Investing in Growth

While RUA Life Sciences’ FY 2021 results echoed some of the challenges from last year’s pandemic, largely in the well-flagged revenue shortfall stemming from RUA’s customers that was a result of fewer elective surgeries, RUA’s focus now is on investing the proceeds of last year’s share offering in its vascular and heart valve products. Our forecasts and valuation have been updated for this increased pace of investment.

RUA Life Sciences has been transformed by the RUA Medical acquisition and our note focusses on how operationally and financially the acquisition has altered our estimates going forward. Suffice to say that an operating business brings a number of new facets, such as increased headcount, working capital and capex expense. However, unlike many biotechnology companies that raise money in order to sit on it for as long as possible, in FY 2021 RUA did, and will continue to, invest in its vascular and structural heart products which, as investors will remember, comprise the bulk of our valuation. While some of this investment in headcount was in FY 2021, the £2,500k in capital investment still to come has been phased-in in our forecast financials over three years. With RUA’s investment in R&D and capital expenditure, we anticipate the cash runway extending out to 2023.

Our valuation has been updated for RUA’s FY 2021 results and the expectations for large-bore vascular graft revenues in FY 2022. This modestly increases our valuation to £116.5m or 525p per share from £115.4m or 520p per share.