Ilika plc (LON:IKA) is the topic of conversation when Baden Hill Partners’ Clean-Tech Equities Specialist Dr Tom McColm caught up with DirectorsTalk for an exclusive interview.
Q1: Tom, Ilika’s results were announced this morning, what did you make of them generally?
A1:I think actually, today, the day the results came out was pretty low key and there was not much reaction from the market. That’s because basically, all of the market activity and action around the company for this period happened before Christmas, November time when they put out a trading statement. This was effectively a profits warning where it was reframing how quickly the revenues would build from the Stereax commercialisation programme.
So, all of the market reaction was already baked in so when the results came out today, with little drama, they were in line with what the market now expects.
Q2: Were there any highlights for you and if so, what were they?
A2: There was actually a very big highlight from these results and that was that a recent announcement, this Monday was obviously featured heavily in this results presentation and it’s the fact that they have signed an MoU with a US company called Cirtec Medical.
Cirtec Medical are a tier one complex medical device manufacturer in the States, they signed an MoU with Ilika to basically tech transfer their manufacturing capabilities across to Cirtec and Cirtec to take that over and scale it up. They’ll then use it to vertically integrate it into a lot of their product lines whilst also servicing IKA’s existing clients.
So, it was a very positive announcement and something we’ve been waiting for, for a long time. It was only an MoU and obviously we’ll be looking for this to turn into a full contract.
Another thing it actually does is it’s a good validation of their technology because lets be sure that Cirtec will have really kicked the tyres on Stereax to make sure it was the real deal so a very positive highlight there.
Q3: What potential positive news flow around the miniature platform Stereax programme should investors be looking out for, over the next few weeks and months?
A3: Again, it directly relates to what I’ve just spoken about the highlights from the results, that the deal with Cirtec we’ll be looking for that to evolve announcements around strengthening that relationship.
Ultimately, the key thing investors should be looking out for is that maturing into signing of a full commercial contract, a big piece of news that I would expect should happen, and is something that if it does happen, it’ll put them in a much better place so that’s something to be looking out for.
When that does happen, they will have achieved a long term ambition that it had of becoming an IP development and licensing play rather than a self-manufacturing play.
Q4: Same question really, positive news flow around the large-scale platform Goliath, what should investors be looking out for there?
A4: Again, Goliath, things are going along quite nicely there. That’s in an earlier stage technology so we’d be looking for clear technological advances so increases in things like energy density, cycle life for the technology.
A key point in the energy density journey will be when they hit parity with incumbent lithium-ion batteries so they’re targeting end of this calendar year for that so when that happens, that’s something to look out for.
As the tech advances, there’s already interest but they’ll be more interest from commercial OEM’s, automotive, appliances etc. so an announcement of commercial and more grant-funded projects involving Goliath would be something to look out for as well.
Q5: Do you have any comments in general around the battery sector?
A5: It’s only going in one direction.
I think we spoke about it before but as we are moving towards net zero, two of the huge areas that are required to do that are the electrification of transport and the switching of grid infrastructure to renewables, particularly solar. Both of those situations, batteries are absolutely essential to achieving those two things.
Obviously, in transport, they are the replacement for the engine and in grid infrastructure, when you’re moving to renewables, batteries are used for storage which you obviously need for an intermittently renewable-powered grid.
So, only one direction for batteries, I think.
Ilika’s Stereax is a little bit different but even there, because of the whole Internet of Things, wearables, and everything going cyber etc, that plan for those smaller batteries is going to go up as well, I think.