REG - Crystal Amber Fund - Fund update

Crystal Amber FundAnnouncement

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RNS Number : 5760R  Crystal Amber Fund Limited  18 July 2025

18 July 2025

 

Crystal Amber Fund Limited

("Crystal Amber" or the "Fund")

 

Fund update

 

The Board of Crystal Amber is pleased to provide an update on the Fund, its
investments and its strategy.

 

De La Rue plc

 

The Fund has now received the cash proceeds from the takeover of De La Rue plc
("DLAR") following the announcement of the Scheme of Arrangement becoming
effective on 2 July 2025.  The Fund received a final payment of c.£18
million (including the Fund's trading in DLAR securities, a total of £40.67
million has been received since DLAR entered an offer period) and the Board is
considering the future strategy of the Fund and the use of proceeds from DLAR,
including the return of capital to shareholders via the ongoing share buyback
programme and potential distributions.

 

Morphic Medical Inc. ("MMI")

 

The Fund's primary focus beyond DLAR is to achieve the regulatory approvals
for MMI's RESET® device to enable sales to commence. The Board of Crystal
Amber believes that this should not only underpin but should significantly
enhance the value of this core investment. As announced on 3 July 2025, with
CE Mark approval now in place for RESET®, MMI has started offering RESET®
for sale in Germany, with plans to expand across the European Union and other
countries recognising CE certification. The addressable market in Europe is
around 93 million patients.

 

MHRA registration for RESET®, which will allow sales of the RESET® device in
the UK, is expected in the coming weeks. Obesity costs the NHS an estimated
£6.5bn per year (source: UK Government / NHS England, 2023) and indirectly
around £27bn per year. MMI believes that around 1.6 million patients in the
UK could benefit from RESET®.

 

Initial interest in RESET® from customers across Europe and the UK has been
encouraging and the Board believes that MMI is in a strong position to
capitalise on these opportunities in the medium term.

 

MMI continues to recruit patients for the FDA fast track approved pivotal
study. Now that CE Mark has been achieved, patient recruitment can
accelerate. It is estimated that FDA approval of RESET® in the US could be
obtained in the second half of 2027 on an expedited basis. The US is a large
market for weight loss devices, estimated to reach a market size of US$8.5
billion by 2032, and the Board of Crystal Amber believes that obtaining FDA
approval should significantly enhance the value of the Fund's investment in
MMI. To provide additional capital for MMI during this period, MMI is in
discussions with several potential investors, including some large,
multinational medical device companies. Since receiving CE Mark approval, one
S&P 500 healthcare company has expressed interest in making an initial
investment of US$5 million to US$10 million. Whilst there can be no certainty
of this investment, MMI believes that such an investment would be at a premium
to Crystal Amber's current carrying value for MMI.

 

Since the start of 2025, the Fund has invested US$5.15 million of cash into
MMI at US$0.48 per share and anticipates up to a further US$1.5 million of
investment in the next few weeks. The Fund will consider supporting further
investment alongside cornerstone investors if appropriate. Given the outlook
for MMI and industry discussions with potential partners and investors, as
well as the CE mark only having recently been obtained and the pending MHRA
registration, the Board of Crystal Amber considers that at this time it is in
the best interests of the Fund to retain its holding in MMI.

 

Further details on MMI are set out further below.

 

Other investments

 

The Board continues to seek to maximise the opportunity to realise value from
the Fund's other investments, Sigma Broking Limited, Allied Minds and Sutton
Harbour Plc. The Board notes recent press comment that Sigma Broking is in
advanced discussions with a third party about being acquired. There can be no
certainty that this transaction will complete. The Investment Adviser is in
active discussions with both the boards of Allied Minds and Sutton Harbour Plc
regarding the timing of realisations of value from these investments.

 

Strategy

 

The Fund is consulting with shareholders and advisers over the future
structure of the Fund, as well as considering strategy and ensuring returns to
shareholders are made in a timely fashion whilst continuing to maximise value
from its investments. The Fund notes that according to Trustnet, over one,
three and five years, shareholder returns have been 72.2%, 118.5% and 267.4%
respectively. This compares with 3%, 24.4% and 69.3% for UK Investment Trust
Smaller Companies.

 

About Morphic Medical Inc.

 

MMI's flagship product, RESET®, is a thin, flexible implant that lines the
proximal small intestine and mimics gastric bypass bariatric surgery as food
bypasses the duodenum and the upper intestines. Unlike gastric bypass surgery,
RESET® is reversible, minimally invasive, and temporary. It does not
permanently alter the patient's anatomy and uniquely targets the body's own
blood glucose control mechanisms. This is achieved through a 20-minute
endoscopic procedure. The patient will typically retain the device for nine
months, after which the device is removed.

 

Based on MMI's latest statutory accounts for the year ended 31 December 2024,
MMI had no revenue and made a loss before tax of US$10,449,000.

 

As at 31 December 2024, MMI was held by the Fund at a fair value of £60.6
million and the Fund held 95.3% of the issued share capital in MMI. An updated
and audited valuation of MMI will be included in the Fund's annual report and
accounts for the year ended 30 June 2025 which the Board expects to show a
significant increase in valuation as a result of progress during 2025, such as
obtaining the CE Mark and the conversion of c.£28 million of loan notes by
the Fund, as announced in January 2025. The Fund currently owns approximately
96.7% of the combined issued common and preference shares in MMI.

 

 

For further enquiries please contact:

 

Crystal Amber Fund Limited

Chris Waldron (Chairman)

Tel: 01481 742 742

www.crystalamber.com (http://www.crystalamber.com)

 

Crystal Amber Advisers (UK) LLP - Investment Adviser

Richard Bernstein

Tel: 020 7478 9080

 

Allenby Capital Limited - Nominated Adviser

Jeremy Porter/ Dan Dearden-Williams

Tel: 020 3328 5656

 

Winterflood Investment Trusts - Broker

Joe Winkley/Neil Langford

Tel: 020 3100 0160

 

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