RUA Life Sciences plc
Ticker: RUA Exchange: AIM

RUA Life Sciences is a holding company for a group of medical device businesses focused on the exploitation of the world's leading long-term implantable biostable polymer (Elast-EonTM).

Latest Reports

Graft progress reflected in new valuation

Published: 12th October 2020

RUA Life Sciences has announced that their graft products have moved into the final long-term animal testing stage. This is the point that proceeds the submission and then FDA approval (during which the graft could be partnered). We have therefore modified the risk-adjustment in our valuation to reflect a 5% higher probability of success. This tangible progress in the development of RUA’s most advanced products validates the acquisition of RUA Medical as all the value from these products now resides in the combined company.

Our valuation methodology attributes most of the valuation of RUA Life Sciences to its grafts, patches and heart valve products. As such, we have updated our valuation to reflect the recent progress announced by RUA Life Sciences. This increases our valuation to £111.2m or 765p per share, from £99.3m or 676p per share.

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CEO & Chairman Interview - Positive AGM statement

Published: 11th August 2020

Chairman, Bill Brown and CEO, David Richmond discuss a year of substantial change and progress for RUA and update on both the Group's prospecfs and an encouraging recent recovery in orders after the initial impact of the pandemic.


Positive AGM statement

Published: 11th August 2020

RUA have provided a recent flurry of positive news, including an update on RUA Vascular division’s products and the recovery in elective surgical procedures in the US and Europe. The recovery in surgeries is positive for the revenues of RUA Medical Devices division and provides investors with much more reassurance than the second-quarter financial results from the biggest medical device companies.

The AGM update paints a recovering picture of the orders and therefore revenues at its RUA Medical Devices division. The recovery in elective surgical procedures and orders from its largest customer are expected to result in shipments that will average around 90% of pre-pandemic levels over the next three months. RUA Medical Devices has received orders in five out of the last eight weeks at higher levels than the pre-pandemic weekly average value.

There is also progress for RUA Vascular‘s Elast-Eon-sealed large diameter sealed vascular grafts and patches, as the critical ‘design freeze’ stage has been reached for the graft. Achieving the leak and permeability characteristics of market-leading grafts without animal products now clears the way for regulatory testing to complete in early 2021.

With the tangible progress in RUA’s surgical grafts and patches, we are getting closer to increasing our valuation, but for now make no changes to our financials. We still value RUA Life Sciences at £99.3m or 676p per share.

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‘The transformation continuum’

Published: 14th July 2020

Following the acquisition of RUA Medical Devices Limited by AorTech International plc, the combination has released their first set of final results under the company’s new banner of ‘RUA Life Sciences plc’. The name change has not been the only transformation as RUA is now a fully integrated medical device company with FY 2020 revenues of £489k, a cash balance as at 7 July 2020 of £1.5m, plus much more to come in product development news in FY 2021.

FYI 2020 Results 

Licence fees and royalties from the legacy business, now known as RUA Biomaterials, increased 5.6% to £489k (vs. £463k for the year to March 2019) – not significantly different to our £490k estimate. Administration expenses, which included R&D for the products in development in the RUA Vascular and RUA Structural Heart divisions as well as patent maintenance costs in RUA Biomaterials, increased 36.6% to £1,123k (vs. £822k in FY 2019) as these products progressed through animal implantation towards clinical trials and regulatory approval.

The R&D expenditure increased the FY 2020 operating loss to £941k compared to £638k in FY 2019. Yet the addition of £81k in R&D tax rebate and £44k in finance income (£0 and £29k in FY 2019) resulted in the net loss only increasing by 34.0% or £816k in FY 2020, compared to £609k in FY 2019. RUA Life Sciences’ cash balance was £1,976k at the end of FY 2020 (compared to £2,412k at end FY 2019) and £1,507k on 7 July 2020 after the costs of the RUA Medical acquisition. We forecast RUA’s cash runway will extend into 2022 and would anticipate a fund-raising based on positive product development news before then.

Many moving parts and product developments

RUA Medical also brings significant customer revenues to RUA Life Sciences in addition to the capabilities, manufacturing, testing and design facilities. We now forecast total revenues increasing to £1,933k in FY 2021, even taking account of the shortfall brought about by fewer elective surgical procedures resulting from the global coronavirus pandemic. Adding to this income will be the PERF grant and increasing R&D tax rebates.

Valuation unchanged by grant funding

We have updated our financials and forecasts, but only change our valuation to reflect RUA’s cash balance. We value RUA Life Sciences at £99.3m or 676p per share.

Summary Financials

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Source: Company historic data, ED estimates

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RUA Life Sciences Management Presentation June 2020

Published: 25th June 2020

Bill Brown, Chairman of RUA Life Sciences, takes us through a presentation on the new structure following the name change from AorTech International, and the acquisition of RUA Medical. Looking at both the Medical, Vascular, Structural Heart, and Biomaterials divisions, he details the trial timelines and expected progress for their key products in the next 12 months.


A run of good news

Published: 8th June 2020

Since AorTech’s May trading update the company has continued its run of positive news announcements with a Government grant under the Pivotal Enterprise Resilience Fund (PERF), the issue of a new patent, and most recently, the impending resumption of orders from RUA Medical’s largest customer.

On 8 June, AorTech announced that its wholly owned subsidiary RUA Medical Devices’ largest customer has requested that it prepare for production, and that orders have resumed for supply in August, subject to any second wave pressure.

Since announcing the finalisation of the manufacturing and design of its heart valve prototype, AorTech have further noted the US Patent and Trademark Office’s issue of a new patent that protects those developments.

The refinement and protection of claims for the incorporation of its biostable polymer ElastEon in medical devices that include heart valves and aortic grafts, will not only be closely watched by AorTech’s potential licensees for its heart valve product, but will be required by any US licensee.

Although the heart valve and vascular products comprise just over 90% of our valuation of AorTech, we have not made any changes to our valuation but have incorporated the £150,000 PERF grant into our FY 2021 financials.

Our valuation remains at £101.3m or 690p per share.

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Trading update

Published: 13th May 2020

In a reassuring and well-received trading update ahead of FY 2020 results set for July, Aortech have detailed their FY royalty and licensing revenues, cash balance and product developments. After many years in the making, the Elast-Eon tri-leaflet heart valve now appears to be ready for ‘prime time’.

We have made only very minor changes to our valuation and financials. Our valuation moves to £101.3m or 690p per share from £101.2m or 689p per share, largely as the result of the slightly higher cash balance. The major components of our valuation are the products in development and their valuation remains unchanged.

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RUA Medical now a done deal

Published: 31st March 2020
AorTech’s £2.45m mainly stock, and cash acquisition of RUA Medical Devices Limited was approved by shareholders at the EGM on March 31. The transaction brings ‘in house’ AorTech’s partner in the development of its vascular products. The acquisition of RUA Medical also brings increased revenues for the combined company (which we now estimate at £2.2m for FY 2021) plus an enlarged management team with extensive medical device experience.
We have taken the opportunity to run sensitivity analyses on the key valuation variables (which are predominantly the exit valuations of the vascular and heart valve products on acquisition). That suggests the stock-market is assigning very low probabilities of success for both products and/or extended timelines for their acquisition or licensing.
Our fair value for the combined entity is unchanged at £101.2m or 689 pence per share, despite the recent market turmoil.
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Strategically more than the sum of the parts

Published: 11th March 2020
AorTech have announced the proposed acquisition of the partner in their vascular business, RUA Medical Devices Ltd, for £2.45m. RUA Medical is a stand-alone cash-generative, medical device and development company. 
The cash element of the acquisition is funded from existing resources and the stock element at £1 is a premium of 34% to the last closing price. RUA’s cost equates to 1.5x FY 2019 sales and 8.5 times EBITDA. Subject to shareholder approval, the deal should close post financial year-end and not affect our FY2020 estimates. 
To us, this seems a strategically sensible move as the transaction has a number of positive attributes:
• it would transform AorTech from a virtual business into a fully formed ISO-accredited, FDA authorised medical device manufacturer. 
• RUA is cash generative in its own right, with revenues that have grown from £0.6m in 2013 to £1.6m in the year to April 2019.
• The full internalisation of the Vascular business will double AorTech’s margin when the products are commercialised.
Upon completion our fair value would change slightly to £101.2m or 689p/share (previously £99.2m or 676p/share) on a pro forma basis that takes account of the additional shares issued.
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The Phoenix continues to rise

Published: 19th February 2020
AorTech International PLC is incorporated in the UK and focused on the commercialization of its own world leading biostable co-polymer technology, Elast-Eon. 

After a twenty-year history, AorTech has started to live up to its rich asset base in medical devices. A management restructuring, reduced cost base and business alignment was complemented by a fund raising in June 2018. The progress made since the fund raising has been noted by investors and the share price has nearly tripled in 20 months. Investors may worry that they have missed the opportunity in AorTech, but we think the alignment and maximisation of assets has probably only just begun.

The AorTech of 2020 is quite different to that of 15 years ago and the company starts the new decade in a good position. AorTech Vascular and AorTech Heart Valve are the two product-focussed division of AorTech where the collaboration with RUA Medical or their long development heritage respectively, are generating medical devices that are expected to have improved outcomes for patients and payers. 

The three divisions demonstrate a diversified portfolio of businesses. The royalties in AorTech Royalty is a low risk, growing business. The Elast-Eon-coated graft and surgical patch products are medium-risk and near-term when compared to the AorTech Heart Valve which we view as having the highest risk and the highest potential value.

After many years in the making, AorTech is now in the right place at the right time – as demonstrated by the many historical transactions that have taken place in the heart valve and graft space – for the company to generate significant value. 

Our sum of the parts valuation for AorTech suggests that there could be much further to run than in the share price appreciation in the last year as this value becomes recognised.  We value AorTech at £99.2m or 676p per share.

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