Trading Update

RNS Number : 9837X

RUA Life Sciences PLC

10 May 2021

 

RUA Life Sciences plc

("RUA", the "Company" or the "Group")

 Trading Update

RUA Life Sciences plc (AIM: RUA.L), the holding company of a group of medical device businesses focused on the exploitation of the world leading long-term implantable biostable polyurathane (Elast-Eon™), is pleased to provide the following trading update ahead of the publication of the Group's audited final results for the year ended 31 March 2021, which are expected to be released in the second half of July 2021.

Highlights:

· Continued like-for-like growth in Elast-Eon™ polymer royalty income.

· Acquired business, RUA Medical, achieved minimum targets set at time of acquisition.

· Strengthened cash position at year end of £6.4 million.

· Successful fund raise in December 2020 allows roll out of investment in development and scale up activities.

2020-2021 Overview

The Group's strategy remains to develop medical devices based upon the world class properties of Elast-Eon™polymers whilst continuing to license the rights to those same polymers in non-competing areas. The Group operates through four business units which are discussed below:

RUA Biomaterials holds the IP rights to a range of long-term implantable biomaterials and derives its income from licence fees charged for the rights to use Elast-Eon™ in medical devices and royalty fees derived from the sale of Elast-Eon™ polymer or Elast-Eon™ enabled devices. Final royalty statements are still awaited from certain licensees, but the indications are that volumes have increased despite the impact of COVID-19 on elective surgery and royalty revenues which are billed in US$ are anticipated to have grown by around 5 per cent. during the year.  When translated into Sterling, the exchange rate movement during the year will mean that royalty income will decline by circa 5 per cent. of the £0.45 million reported last year. No polymer licensing income was recognised in the year as the industry's focus was on COVID related issues; as a result, R&D projects were deferred, and no new licences were signed (licence income to 31 March 2020: £40,000).

RUA Medical , the third-party device manufacturing business acquired at the beginning of the financial year, was impacted by reduced orders from customers as elective surgery procedures were cancelled due to COVID. During the year, third party sales amounted to £1.02 million, broadly in line with internal budgets which had been reduced by around 30 per cent. of pre-COVID activity. Additionally, minimum operating profit targets set for the calculation of deferred consideration payments were achieved resulting in a payment of £0.42 million being made in April 2021. Recent activity has returned to close to historic levels and RUA Medical has been praised by its major customer for its continued quality of supply and high level of service.

RUA Vascular , the business developing a comprehensive range of vascular grafts and patches, made strong progress over the year meeting very demanding targets. These products have been developed using a combination of the qualities of Elast-Eon™ together with RUA Medical's textile expertise. Design freeze on the graft was achieved during the summer, allowing the commencement of an in vivo study which has now satisfactorily reached its end point. The grafts have performed as anticipated and, as previously announced, RUA Vascular remains on track for FDA 510k submission during June 2021 and the Group expects to recognise first revenues by the end of this financial year.  Commercialisation will involve both OEM sales and distribution in the US and discussions are progressing to plan with interested parties. Planning has also commenced to prepare for European and UK product approval and feedback from potential distributors has been positive with the product offering being described as "disruptive".

RUA Structural Heart , the business developing Elast-Eon™leaflet systems for heart valves, achieved a significant milestone in the proof of concept of the novel manufacturing method with the valves meeting all hydrodynamic requirements. To enable faster development and reduce development costs, equipment has been ordered to allow in-house testing. Following initial testing of the prototypes, valves are now being manufactured after the fine tuning of some of the variables designed to further refine the manufacturing process and maximise potential valve durability .

Capital Management and Investment Plans

Cash as at 31 March 2021 was £6.41 million compared to £1.98 million at the same stage last year. The increase follows the successful fund raise in December 2020 with net proceeds after costs amounting to £6.3 million. Other investment activities in the year include the purchase of RUA Medical, the acceleration of research and development activities and capital investment in property, plant and equipment. The fund raise enabled several capital projects to be committed to, including: textile processing equipment, scale up equipment and tooling for graft and patch manufacture, heart valve testing equipment and additions to group property. The objectives are to ensure the Group has the manufacturing capacity to meet anticipated demand for the vascular products and to bring all heart valve mechanical testing in house to reduce cost and timelines.  

Bill Brown, Chairman of RUA Life Sciences, stated : "During the year just ended, RUA Life Sciences achieved all of the objectives set. The acquisition of RUA Medical was fully integrated into the Group, our first Elast-Eon™ enabled product has been readied for regulatory submission and proof of concept accomplished on the polymeric heart valve. This was all achieved within the cash resources available to the Group at the start of the year and the recent fund raise should allow RUA to continue its positive development."

For further information contact:

RUA Life Sciences

Bill Brown, Chairman     Tel: [phone]                                   

David Richmond, CEO      Tel: [phone]

Shore Capital (Nominated Adviser and Joint Broker) 

Tom Griffiths/David Coaten                                           Tel: [phone]

Cenkos Securities plc (Joint Broker)                            Tel: [phone]

Russell Cook/Max Gould (Corporate Finance)

Michael Johnson (Sales)

About RUA Life Sciences

The RUA Life Sciences group was created in April 2020 when RUA Life Sciences Plc (formerly known as AorTech International Plc) acquired RUA Medical Devices Limited to create a fully formed medical device business. RUA Life Sciences is the holding company of the Group's four trading businesses, each exploiting the Group's patented polymer technology.

Our vision is to improve the lives of millions of patients by improving and enabling medical devices with Elast-Eon™, the world's leading long-term implantable polyurethane.

Whether it is licensing Elast-Eon™, manufacturing a device or component or developing next generation medical devices, a RUA Life Sciences business is pursuing our vision.

Elast-Eon™'s biostability is comparable to silicone while exhibiting excellent mechanical, blood contacting and flex-fatigue properties. These polymers can be processed using conventional thermoplastic extrusion and moulding techniques. With over 7 million implants and over 14 years of successful clinical use, RUA's polymers are proven in long-term life enabling applications.

The Group's four business units are:

RUA Medical :	End-to-end contract designer and manufacturer of medical devices and implantable fabric specialist.
RUA Biomaterials:	Licensor of Elast-Eon™polymers to the medical device industry.
RUA Vascular:	Commercialisation of large bore polymer sealed grafts and soft tissue patches.
RUA Structural Heart:	Development of polymeric leaflet systems for heart valves.

 

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