REG - RUA Life Sciences - Trading Update

Rua Life SciencesAnnouncement

27/05/2022 07:00

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RNS Number : 9918M  RUA Life Sciences PLC  27 May 2022

 

 

 

 

 

27 May 2022

 

RUA Life Sciences Plc

("RUA Life Sciences", the "Company" or the "Group")

Trading Update

 

RUA Life Sciences plc (AIM: RUA.L), the holding company of a group of medical
device businesses focused on the exploitation of the world leading long-term
implantable biostable polyurethane (Elast-Eon™), is pleased to provide an
update for the year ended 31 March 2022 together with current trading,
regulatory and operational updates, ahead of the publication of the Group's
audited final results for the year ended 31 March 2022, which are expected to
be released mid-July 2022.

This period has been one of increased sales growth, recovery from Covid-19
disruption and making advances in business processes and management to
minimise the risk of a further delay to the regulatory approval of RUA
Vascular's graft range.

Trading update for the 12 months to 31 March 2022

The Group (including the contract manufacturing and polymer licensing
businesses) is expected to have generated consolidated unaudited revenues of
£1,625,000 (2021: £1,528,000), an increase of 6% over the same period in the
previous year. Unaudited R&D expenditure of the Group is expected to be
£887,000 (2021: £541,000), an increase of £346,000 over the preceding year,
demonstrating continued investment in this area.

 

Overall, loss before tax for the period is expected to have increased to
£2,360,000 (2021: £1,594,000) which resulted from a combination of increased
R&D activities and further investment in the infrastructure to support
future growth.

 

The balance sheet is expected to show a cash balance at the period end of
£2,963,000 (2021:  £6,294,000) having invested in excess of £500,000 in
capital equipment during the recent financial year.  This equipment includes
heart valve testing equipment, graft manufacturing scale up equipment and a
new factory unit to accommodate the high output cleanroom facility to support
scale up manufacturing of RUA Vascular's graft range and associated support
functions. The new facility will be commissioned during 2023.

 

The Annual General Meeting (AGM) is planned for Tuesday 16 August 2022. A
further notice of meeting announcement will be made in due course.

Pivoting to sustainable and profitable growth

Significant progress was made on product development activities for RUA
Vascular's large bore vascular graft, which enabled a 510(k) submission to the
FDA in November 2021. It was therefore disappointing to receive feedback from
the FDA that human clinical data would be required to demonstrate substantial
equivalence of the grafts to existing products on the market on the basis that
they introduced novel technology compared to the predicate devices. Bringing
full time regulatory and clinical study expertise in house was already being
addressed prior to the 510(k) submission, and as a result resource has been
available to further engage with the FDA and review the regulatory strategy.
The need to generate clinical data will push approval to late 2024 but has
enabled a critical review of business processes and afforded the time to
progress the following advances in 2022:

 

1-   Transform business processes required to transition from a traditional
component (OEM) supplier to a fully-fledged medical device manufacturer.

2-   Develop high throughput manufacturing processes to ensure manufacturing
at scale from day one of FDA approval.  This will allow RUA to maximise
initial Vascular Graft revenue and secure significant early market
penetration.

3-   Accelerate development and launch plans for the extended Vascular Graft
product pipeline.  This will include an open surgical hybrid device to repair
the aortic arch and descending aorta.

4-   Put in place a revitalised team with the necessary experience,
knowledge and skill sets to deliver on RUA's ambitious plans

 

RUA's world class products have been designed and developed to meet identified
needs in the market, and by augmenting the team and focussing on laying these
foundations, this will allow RUA to become a medical device manufacturing
business that can disrupt the Cardiovascular market with innovative products
that utilise the Group's IP and expertise with Elast-Eon, and ultimately
deliver on its goal of significantly growing shareholder value.

 

Significant Board/Management changes for the period

Following the retirement of David Richmond, Group CEO, in late 2021 and the
departure of Matthew Litton, Group R&D Director, in April 2022, the Group
has restructured its operations and the team expanded with new recruits from
the medical device industry. Product development and all graft R&D
activities are now being managed by Simon Rosendale (Manufacturing Engineering
Manager). Stuart Elias (Medical Textiles Manager) continues to manage day to
day textile production and provide his invaluable textiles expertise to Group
businesses. Simon and Stuart have over 40 years medical textiles expertise
between them, including employment at Terumo Aortic on the production and
development of vascular grafts.

 

The further key appointments to the Board of Lachlan Smith, Chief Financial
Officer, and Iain Anthony, Director of Clinical and Regulatory Affairs, also
ensure the right management expertise is available to support growth of the
Group. Iain in particular has extensive cardiovascular medical device
experience in clinical, regulatory and R&D areas. Caroline Stretton has
also moved into a wider Group role from the narrower focus she previously had
within the RUA Medical subsidiary.

 

RUA Biomaterials

RUA Biomaterial's manufacturing and licensing partner, Biomerics, continues to
actively promote the uptake of Elast-Eon as a world leading material to the
medical device industry. Biomerics has expanded its manufacturing capacity,
and the Group will look to enhance its Intellectual Property portfolio to add
more value to future licensing deals.

 

RUA Medical Devices

Third party contract manufacturing revenues are expected to have increased by
11% to £1,138,000 reflecting a recovery from Covid related disruption. RUA
Medical Devices operations were not significantly affected during the year,
and it managed to respond to Covid-19 supply chain disruption and ensure
continued focus on quality and delivery.

RUA Vascular

After collaborative discussions with the FDA, the 510(k) submission for the
large bore vascular graft was converted to a pre-submission or Q-sub, allowing
interactive discussions between the Company and the FDA to determine the
regulatory path to approval in the US. During these discussions, the
additional data requirements for a future 510(k) submission were agreed. On a
positive note, it was confirmed that RUA can still follow the 510(k) route to
the US market, provided that supplementary clinical data are generated to
support the Vascular Graft range.  A clinical trial has now been designed to
demonstrate the safety and efficacy of Elast-Eon as a graft sealant.  The
trial design has been submitted to the FDA in a further pre-submission to
ensure alignment with the FDA's expectations. These discussions are expected
to be completed by the third quarter of this year. While this adds some delay
to the front end of the process, the data generated in the trial will be
utilised to support marketing applications in multiple geographic regions
including the European Union and the UK, and this is expected to drive faster
acceptance and uptake of the graft products than previously planned, post
approval.

 

Iain Anthony has played a key role in planning the work packages required and
timeframes involved to accelerate clinical study plans for US launch and the
earlier entry of large bore grafts into global markets.  The recruitment of
the first patient for the pre-market clinical trial is planned for this year,
with regulatory submissions planned to allow entry into US and European
markets in 2025. Other markets will also be pursued where market access can be
achieved on the back of US/EU regulatory clearance. Interest continues to be
strong for OEM use of the RUA Vascular Graft and those opportunities are being
advanced in parallel with our plans for sales into hospitals via distribution
partners. The business is confident that this clinical trial will demonstrate
improved benefits of an Elast-Eon sealed vascular graft for patients and
surgeons and that this will drive the inevitable switch away from traditional
animal sourced graft sealants such as gelatin and collagen. We therefore
remain of the opinion that once we achieve regulatory approval for the grafts,
there will be ready buyers for the devices, including significant OEM
interest.

 

The segments of the global vascular graft market being addressed by the RUA
product pipeline are estimated to be worth around $1 billion and represent in
the main the products required and used by cardio-thoracic (or heart)
surgeons. Detailed financial planning by Group management has estimated that
the Vascular Graft product pipeline could achieve a minimum market penetration
of 10% within the next ten years.

 

Significant work has been completed on manufacturing process refinement and
efficiencies of the existing small scale production line, to support the build
of clinical trial stock and future transfer of manufacturing to a new high
output cleanroom facility in 2023. With supporting clinical data available for
market launch, this is expected to drive faster acceptance and uptake of the
graft products than previously planned. Production capacity plans have
therefore been revamped, and a scale up line is being developed that is
capable of meeting the increased volumes and margins required for a global
launch of the vascular graft pipeline.

 

RUA Structural Heart

RUA Structural Heart continues to position itself to disrupt the $8 billion
heart valve market. Two heart valve programmes are running in parallel - one
with a 100% polymer leaflet and the other a composite textile leaflet.
Milestones this year relate to the development and optimisation of both heart
valve designs and prioritising the design which ensures the most resilient and
appropriate technology is embraced.  This lead design will be taken forward
into in vivo trials during 2023, at which point options for clinical trial
will be considered.

 

Caroline Stretton, Group Managing Director of the Company, commented: "We
continue on our journey to develop the scale and expertise required of a
fully-fledged medical device manufacturer, that will allow us to deliver on
our ambitious plans. Our strengthened business strategy will maximise
contribution from new product pipelines and positions the Group well for
sustainable and profitable growth"

 

Bill Brown, Chairman of the Company, commented: "The regulatory bump on the
road has clearly been a disappointment, however I remain convinced that it is
a question of when and not if we receive approval for the grafts range, and
that when we do, the commercial opportunities are considerably larger than
first anticipated."

 

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit)
Regulations 2019. Upon the publication of this announcement via the Regulatory
Information Service, this inside information is now considered to be in the
public domain.

 

 

For further information contact:

 

RUA Life Sciences

Bill Brown,
Chairman
     Tel: +44 (0)1294 317073

Caroline Stretton, Group Managing Director
       Tel: +44 (0)1294 317073

 

 

Cenkos Securities plc (Nominated Adviser and Broker)      Tel: +44
(0)20 7397 8900

Giles Balleny/Max Gould (Corporate Finance)

Michael Johnson (Sales)

 

 

About RUA Life Sciences

 

The RUA Life Sciences group was created in April 2020 when RUA Life
Sciences Plc (formerly known as AorTech International Plc) acquired RUA
Medical Devices Limited to create a fully formed medical device business. RUA
Life Sciences is the holding company of the Group's four trading businesses,
each exploiting the Group's patented polymer technology.

 

Our vision is to improve the lives of millions of patients by enabling medical
devices with Elast-Eon(TM), the world's leading long-term implantable
polyurethane. Whether it is licensing Elast-Eon(TM), manufacturing a device or
component, or developing next generation medical devices, a RUA Life Sciences
business is pursuing our vision.

 

Elast-Eon™'s biostability is comparable to silicone while exhibiting
excellent mechanical, blood contacting and flex-fatigue properties. These
polymers can be processed using conventional thermoplastic extrusion and
moulding techniques. With over 8 million implants and 15 years of successful
clinical use, RUA's polymers are proven in long-term life enabling
applications.

 

The Group's four business units are:

 

 RUA Medical:           End-to-end contract developer and manufacturer of medical devices and
                        implantable fabric specialist.

 RUA Biomaterials:      Licensor of Elast-Eon(TM) polymers to the medical device industry.

 RUA Vascular:          Commercialisation of open surgical vascular grafts and patches

 RUA Structural Heart:  Development of polymeric leaflet systems for heart valves.

 

 

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