RUA Life Sciences interim results demonstrated the continued investment in the business and its new products. The highlight of the interims was the 33% increase in third-party contract revenues that were a result of a recovery in elective surgical procedures, particularly in the US. Clouding the interims were the implications of the regulatory delay to the 510(k) review of RUA’s large-bore vascular graft medical device, which we explore more in this note.
The deferral of RUA Vascular product revenues raises the spectre that bigger medical device companies, and even its potential OEM partners for the products, might sense an opportunity. The pressures that a delay to revenues could bring, and the extent of the investment cost already spent on the product’s development, means they could attempt a licensing transaction at a fraction of our £74m valuation of RUA’s Vascular products, or acquire the whole portfolio today for about half the price of RUA’s market capitalisation a year ago.
Our valuation remains at £122.9m or 554p per share since regulatory progress continues to be made on the vascular products even if revenues are delayed. There are however, the emerging variables of the additional clinical costs for the vascular graft products, and time until approval. We have made minor updates to our FY 2022 forecasts of working capital and liabilities from the interim balance sheet but will revisit our forecasts and valuation once these variables are known.
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