

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