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Harvard Bioscience looks to spin out unit in $20m IPO

Shares of Harvard Bioscience Inc. surged nearly 13 percent Wednesday after the life sciences tool maker disclosed plans to spin off its regenerative medicine device business through an initial public offering next year and give some stock to Harvard Bioscience investors.

In a regulatory filing, the Holliston company said it will seek to raise $20 million by taking public its wholly owned subsidiary, Harvard Apparatus Regenerative Technology, known as HART, which is developing parts for “bioartificial” organs such as replacement tracheas using plastic scaffolds seeded with the cells of patients needing airway transplants. Executives said they expect to complete the offering within seven months depending on market conditions.

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Chane Graziano, chairman and chief executive of Harvard Bioscience, told investors in a conference call Wednesday that it has become too complicated to manage the research tool business and clinical stage regenerative device unit within the same company.

“This spinoff will allow each business to focus exclusively on being successful in its own market,” Graziano said. After the IPO, he said, Harvard Bioscience would retain 80 percent of HART and distribute the remaining shares to Harvard Bioscience shareowners.

The plan drew an enthusiastic response from investors, who sent Harvard Bioscience shares up 49 cents to $4.28, a 12.93 percent gain on the Nasdaq stock market.

In its initial offering registration statement filed with the Securities and Exchange Commission, Harvard Bioscience estimated the potential market for trachea transplants using HART products could total $300 million a year worldwide. The company said HART initially will seek regulatory approval to sell its first products — a bioreactor and a synthetic scaffold that can be used by surgeons to create replacement tracheas — in the United States and Europe.

“We believe our products are the first to enable the application of regenerative medicine techniques to the production and transplant of complex, three-dimensional human organs like the trachea,” the company said. It said the products already have successfully been used in a half-dozen airway transplants in clinical trials, including the first transplant of a regenerated airway.

Company officials said Wednesday that David Green, currently president of Harvard Bioscience, will leave after the IPO to become chief executive at HART. Graziano, meanwhile, will continue to run Harvard Bioscience.

Robert Weisman can be reached at weisman@globe.com.
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