One Emerging AIM Listed Biotech Player With A Strong Growth Potential - AorTech International Plc

  • Dec 05, 2019 GMT
  • Team Kalkine
One Emerging AIM Listed Biotech Player With A Strong Growth Potential - AorTech International Plc

AorTech International Plc (LON: AOR) is a United Kingdom domiciled Biotechnology company having interest in bioplastic for medical applications. The company is the developer and licensor of the world's leading long-term implantable biostable polymer by the trade name Elast-EonTM and also the developer of medical devices utilising the key properties of Elast-EonTM. The company has been doing research in this field and has developed biostable, implantable polymers with Elast-Eon™ and ECSil™ being its latest offerings. These co-polymers are the world's leading biopolymers for the manufacture of long-term implantable medical devices and are now being manufactured by Biomerics LLC in Utah United States of America on its behalf. The biostability of Elast-Eon™ and ECSil™ is comparable to that of silicone while having excellent blood contacting, mechanical and flex-fatigue properties while also possessing the ability to be shaped using conventional thermoplastic extrusion and moulding techniques. AorTech polymers are proven in long term life enabling applications, having seen implementation in over 6 million implants and more than 10 years of extensive and highly successful clinical use.

Underpinning on the Elast-Eon™ polymer’s best in the class long-term blood contacting properties, all of the initial products being developed by the company are in the field of cardiovascular applications. Implants that are being designed using proprietary Elast-Eon™ based bio-polymers have improved clinical outcomes over the current state of similar device technologies, eliminating the use of animal sourced material while allowing all other related procedures to remain the same. This leads to significant savings in time and energy on the retraining of surgeons on new ways of performing operations.

The Shares of the company have their listing on the London Stock Exchange having been admitted on 18 December 2002. There they trade with the ticker name AOR in the Alternative Investment Market (AIM) segment. The shares of the company are constituents of the FTSE AIM All-Share index.

A Healthy Result Update

The company on 29 November 2019 came out with its interim results for the half year period ending on 30 September 2019.

  • During the six-month period, the company registered a 27 per cent increase in Elast-Eon™ related revenues, which stood at £299,000, while for the corresponding period in 2018, the revenues from Elast-Eon™ stood at £236,000.
  • Significant progress was achieved by the company during the six-month period on its products Elast-Eon™ sealed graft and Elast-Eon™ Heart Valve and a new licence agreement has been signed with Medibrane Ltd of Israel with scope for expansion of Elast-Eon™ enabled devices market.
  • The company continues to spend heavily on its Research and Development activities to develop and further expand its pipeline of products. The company, however, is cash rich with end of period cash balances as on 30 September 2019 stood at £2,331,000, which at the previous six-month period ending on 31 March 2019 it stood at £2,412,145.
  • The company though has not disclosed the exact amount of Research and Development expenditure undertaken by it for commercial reasons; however, it is expecting a cash reimbursement on account of tax credit on R&D expenditure to the tune of £81,000 which has been recognised and will significantly improve its cash position in the forthcoming periods.
  • Expenditure on account of amortisation of intangible assets for the period stood at £93,000 while for the corresponding six-month period in 2018, the expenditure on this account stood at £109,000, signifying a major cost saving. The company understands that with expanding operations its administrative expenditure will increase, hence has started disciplining its activities.

The company remains a biotechnology development stage company with its revenue streams expanding rapidly while strategy on costing is under process.

Stock Performance at the London Stock Exchange

Source – Thomson Reuters

At the time of writing this report on 05 December 2019, the shares of the company were trading on the London Stock Exchange for GBX 97.5.

The shares of the company during the past 52 weeks of trading at the London Stock Exchange have registered a 52-week high of GBX 102.75 while also registering a 52-week low of GBX 40.10. The company has a market capitalisation of £14.30 million on the London Stock Exchange at the time of writing this report on 05 December 2019.

The stock’s average volume (before the market close, at the time of writing, on 05 December 2019) stood at 5,853. Stock's average traded volume for 5 days was 97,606.80; 30 days- 44,516.03 and 90 days – 47,220.60. The company’s stock beta was 0.80, reflecting lower volatility as compared to the benchmark index. The average traded volume for 5 days was up by 119.26 per cent as compared to the 30 days’ average traded volume. In last one month, the shares have generated a positive return of 19.63 per cent and also a return of 96.97 per cent return on year to date basis.

Positive Growth Catalysts

  • Excellent response from the market for the company’s flagship product Elast-Eon™ polymer as evidenced by its exponential growth in revenues.
  • The company is forward-integrating into medical device manufacturing based on its successful Elast-Eon™ polymer. Elast-Eon™Enabled Textile Devices and Elast-Eon™ Enabled Heart Valves have extensive revenue potential far surpassing the company’s licence-only revenue stream.
  • The company is expecting tax credit reimbursements for its research activities, providing further depth to its R&D funding.
  • Top Shareholders of the company are institutional investors, providing it with a significant stability.

Institutional Share Holdings

The following institutional investors are amongst the top shareholders of the company (as on 11th October 2019)

 Source – Company website

As of 11 October 2019, there was no restriction of the share transfer of the company. There were zero shares of the company that were being held in treasury. 29.75 per cent of the shares were not in public hands and there was a total of 14,686,608 number of shares on issue.

Business Prospects

The success of the company’s biopolymer Elast-Eon™ specially in the cardiovascular field gives it immense potential to make deep inroads into the vast and immensely rewarding field of cardiovascular medical devices. The company is currently working on bonding Elast-Eon™ with silicone, that will give rise to a new generation of biopolymer materials with vast medical device applications. The company’s forward integration into manufacturing will give it better control over pricing as well as help it extend its market reach.

The New licence agreement with Medibrane Limited of Israel is of strategic importance to the company. The latter is an expert in encapsulation technology for medical devices, particularly stents, which are used in cardiovascular surgery to prevent blockage of blood vessels. Medibrane would provide design services to AorTech International for the manufacture of devices based on Elast-Eon™ technology.

The management of the company is also comprised of some of the most experienced people in the field of Finance, clinical marketing and cardiovascular medicine, who provide the company the strategic edge to excel in this field.

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