Member Info for IntraVnus

Currently they’ll buy 210,000 at 11p.

There’s plenty still on sale under 12p

Should see a 90k at 11.7p soon. Market in generous mood today. Best I back my positive outlook here with some pounds and pennies. The SIPP will hopefully thank me later. How much later, who knows?

Switches all the time. A trader’s problem. Wouldn’t put it past market makers to go short to take advantage of the perceived disappointment of those who totally ignore the increasing profitability of the group.

Last para in full!

Add all that to the existing CM business in Scotland which seems to be growing, there should be a good result and possibly a bumper book profit to show for it. With R&D on Vascular and HV much reduced, we might even start generating real cash flow.

Thanks Nick, nothing happens without a reason.

It’s already pretty well accepted (see original RNS on the acquisition) that Coloplast (therein named) needed to have their French products liberated from the confines of a liquidator (of the holding company of ABISS, not ABISS itself). Coloplast have another product manufactured by RUA (Scotland) so this seems a convenient arrangement for all concerned. The change of accounting date to September points in their direction. Whether that’s an operational convenience or something more is for others to advise! It does though seem to be important enough for RUA to change its accounts date for the whole group.

The good thing from RUA’s viewpoint is that they’ve bought a solid, established business for peanuts. It has net assets of over €1M at book value, so there’s an uplift straight off. The RNS yesterday talks of that benefit having still to be adjusted to reflect fair value of all ABISS assets. Might that lead to a much bigger one off but permanent addition to RUA’s consolidated balance sheet (and an exceptional non cash gain for the P&L)?

Under the liquidator it’s possible a lot of assets were written down in value but, in a revaluation scenario, with the buildings and plant in good use under new ownership, might the fair values be higher than book? What about all the IP in the legally owned, CE Marked medical devices and production techniques? What are their fair values and are they in the balance sheet yet? We don’t know but often the costs of research and development are long written off as incurred. Two out of three of these devices are licensed to Coloplast who have their own US FDA clearances we are told. The other seems to be the one sold through Poland of which ABISS has 60% so earns 60% of its profits as well. I asked the company before about the 40% and that’s with the guys that run it out there so a kind of entrepreneurial benefit in play.

All of this balance sheet value (book and undeclared fair values) have been acquired for €80k! It sounds like the business is a profit maker at operating and cash generating level. The depreciation charge referred to last year seemed very high (liquidator related?) so it might have been a one off if assets have low book values now.

Hopefully, the directors will have established the asset “fair values” by the time the interims are announced in December.

I reckon there’s a minimum €900k uplift in non-cash adjustment (could be more) plus there’s a real €1M of backlog being cleared this quarter which is more turnover and associated profit, on top of whatever other business ABISS does. The bulk of these benefits should show up in RUA’s 12 months numbers to 31/3/25 (which is now a second interim period!)

Add all that to the existing CM business in Scotland which seems to be growing, there should be a good result and possibly a bumper book profit to show for it. With R&D on Vascular and HV much reduced, w

In the Abiss acquisition, we were told today that the immediate priority is to catch up with €1M of order backlogs and get them packaged off to the customers before quarter end. That’s another handy lump of turnover to cram into the ongoing business activity for the current period. Don’t know the margin on those as it might be necessary to pay overtime or have extra shifts but even do the business is typically high margin.

Good to know that the first hurdle cleared after the acquisition was a clean bill of health from the FDA auditors looking at the medtech processes. Suggests a well run ship and crucially of high importance to the customers.

I think the year end date change to match that of Coloplast could be significant. Why else do it? (See my separate thread)

RUA Life Sciences year end is March. ABISS year end is December. Usually, following an acquisition, the acquired company’s year end is changed to align with the acquiror’s year end.

So why a change to September for the group?

The RNS says: “….. to better guide business planning and international business unit assimilation.”

No RUA group company has a September year end, so what assimilation are they referring to? One thing occurs to me……

Coloplast A/S group of Denmark has a September year end. Are they “assimilating” to them? They were apparently the main reason for buying ABISS. They are an important customer of both arms of the Contract Manufacturing division.

Contract manufacturing is the main focus and that seems to be progressing nicely. Good increase in turnover (before Abiss). A provisional accounting gain (assume non cash) to reflect the bargain cost of Abiss compared to its net assets which will likely be adjusted once everything worked out on “fair value”. My guess is the £0.9m gain is part of the £0.4m profit, as cash reduced by £0.5m.

The MTA partner obviously in no hurry so I guess the AurTex material will be shown widely to industry players. Pleasing to hear of activity showing the Vascular product being reviewed.

As stated by RUA:

“Several opportunities are being pursued for each of the Vascular and Structural Heart businesses, and further updates will be made as appropriate.”

Intriguing reasons for change of accounting date to 30/9.

Potentially around 10% of RUA is accounted for by posters here (not all are regular contributors). That’s a useful power to be aware of.

Hopefully, the board will release a half year update soon, shedding light on progress in all the divisions.

Interesting, looks like the MM's trying a spoof on then as Peel Hunt lowered the published offer on L2 to 14.0p to give the distinct impression those two trades of yours were sells, having also given you below mid-price with the quote at 13.5 - 14.5 before the markdown.

A fine prognosis.

Possibly more of the 11p placing crew grabbing profits? Possibly some people taking fright ahead of Keanu Reeves’ “Budget of the Century” with talk of curtailing AIM tax reliefs?

All we can do in the meantime is the old “diamond hands” soft shoe shuffle and sit tight waiting for some new developments. For me, the sum of the parts still hugely outweighs the market cap.

Thanks Jimzi, where do you access the RSP data?

CTSFO, the major customer is Coloplast, a £20Bn corporation with HQ in Denmark where it is quoted. I assume it’s one of their subsidiaries (French?) that had the supply problem with the legal manufacturer under a liquidator’s management.

Amazing times they were, Nick!

Fortunately, I didn't get involved in AOR/RUA until 2017 when it was little more than a shell after the resolution of the Maguire fiasco that nearly busted them. If I have a big holding in something, I like to research its history to gain context and I like messing with spreadsheets....

One more perspective view. Today, the company has a lot of technology that is possibly close to commercialisation in some form. Plus it has a business in Contract Manufacturing with obvious value producing profits.

In 2000, it was all early stage, speculative technologies with no guarantees attached.

Putting some things in perspective:

- The post-consolidation number of shares in issue after all that fundraising in 1997-2001 was 3.8M.

- There were only 5M in issue before the December 2020 fund raise

- There were 22M in issue before the December 2023 fundraise.

- There are now 62M!

The other question is whether the company overpaid for everything it bought in the 1999-2001 boom years? It was manic and stupidly easy to raise funds at high prices then. Just some food for thought.

Just to fill in some history, Elast-Eon was developed by CSIRO of Australia in the 1990's. CSIRO is the Australian government science and industrial research agency.

In Feb 1997, Aortech International plc (ticker AOR, but now called RUA Life Sciences plc) floated on AIM at today's equivalent share price of 1,250p (there was a 1 for 10 consolidation in 2003) and raised £4.5M. This partly was used to finance the acquisition of Aortech Europe Ltd which was working on early stage polymer heart valve ideas.

In May 1998, AOR raised £3M at today's equivalent of 980p per share, partly to acquire a 33% interest in Elastomedic, the company that CSIRO used to hold the rights to its Elast-Eon polymer IP.

In 1999, AOR became a hot stock getting caught up in the tech boom bull market fever. It took advantage by raising funds for heart valve R&D and acquisitions:

Aug 1999 - raised £3M at 850p (today's equivalent) to meet HV R&D costs and to buy TruCCOMS, a tech that came to nothing.

Sep 1999 - raised £0.5M at 3,354p (today's equivalent) to meet HV R&D costs and buy Tissuemed (heart valve tech - not sure what role it played subsequently)

Then, with impeccable timing at the very top of the tech boom:

Mar 2000 - raised £17.8M at 5,900p (today's equivalent) to meet HV R&D costs and finance marketing of TruCCOMS

Mar 2000 - raised (in two separate placings a week apart) £18.7M at an average 9,349p a share (today's equivalent) to fund the buyout of the remaining 67% of Elastomeric that AOR didn't already own. That gave AOR 100% of Elast-Eon.

May 2001 - raised £20.1M at 3,200p (today's equivalent) to finance further marketing of TruCCOMS and advance R&D in Elast-Eon and HV.

Jun 2001 - raised £6.1M at 3,760p (today's equivalent) in response to "demand from institutions".

After that, it went downhill rapidly over the next 20 years, with a few fleeting bursts of excitement but no commercial breakthroughs. Some say the £80M or so that was raised at the outset was all ******* away (your choice of word!). In some ways it was but around £30M is probably attributable to Elast-Eon and those rights remain and have been enhanced in terms of IP.

Elast-Eon would be a critical IP element to someone buying into or licensing AurTex so they would not want to risk losing those rights in a fire sale. Likewise, the IP inherent in the manufacturing process of AurTex which also involves the textile expertise of the contract manufacturing arm as well as the actual methodology of combining the two materials to arrive at the composite, AurTex.

The legal gymnastics would be interesting. Perhaps buy out the whole group and then, at the buyer’s leisure, they can separate out what they do and don’t need.

Seems to make sense to buy the group outright complete with all its technologies. It would still be a modest investment for the likes of Edwards (or whoever) even at £50M - £100M.