Trading Update

RNS Number : 9918M

RUA Life Sciences PLC

27 May 2022

 

27 May 2022

RUA Life Sciences Plc

("RUA Life Sciences", 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 polyurethane (Elast-Eon™), is pleased to provide an update for the year ended 31 March 2022 together with current trading, regulatory and operational updates, ahead of the publication of the Group's audited final results for the year ended 31 March 2022, which are expected to be released mid-July 2022.

This period has been one of increased sales growth, recovery from Covid-19 disruption and making advances in business processes and management to minimise the risk of a further delay to the regulatory approval of RUA Vascular's graft range.

Trading update for the 12 months to 31 March 2022

The Group (including the contract manufacturing and polymer licensing businesses) is expected to have generated consolidated unaudited revenues of £1,625,000 (2021: £1,528,000), an increase of 6% over the same period in the previous year. Unaudited R&D expenditure of the Group is expected to be £887,000 (2021: £541,000), an increase of £346,000 over the preceding year, demonstrating continued investment in this area.

Overall, loss before tax for the period is expected to have increased to £2,360,000 (2021: £1,594,000) which resulted from a combination of increased R&D activities and further investment in the infrastructure to support future growth.

The balance sheet is expected to show a cash balance at the period end of £2,963,000 (2021:  £6,294,000) having invested in excess of £500,000 in capital equipment during the recent financial year.  This equipment includes heart valve testing equipment, graft manufacturing scale up equipment and a new factory unit to accommodate the high output cleanroom facility to support scale up manufacturing of RUA Vascular's graft range and associated support functions. The new facility will be commissioned during 2023.

The Annual General Meeting (AGM) is planned for Tuesday 16 August 2022. A further notice of meeting announcement will be made in due course.

Pivoting to sustainable and profitable growth

Significant progress was made on product development activities for RUA Vascular's large bore vascular graft, which enabled a 510(k) submission to the FDA in November 2021. It was therefore disappointing to receive feedback from the FDA that human clinical data would be required to demonstrate substantial equivalence of the grafts to existing products on the market on the basis that they introduced novel technology compared to the predicate devices. Bringing full time regulatory and clinical study expertise in house was already being addressed prior to the 510(k) submission, and as a result resource has been available to further engage with the FDA and review the regulatory strategy.  The need to generate clinical data will push approval to late 2024 but has enabled a critical review of business processes and afforded the time to progress the following advances in 2022:

1-  Transform business processes required to transition from a traditional component (OEM) supplier to a fully-fledged medical device manufacturer. 

2-  Develop high throughput manufacturing processes to ensure manufacturing at scale from day one of FDA approval.  This will allow RUA to maximise initial Vascular Graft revenue and secure significant early market penetration. 

3-  Accelerate development and launch plans for the extended Vascular Graft product pipeline.  This will include an open surgical hybrid device to repair the aortic arch and descending aorta.

4-  Put in place a revitalised team with the necessary experience, knowledge and skill sets to deliver on RUA's ambitious plans

RUA's world class products have been designed and developed to meet identified needs in the market, and by augmenting the team and focussing on laying these foundations, this will allow RUA to become a medical device manufacturing business that can disrupt the Cardiovascular market with innovative products that utilise the Group's IP and expertise with Elast-Eon, and ultimately deliver on its goal of significantly growing shareholder value.

Significant Board/Management changes for the period

Following the retirement of David Richmond, Group CEO, in late 2021 and the departure of Matthew Litton, Group R&D Director, in April 2022, the Group has restructured its operations and the team expanded with new recruits from the medical device industry. Product development and all graft R&D activities are now being managed by Simon Rosendale (Manufacturing Engineering Manager). Stuart Elias (Medical Textiles Manager) continues to manage day to day textile production and provide his invaluable textiles expertise to Group businesses. Simon and Stuart have over 40 years medical textiles expertise between them, including employment at Terumo Aortic on the production and development of vascular grafts.

The further key appointments to the Board of Lachlan Smith, Chief Financial Officer, and Iain Anthony, Director of Clinical and Regulatory Affairs, also ensure the right management expertise is available to support growth of the Group. Iain in particular has extensive cardiovascular medical device experience in clinical, regulatory and R&D areas. Caroline Stretton has also moved into a wider Group role from the narrower focus she previously had within the RUA Medical subsidiary.

RUA Biomaterials

RUA Biomaterial's manufacturing and licensing partner, Biomerics, continues to actively promote the uptake of Elast-Eon as a world leading material to the medical device industry. Biomerics has expanded its manufacturing capacity, and the Group will look to enhance its Intellectual Property portfolio to add more value to future licensing deals.

RUA Medical Devices

Third party contract manufacturing revenues are expected to have increased by 11% to £1,138,000 reflecting a recovery from Covid related disruption. RUA Medical Devices operations were not significantly affected during the year, and it managed to respond to Covid-19 supply chain disruption and ensure continued focus on quality and delivery.  

RUA Vascular

After collaborative discussions with the FDA, the 510(k) submission for the large bore vascular graft was converted to a pre-submission or Q-sub, allowing interactive discussions between the Company and the FDA to determine the regulatory path to approval in the US. During these discussions, the additional data requirements for a future 510(k) submission were agreed. On a positive note, it was confirmed that RUA can still follow the 510(k) route to the US market, provided that supplementary clinical data are generated to support the Vascular Graft range.  A clinical trial has now been designed to demonstrate the safety and efficacy of Elast-Eon as a graft sealant.  The trial design has been submitted to the FDA in a further pre-submission to ensure alignment with the FDA's expectations. These discussions are expected to be completed by the third quarter of this year. While this adds some delay to the front end of the process, t he data generated in the trial will be utilised to support marketing applications in multiple geographic regions including the European Union and the UK, and this is expected to drive faster acceptance and uptake of the graft products than previously planned, post approval.

Iain Anthony has played a key role in planning the work packages required and timeframes involved to accelerate clinical study plans for US launch and the earlier entry of large bore grafts into global markets.  The recruitment of the first patient for the pre-market clinical trial is planned for this year, with regulatory submissions planned to allow entry into US and European markets in 2025. Other markets will also be pursued where market access can be achieved on the back of US/EU regulatory clearance. Interest continues to be strong for OEM use of the RUA Vascular Graft and those opportunities are being advanced in parallel with our plans for sales into hospitals via distribution partners. The business is confident that this clinical trial will demonstrate improved benefits of an Elast-Eon sealed vascular graft for patients and surgeons and that this will drive the inevitable switch away from traditional animal sourced graft sealants such as gelatin and collagen. We therefore remain of the opinion that once we achieve regulatory approval for the grafts, there will be ready buyers for the devices, including significant OEM interest.

The segments of the global vascular graft market being addressed by the RUA product pipeline are estimated to be worth around $1 billion and represent in the main the products required and used by cardio-thoracic (or heart) surgeons. Detailed financial planning by Group management has estimated that the Vascular Graft product pipeline c ould achieve a minimum market penetration of 10% within the next ten years.

Significant work has been completed on manufacturing process refinement and efficiencies of the existing small scale production line, to support the build of clinical trial stock and future transfer of manufacturing to a new high output cleanroom facility in 2023. With supporting c linical data available for market launch, this is expected to drive faster acceptance and uptake of the graft products than previously planned. Production capacity plans have therefore been revamped, and a scale up line is being developed that is capable of meeting the increased volumes and margins required for a global launch of the vascular graft pipeline.

RUA Structural Heart 

RUA Structural Heart continues to position itself to disrupt the $8 billion heart valve market. Two heart valve programmes are running in parallel - one with a 100% polymer leaflet and the other a composite textile leaflet. Milestones this year relate to the development and optimisation of both heart valve designs and prioritising the design which ensures the most resilient and appropriate technology is embraced.  This lead design will be taken forward into in vivo trials during 2023, at which point options for clinical trial will be considered.

Caroline Stretton, Group Managing Director of the Company, commented : "We c ontinue on our journey to develop the scale and expertise required of a fully-fledged medical device manufacturer, that will allow us to deliver on our ambitious plans. Our strengthened business strategy will maximise contribution from new product pipelines and positions the Group well for sustainable and profitable growth "

Bill Brown, Chairman of the Company, commented: " The regulatory bump on the road has clearly been a disappointment, however I remain convinced that it is a question of when and not if we receive approval for the grafts range, and that when we do, the commercial opportunities are considerably larger than first anticipated. "

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit) Regulations 2019. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

For further information contact:

RUA Life Sciences

Bill Brown, Chairman    Tel: [phone]  

Caroline Stretton, Group Managing Director    Tel: [phone]

Cenkos Securities plc (Nominated Adviser and Broker)     Tel: [phone]

Giles Balleny/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 enabling medical devices with Elast-Eon^TM, the world's leading long-term implantable polyurethane. Whether it is licensing Elast-Eon^TM, 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 8 million implants and 15 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 developer and manufacturer of medical devices and implantable fabric specialist.
RUA Biomaterials:	Licensor of Elast-EonTM polymers to the medical device industry.
RUA Vascular:	Commercialisation of open surgical vascular grafts and patches
RUA Structural Heart:	Development of polymeric leaflet systems for heart valves.

 

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