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I asked the Company about competition and it appears the only main competitor is Foldax but only in India where they are conducting regulatory trials. Foldax raised funds at $135m valuation about a year ago which highlights how under-valued RUA is. I think Foldax complete their Indian trials in late 2025 but then they have to monitor it for five years. So RUA is well ahead of the game of a company valued at $135.
I also asked about the regulatory environment and was advised that devices are approved not specific components or materials. The advantage of ElastEon is the material is proven to work in the clinical environment thus giving a manufacturer greater confidence to use it.
I assume that means that if the heart valve company with the MTA wanted to move forward they could use RUA's material in their existing regulated valve products without having to go through regulatory trials. That's massive for RUA and no doubt a major factor on why they have embarked on a deal for material rather than create a heart valve for licensing.
They do of course have a heart valve for which their engineer achieved an award for its excellence which begs the question whether it could be a commercial offering but I doubt it and it conflicts with their declared strategy. I understand it's just an excellent product used for testing and further development purposes.
Many thanks NickE for sharing your findings!
Unfortunately, if a manufacturer changes the polymer used within its valve replacement it will be classed as a new device. It will need to be tested to ISO 5840 requirements. The FDA / MHRA / EMA etc will then authorise and determine what post implant follow up is required.
CTSFO, yes that would be certain but that’s par for the course for the majors. The BIG issue here is the ultimate need for the market to find a suitable replacement for using animal byproducts like collagen. These are affected by supply chain risks and limited life in younger patients who will need re operating on in time.
If RUA’s material is shown to have the promise of overcoming these two limitations, that could be enough for a major to want to secure the rights to it despite the early days of trialling. That’s their usual MO in these situations.
That's what the global company are doing now and have been for the last 6 months - testing to ISO 5840 requirements.
They don't make up their own tests only to have to do another mandatory different set of tests - they ain't stupid by duplicating costs and time.
And the supply chain risks are a massive tick for me. Reliance on one country to remain TB free for ever is a risk that must be addressed.
APOLOGY AND EXPLANATION.
My post looks like it’s knocking the company a bit. I’m very sorry. That wasn’t the intention. It was a reply to:
“ I assume that means that if the heart valve company with the MTA wanted to move forward they could use RUA's material in their existing regulated valve products without having to go through regulatory trials. That's massive for RUA and no doubt a major factor on why they have embarked on a deal for material rather than create a heart valve for licensing”
Which I think suggested full testing wouldn’t be necessary. Sorry for not making this clear.
I don’t see how RUA’s product will be anything but game changing here.
I’m guessing the Final Results in July will include an update on the in-house testing of the heart valves. Approx another 6 months of data. That’s got to be close to double the minimum number of cycles ISO expect. Fingers crossed and the best of luck everyone.
Indeed let’s trust in a decent update with the finals.
The fact that, at this late stage, the board have positioned themselves and some employees via options to benefit from any takeover or return of capital seems significant. It’s rare for an options RNS to make a point about this when it would usually be a standard part of the option clauses. It’s almost like they want to avoid being accused of moving the goalposts at the time a later event like a takeover occurs.
Couldn’t agree more. The potential for a takeover is very real here. RUA structural heart or the entire group? Personally I think a major buying everything makes most sense. Would this trigger a bidding war? Jimzi’s comments very important here as well. The potential to disrupt the source and supply chain of xenografts is very real. Whilst this product is cheaper and better. Another point, plenty of lab work being done on polymeric valves in universities. Echoing other posts, not sure how many others have the science to improve AND ability to upscale supply? I’ve got to repeat myself, this is a hidden gem. Tine to load up.
GLA.
When does “loading up” become irresponsible? I’m stopping myself buying any more - trying to moderate impulsive buying!
When you remortgage the house and buy RUA with the cash!!!
Being serious, we don’t know if anyone will take an interest in RUAs product and develop heart valves from it.
But
We’re a decent length of time into the trial and we haven’t had an RNS saying the major isn’t interested. So that’s good.
This is important:
“ That's what the global company are doing now and have been for the last 6 months - testing to ISO 5840 requirements.
They don't make up their own tests only to have to do another mandatory different set of tests - they ain't stupid by duplicating costs and time.”
RUA is 6 months ahead of the major with in-house data. If the major’s 6 month / 400 & 200 million cycle data is the same as RUA’s at the equivalent point - then the major may seek to see RUA’s most recent data covered by a NDA. It might accept the performance data will match for its valve extrapolated out. And be more interested in entering into a JV / merger / TO earlier rather than later.
BUT a ten bagger feels realistic here and if you multiply your holding by that it makes the mouth water !
Yes, if ever there is anything that could be termed a realistic ten-bagger then RUA fits the bill. Doesn't mean it will happen of course but there is a decent chance.
With Foldax doing their last funding round at $135m valuation then it only take an offer of about half that solely for RUA Structural Heart to get a £60m plus valuation the other three divisions remaining to give further upside. It would make sense for any interested major player to buy Structural Heart and the relevant IP for the heart valve material rather than pay an upfront fee, milestones as it progresses through trials and ultimately royalties.
I am sure that would be managements preference and the wording of the options RNS certainly made sure investors were made aware of the possible prospect and benefits to directors who are now very much aligned to shareholder aspirations.
Going back to the question of whether a multibagger prospect is realistic I'd say that the material seems to solve some key issues that arise with existing products:- avoids the need for lifetime anti-coagulants , proven, at least internally, as more durable than mechanical valves and those using animal material and not subject to catastrophic failure.
So there is potentially a quick route to a ten bagger via the sale of RUA Structural Heart (say a £50m offer for this segment alone) and a less instant route to three to five bagger through RUA Medical doubling contract manufacturing revenues - say £20m to £35m m/cap once it transitions the Company as a whole to breakeven/profitability. I'd discount RUA Vascular but £7m value can be thrown in for RUA Biomaterials and it's circa £550,000 profit contribution.
Could get both of course (a £50m sale of Structural heart and breakeven for the rest of the group) and get a 15 bagger but that's just being greedy!
I'd like to see another company do a MTA but, who knows, although there is no declared exclusivity with the current agreement, there might be a mutual understanding to wait for this Company's testing and decision within an undeclared but internally known and reasonable timeframe.