SolidWorld Group: Bioprinting breakthrough in the cradle of the Renaissance
Tuscany is better known for its historic cultural influence than cutting-edge medical research, but it is there that the Venetian additive manufacturing specialist SolidWorld Group has delivered a major advance in 3D bioprinting. Its new Electrospider machine is a giant leap forward in the production of viable human tissue, which promises to revolutionise many areas of medicine in years to come.
Without additional steps, the current output of 3D Bioprinters tends to be amorphous cell masses, which puts limitations on their uses. By combining multiple printing techniques, SolidWorld Group’s machine adds structure – a major step towards body-part printing, as well as a significant improvement for researchers, and medical institutions are noticing.
Last February, SolidWorld Group announced the start of production of its highly innovative Electrospider 3D Bioprinter, developed by subsidiary Bio3Dprinting’s collaboration with the “E. Piaggio” Research Center of Normale University of Pisa (the top-ranking Italian institution for sciences). Hot on those heels came the recent news of the first firm order for the €500,000 machine – to be delivered in September – from an “important hospital and medical research institute in Italy”.
3D Bioprinters reproduce tissue with a patient’s or a tumour’s own DNA, which can then be used for multiple applications, from oncology drug formulation to testing of cosmetics. The Electrospider’s innovation is the combination of commonly-used extrusion with electrospinning, which enables the reproduction of structures, rather than simple agglomerations of cells. The overall viability of the output is therefore greatly improved, which is very helpful for research/testing applications and is a significant step towards the production of actual bodily implants.
EXTRACTS FROM MEDICAL RESEARCH
“…studies show that there is a great potential to add electrospinning heads in a 3D bioprinter to make hydrogel composites for vascular grafts having superior mechanical properties comparable to native blood vessels” (Edinburgh University paper)
“With the availability of electrospinning techniques, it is possible to combine nano- and microﬁber-based structures with 3D bioprinted constructs, to obtain composite structures that have biomimetic or functional features and improved mechanical stability.” (UCLA paper – Jul 22)
“The combination of AF electrospinning with NP 3D bioprinting, an approach that has also been discussed in engineering of osteochondral tissues, 99 could improve the advantages of the individual methods and lead to the fabrication of biomimetic whole IVD (intervertebral disc) equivalents.” (Rochester Inst of Technology paper – Dec 22)
The combination of electrospinning and extrusion is being researched in other universities, but it fell to Pisa to turn the research into a commercially viable offering. It would appear that Electrospider has first-mover advantage in an area where demand is growing fast.
Although it does appear that some of the research conducted elsewhere involved setting up equipment to combine extrusion and electrospinning, we have seen no evidence of a commercial offering arising from that research. A couple of the 20-plus bioprinter manufacturers that we identified can effect electrospinning in the same equipment as extrusion, but SolidWorld assures us that there is no other offering on the market that can use the two techniques simultaneously. CEO-Founder Roberto Rizzo believes SolidWorld has a significant lead and, importantly, his team have been assiduous in securing patents worldwide.
A search for market size estimates reveals the usual clutch of Pune-based agencies touting reports for sale. Their estimates of market size are in the low single-digit billion dollars at present, rising to as much as $8bn in 2030. Swedish company Bico, which appears to be one of the market leaders – at least in Europe – reported bioprinting net sales of SKr 655m (ca. €60m) in 2022. That number does make the market researchers’ figures look high, but they may include lower-end applications, and evolution will, as ever, drive adoption. Bico talks about interest in its new bioNovaX printer being “… so high that the business area will surpass our full year sales targets well before year end”. Allied with SolidWorld’s talk of a number of institutions already showing strong interest, the order received, and initial productive capacity for 12 machines, the numbers do suggest that Electrospider could start moving the dial for SolidWorld’s €58m revenue-base relatively quickly.
SolidWorld’s current core business is the leading Italian systems integrator and distributor for 3D CAD-CAM/Printing installations. The Company also has some significant proprietary IP in this area and is establishing itself as a turnkey provider for Industry 5.0 manufacturing.
The vast majority of SolidWorld’s ca €58m 2022 sales were generated by its activity as a value-added reseller of Dassault Systèmes’s dominant CAD-CAM software (e.g all top 10 EV new entrants – incl Tesla – are customers), as well as sales of 3D-scanning and Stratasys 3-D printing hardware. Clients include many iconic names in Italian manufacturing, from Ferrari to Bulgari, and the Company has gained recognition as one of Dassault’s top group of resellers worldwide.
On top of this, SolidWorld has been developing some interesting IP of its own. Its Integr@ software platform greatly enhances companies’ ability to manage product life cycles, by ensuring project/product data can flow between – and be recognised by – various systems, eg CAD-CAM and ERP (SAP-type enterprise software). Investment in R&D for Integr@ totalled €3m, and it is being adopted by many of SolidWorld’s clients.
In addition, the SolidFactory division is positioning itself as a provider of highly advanced turnkey manufacturing projects, implementing Industry 5.0 solutions, from machine learning to additive manufacturing and advanced robotics. On the latter point, SolidFactory was recently awarded a ready-to-use contract for an Italian client’s robotic cell in China, which includes an anthropomorphic robot. In addition, SolidWorld signed a worldwide distribution agreement for Monza-based Oversonic’s Robee (pictured on Italian TV news).
Northern Italy, where SolidWorld is based, is one of the principal manufacturing regions of Europe. In addition, it would appear that a decent proportion of Italian industrial companies are moving plants back on shore or changing offshore locations, which will create opportunities.
Italy is the second industrial country in Europe, accounting for 16% of EU industrial production; this is more than 3% above its share of GDP, which is the widest IP/GDP spread among the top 5 EU economies. So, not a bad country in which to specialize in factory modernization, particularly as the trend for re-shoring takes hold. A study by Confindustria from June 2022 showed that, in Lombardy (Italy’s industrial heartland), 20% of companies that had moved production offshore are bringing it back, and a further 12.5% plan to do so in future. Notable names in the former group are Iveco buses, Bianchi bicycles, Diadora trainers and Gaggia coffee machines. Last year’s spike in energy costs may have caused some to pause for thought, but European gas prices are now well within their pre-COVID range. In addition, 17.5% of Lombard manufacturers plan to change countries for their plants, which is also significant for SolidWorld, as it is proving that it can operate for Italian companies abroad as well.
SolidWorld’s valuation is distorted by start-up costs which, stripped out, imply that the current share price is under-representing the 3D-Bioprinting opportunity.
Having spiked in the wake of the Electrospider production announcement, SolidWorld ostensibly trades on an EV/EBITDA multiple in the mid-twenties, but that doesn’t tell the whole story.
The Company could reasonably be viewed as a combination of two businesses:
- An industrial IT/3D-Printing VAR, principally active in an economy highly exposed to manufacturing, with a proprietary IP overlay and significant factory design capabilities.
- A 3D-bioprinting start-up with productive capacity and orders/interest for a cutting-edge, manifestly commercial/unique offering.
The subsidiaries don’t publish separate accounts, but the CEO tells us that, in 2017, before expenditure on the development of Electrospider got going, the EBITDA margin was in the mid-high teens, vs last year’s 7%. This would imply that, absent 3D-Bioprinting, SolidWorld’s “legacy” business would be chalking up an EBITDA not too far from € 10m.
VARs tend to trade on EV/EBITDA multiples in the high single-digits, while software suppliers gravitate more around the 20x mark (Dassault is on 25x). Given that the current EV of SolidWorld is around €120m, ie 12-13x the theoretical core-business EBITDA, it would appear that, despite the recent rally, one isn’t paying very much at all for the 3D-Bioprinting opportunity.
A lot of people (connected and not) would need to be getting it very wrong for that to make sense.
Galileo, and maybe even Leonardo, despite his fellow Florentines' quarrel with Pisa, would have approved
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Max Casini – May 31 2023
SolidWorld Corporate website
Research Coverage: Integrae SIM