AorTech International PLC Interim Results (1818H)
November 27 2015 - 2:33AM
UK Regulatory
TIDMAOR
RNS Number : 1818H
AorTech International PLC
27 November 2015
AORTECH INTERNATIONAL PLC ("AorTech", "the Company" or "the
Group")
Unaudited Interim Results
For the six months ended 30 September 2015
CHAIRMAN'S STATEMENT
Trading
Trading in the half year to 30 September 2015 was in line with
the Board's expectations. Revenues for the period were $380,000 and
administrative costs amounted to $365,000 resulting in the Company
achieving a profit at the EBITDA level. However, after charging
$163,000 for amortisation of intangible assets and incurring a
further $45,000 of exceptional litigation costs, the reported
operating loss was $193,000. Also charged to the profit and loss
account is a $363,000 finance cost relating to the residual loan
note interest. At the AGM in September, shareholders approved the
Company's intention to approach loan note holders to convert their
residual interest into ordinary shares. This charge recognises the
full cost of the shares to be issued, less the provisions
previously made.
Debtor Recovery
We mentioned in the year end accounts that the last $300,000 of
a long standing debtor was being recovered by monthly payments. Up
to the period end, all payments had been received on the due date.
Since the end of September, no payments have been received and
steps are being taken to ensure full recovery of the final balance
of $150,000 together with our costs of recovery. No provision has
been made against this debt.
We are currently owed in excess of $300,000 by one of our
licensees; a provision of $100k has been made in the accounts and
legal counsel has been retained to recover all sums due.
These matters are disappointing and will, as a result, impact on
the timing and potentially the values of cash flows going
forward.
Maguire Litigation
A great deal of time and effort is still having to be committed
by the Directors in pursuing the US litigation against AorTech's
former CEO and related parties. The case is in the pre-trial
discovery phase in which AorTech is able to gather the evidence to
support its allegations. The Directors intend to continue to
vigorously pursue this action in order to protect the Company and
shareholders from the actions of Maguire and other related
parties.
Heart Valve
I set out a brief history and analysis of the Heart Valve
project in the Annual Report and Accounts. Current commercial
bioprosthetic and mechanical heart valves are compromised by either
their durability or need for long term anticoagulation. Creating an
analogue of the human valve out of polymer that has the benefits of
current bioprosthetic and mechanical valves without the drawbacks
has been recognised as the "Holy Grail" of heart valve technology
for over 50 years.
There has been no real step change in surgical valve technology
over the past 20 to 30 years, although evolutionary improvements
have been made. There have been major developments in surgical
techniques with the advent of catheter delivered valves (TAVI). By
nature of the TAVI procedure, only bioprosthetic valves can be
delivered this way and it is believed that the already limited
durability of bioprosthetic valves may be further compromised by
them being crushed into the narrow catheter. TAVI valves are
currently only suitable for the much older patient who is unable to
have open heart surgery.
Further independent review and initial consultation on the
AorTech heart valve project has demonstrated that AorTech's
Elast-Eon(TM) material is still the most appropriate polymer for
making durable heart valves. The progress made in the AorTech heart
valve project includes a valve design that has now completed proof
of concept at clinical trials; a strong IP portfolio that comprises
polymer patents; valve design and basis of manufacture; patents,
significant know how and trade secrets regarding design history and
manufacturing processes.
We have now identified a team of industry specialists covering
the key areas of manufacturing, quality, regulatory, clinical
marketing and business development expertise. The team has reviewed
and bought into the potential for a polymer valve utilising
AorTech's technology.
The market opportunities have been analysed for this disruptive
technology as well as the surgical version of the valve being a
replacement for current technology in the developed western
markets. The ability to use inexpensive mass production techniques
will produce a cost effective solution for developing countries
where rheumatic heart disease is so prevalent and young patients
require a relatively low cost valve that is both durable and avoids
anticoagulation. In addition, in the area of TAVI, the valve
leaflets can be incorporated into a TAVI stent and dry stored and
pre-loaded in a smaller catheter, thus dramatically improving TAVI
technology.
A non-binding Heads of Terms has been agreed whereby AorTech
will transfer its Heart Valve technology into a new company
established with the objective of replicating the testing work
under regulatory conditions and which will then commercialise the
valve in both surgical and TAVI uses.
The deal is contingent upon the new company raising sufficient
funding in order to set up a manufacturing plant and take the heart
valve through initial regulatory testing. AorTech will have a
significant equity interest in the new company together with future
royalty income. I will personally have a directorship in the new
company and I am presently working with the team members identified
to raise the necessary finance and establish a manufacturing
facility. Discussions and meetings on the project have been
positive to date and I would be hopeful that AorTech could make a
formal announcement in due course. Should the transaction proceed,
it will constitute a related party transaction under the AIM
rules.
Conclusion
The business continues to make progress and our Manufacturing
Licensee has a growing prospects list. We recently commissioned a
detailed report from a world leading biomaterials expert to review
the potential of AorTech's IP portfolio. The report is extremely
positive in that the Elast-Eon(TM) family of materials continues to
be the leading material for implantable medical devices. Your
Board, in conjunction with the author of the report will be
reviewing all of the recommendations contained therein. A range of
opportunities have been identified which also includes the filing
of additional patents to further strengthen AorTech's IP
portfolio.
Your Board, despite the problems and issues which have arisen
over the past two years, remain enthusiastic about the potential of
Elast-Eon(TM), not just in the field of heart valves but also in
other exciting medical device applications.
Bill Brown, Chairman
25 November 2015
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
Six months ended 30 September 2015 Unaudited Unaudited Audited
Twelve
months
Six months Six months to 31
to 30 to 30 March
Note Sept 2015 Sept 2014 2015
US$000 US$000 US$000
Revenue 380 524 844
-------------------- -------------------- ----------------
Other income - - 13
-------------------- -------------------- ----------------
Cost of sales - (46) -
Administrative expenses (365) (340) (776)
Exceptional administrative expenses
2 (45) (212) (204)
Other expenses - amortisation of intangible
assets 7 (163) (141) (332)
-------------------- -------------------- ----------------
Operating loss (193) (215) (455)
Finance income / (expense) 3 (363) 117 129
-------------------- -------------------- ----------------
Loss from continuing operations attributable
to owners of the parent company (556) (98) (326)
-------------------- -------------------- ----------------
Loss from discontinued operations 4 - - (44)
-------------------- -------------------- ----------------
Loss attributable to owners of the parent
company (556) (98) (370)
Taxation - - -
-------------------- -------------------- ----------------
Loss attributable to equity holders of
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