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Ilika dispatches first revenue-generating samples


Ilika LON:IKA the Southampton-based, AIM-listed, solid-state battery technology company published its final results for the year ended 30th April 2023 today (13th July).

The company was not expecting any surprises, indicating to investors in its last trading update in May that both revenues and losses would be up year-on-year with revenues of GBP0.8m, up 60% on GBP0.5m revenues in 2022, but losses also up 9.4% to GBP7m. This follows a period of R&D and investment into the development of its two key products, Stearax, its micro-scale solid-state battery for healthcare applications and Goliath, its large format battery for electric vehicles and consumer appliances. Loss-per-share was 4.16p and the company had GBP15.9m of cash in hand.

As previously reported, Ilika manufactures a range of solid-state, large format batteries as well as micro-batteries for ‘hostile environments’ namely to power medical equipment that is then implanted into patient’s bodies. The company is still at an early-stage of commercialising it products.

First earnings

However, Ilika was pleased to report that in April it had dispatched its first revenue-generating customer samples of Stereax M50s and M300s from the firm’s UK production facility. A move to revenue-generation and ultimately sustainability and possibly profitability will be welcomed by shareholders.

Management is not prepared to rest on the laurels of this milestone, and speaking to The Armchair Trader, chief executive, Graeme Purdey confirmed that Ilika would keep up its programme of investments, with around GBP2m further scheduled investment over the next year in capital machinery, equipment that will increase its capacity to produce cells. Funds have already been earmarked for this purpose from its 2021 fundraising activities.

A large part of Ilika’s growth strategy is to work in partnership with larger-scale manufacturers to build its products under licence. The company agreed a licencing deal with Cirtec Medical, a Minnesota-based medical devices and components manufacturer in January to manufacture Stearax at its Massachusetts facility in the United States, allowing Ilika to focus on its core expertise in technology development and licensing. Interest in Stearax has grown following commercial enquiries from Blink Energy, CubeWorks and Lura Health, which all requested commercial samples from the UK technology company.

Bread & Butter

Purdey said: “…to have someone on board [like Cirtec Medical] that understands the technology and goes through FDA approvals like bread and butter has been invaluable […] we’ve got a totally different skill-set [to Cirtec] whereas we are technology-focussed and have a very strong scientific background and a life-time dedication to a [sub-]sector; Cirtec has the skills to ensure that products are manufactured on a repeatable basis, they can manage quality control issues and have experience of manufacturing the same thing day-in-day-our in commercial quantities at spec, to a pre-determined price and deliver to customers on time.”

He added: “[the agreement allows Stearax to be manufactured at scale] at a lower risk and without us having to change the [research-driven] culture of our organisation.”

The partnership has allowed Ilika to de-risk the manufacturing and customer-facing aspects of production, whilst freeing up the capacity to further refine Stearax and focus upon research and development of other potential products like Goliath. Cirtec Medical plans to ship its first Stearax batteries in 2024 and is planning on collaborating with Ilika on future generations of Stearax.

Purdey said: “Cirtec can help us develop Stearax further by bringing ideas on manufacturing process that they have had experience with. They could also advise on materials and processes we have ourselves not integrated into our own manufacturing processes.”

The terms of the licence agreement will likely see Ilika receive a commission payment for each unit that Cirtec sells, although Purdey noted that the final details of the agreement were still being discussed by the parties. The British company is in the process of shipping machinery to Massachusetts to expediate the production process.

Ilika has global aspirations

The company is keen to explore opportunities in other medical technology markets globally. Although the United States is the Mecca of medtech, given its well-funded healthcare system and comparative consumer affluence, Purdey sees opportunities in Europe and Asia.

European consumers, and the European healthcare system are an obvious target market, but the growing wealth of Asian consumers and its demographics make it an interesting market. Possible future collaborations with Asian manufacturers could well help Ilika bring down unit-costs for Stearax and it Asia offers a vast potential market to service.

The Goliath programme is delivering improved cell performance with increasing capacity, cycle life and charge rates combined with elevated safety. Ilika expects to deliver data showing lithium-ion energy density equivalence by end-2023 and to share prototype cells with partners early 2024. Unlike the ubiquitous lithium-ion batteries currently used as the go-to of electric car manufacturers, solid-state technology allows for a lighter, less complex, more temperature-tolerant power pack.

Luxury vehicles

Initially, as the battery is still in R&D phase, unit costs will be higher than lithium-ion batteries. Purdey said Ilika will be targeting luxury vehicle manufacturers in the first instance, including McLaren and BMW, but as the technology is adopted, the company hopes that the battery will become available for the mass personal vehicle market.

Purdey said: “…Our research [with Comau and the UK Battery Industrialisation Centre (UKBIC)] has shown that manufacturing a solid-state battery in a gigafactory would only need a 30% change in equipment from standard lithium-ion [battery] tooling.”

At the moment the company’s focus is finding uses for its large format battery in the electric vehicle market. Purdey admitted that this was a causal effect of the grants that Ilika was taking from the government, as the government’s priority was decarbonising the transport sector to meet its net zero goals. However, said Purdey, the Goliath series also had numerous potential uses in consumer electronics, which once the battery was proved for transportation, Ilika would also look to develop.

The company’s Goliath series has been a part of an GBP8.2m collaboration project to integrate high silicon content electrodes into its Goliath batteries to enable automotive level performance. Ilika will be making available Goliath battery prototypes to the automotive industry next year.

Ilika opened trading today (13th July) at 35p. The company has offered a 38% year-to-date return, a -24% one-year return with its shares ranging between 22.5p and 95p over a 52-week period. The company has a market capitalisation of GBP54m.

Bridgewise gives Ilika a ‘Hold’ recommendation. The analyst stated: “Ilika published its 3Q22 report on 19th January 2023 with positive results, but no significant factors particularly remarkable relative to its peers. We do believe, though, that macro-related market conditions will influence the company’s performance more significantly than its individual results. Therefore, Ilika received an overall score of 68, translating into a ‘Hold’ ranking.”

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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