RE: Something going on here14 Apr 2026 14:48
Just been through the Hybridan note and the standout for me is that they’ve just put a valuation on the existing business, not the blue-sky elements or a valuation post increased revenues and profitability.
On the CDMO side, they’re using a 5.4x sales multiple (which they show as a standard industry exit multiple) and applying that to annualised revenues of £4.46m to get to £24.1m or 35.8p per share. That’s just the manufacturing business on its own.
It’s just based on current/visible activity but covered the expectation that development contracts convert into manufacturing as products reach regulatory approval.
They reiterate that around 60% of current development work relates to approved or near-approved products, with potential manufacturing revenues expected to exceed £5m annually if that conversion continues.
They then go a step further and include Biomaterials:
Applying a 6.7x multiple (sector norm) to biomaterials revenues gives an additional £3.7m, taking the combined illustrative value of CDMO + Biomaterials to £27.8m or 44.8p per share.
That still excludes:
Structural Heart and the heart valve HoT progressing to a fully funded pre-clinical development deal
AurTex other applications
Any future royalty growth beyond current levels
So the core point they’re making is that the current valuation is largely supported by the existing businesses alone and well undervalued were exit multiples applied to the revenues.
On the royalty side, they confirm Biomaterials delivered £0.914m over 18 months, with growth expected through new contracts and an audit of historical royalties.
Given the 90% margins here, it’s high-quality consistent income even if not yet huge in absolute terms.
Another key line for me was the break-even analysis: They calculate cash EBITDA break-even at £5.5m–£6.5m revenue run rate, which they expect by H1 2027.
Given revenue was already £6.7m over 18 months, it shows how close the business is to profitability if the mix improves and manufacturing revenues scale.
On the HoT, they don’t overplay it, but the wording is: “signing of Heads of Terms… suggests this is likely to be achieved” That’s fairly confident language for an analyst note, especially given Hybridan tend to be cautious. I guess it just reflects the confidence in RUA's own wording from the AGM trading update but almost certainly they would have spoken with RUA's team in compiling the 18 page note.
In summary the theme is:
CDMO alone can justify a valuation materially above current levels
Biomaterials adds further underpinning value
Profitability is visible rather than speculative
Structural Heart remains additional upside rather than being required for the investment case but the HoT are likely to progress.
They also point out that implantable device contracts tend to be long life-cycle, multi-year and multi-£m once in production, which helps explain the confidence in revenue visibility.
Hybridan don’t publish target prices
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