‘The transformation continuum’

Following the acquisition of RUA Medical Devices Limited by AorTech International plc, the combination has released their first set of final results under the company’s new banner of ‘RUA Life Sciences plc’. The name change has not been the only transformation as RUA is now a fully integrated medical device company with FY 2020 revenues of £489k, a cash balance as at 7 July 2020 of £1.5m, plus much more to come in product development news in FY 2021.

FYI 2020 Results 

Licence fees and royalties from the legacy business, now known as RUA Biomaterials, increased 5.6% to £489k (vs. £463k for the year to March 2019) – not significantly different to our £490k estimate. Administration expenses, which included R&D for the products in development in the RUA Vascular and RUA Structural Heart divisions as well as patent maintenance costs in RUA Biomaterials, increased 36.6% to £1,123k (vs. £822k in FY 2019) as these products progressed through animal implantation towards clinical trials and regulatory approval.

The R&D expenditure increased the FY 2020 operating loss to £941k compared to £638k in FY 2019. Yet the addition of £81k in R&D tax rebate and £44k in finance income (£0 and £29k in FY 2019) resulted in the net loss only increasing by 34.0% or £816k in FY 2020, compared to £609k in FY 2019. RUA Life Sciences’ cash balance was £1,976k at the end of FY 2020 (compared to £2,412k at end FY 2019) and £1,507k on 7 July 2020 after the costs of the RUA Medical acquisition. We forecast RUA’s cash runway will extend into 2022 and would anticipate a fund-raising based on positive product development news before then.

Many moving parts and product developments

RUA Medical also brings significant customer revenues to RUA Life Sciences in addition to the capabilities, manufacturing, testing and design facilities. We now forecast total revenues increasing to £1,933k in FY 2021, even taking account of the shortfall brought about by fewer elective surgical procedures resulting from the global coronavirus pandemic. Adding to this income will be the PERF grant and increasing R&D tax rebates.

Valuation unchanged by grant funding

We have updated our financials and forecasts, but only change our valuation to reflect RUA’s cash balance. We value RUA Life Sciences at £99.3m or 676p per share.