Nanoco, LON:NANO, the Manchester-based technology company engaged in the research, development and manufacture of products and services based on nanoparticles published its unaudited preliminary results for the year ended 31st July 2022 on 20th October.
The company was originally established in 2001 as a spin-out from research bring undertaken at the University of Manchester and today manufactures a high volume of quantum dots – or nanometre-sized semiconductor particles used in screen displays, sensors, LED lighting, backlighting, flexible low-cost solar cells and biological imaging – from its factory in Runcorn, Cheshire.
The company floated on AIM in May 2009 following the reverse acquisition of Nanoco Tech Public Company Limited by Evolutec Group plc, and was promoted to the Main Market in May 2015.
Nanoco sells its products direct to manufacturers, but also raises revenue from one-off licence fees, when a customer initially acquires a right of access to or use of Nanoco technology and IP and from royalties, which allows partners to manufacture Nanoco products themselves, or source from elsewhere under further licence, and then pay a royalty on the value of their sales to their customers.
The royalty stream is a very attractive aspect of Nanoco’s business as it has the potential for very high leverage since it is not constrained by Nanoco’s own limited manufacturing scale and has minimal costs associated with incremental sales.
The company also offers design consultancy services.
Nanoco losses narrowing
The company said that it had increased revenues 19% to GBP2.5m over the period – up from GBP2.1m the year previously. Its losses before interest, taxes, depreciation and amortization (LBITDA) had reduced from GBP2.8m in FY21/22 to GBP2.1m but had buffered its cash position through an equity fundraise that gave the company a runway through to 2025, beyond its expected breakeven point, and reported GBP6.8m of cash in the bank and had trimmed its burn-rate to GBP200,000 a month.
The company has existing licencing deals with Dow Chemical Company in its South Korean factory, as well as licences with Wah Hong Industrial Corporation in Taiwan and Merck in Germany.
Brian Tenner, Nanoco’s chief executive said in a statement: “We have consistently delivered on all of our target milestones […] we maintain our goal of being ready in 1H23 for potential commercial production orders in the short term […] We are consolidating our core R&D and scale up capabilities in our Runcorn production facility to deliver sustainable net savings of around GBP700.000 a year. The over-subscribed equity fund raise significantly extended the cash runway beyond when we expect to be self-financing. This has also allowed targeted strategic investments in new equipment and additional personnel as we increase our overall activity levels across the business, including new R&D staff to support new materials for other quantum applications.”
David v Goliath
The company is currently locked in litigation with tech giant, Samsung, claiming the South Korean electronics titan stole its tech and used it in its bestselling QLED TVs. The initial case is set to be heard in Texas and has filed another suit in Germany and Nanoco is also considering follow-up lawsuits in the UK and China, claiming hundreds of millions of dollars from past and future sales. Analysts reckon if Nanoco is successful, it could be due up to USD500m in damages.
Texas has been chosen because it has a ‘rocket docket’ that hears claims and reaches verdicts much more quickly than in other states. Nanoco had brought 47 claims against Samsung for the wilful infringement of its intellectual property under five patents in the US. In May, all claims were ruled in favour of Nanoco by the US Patent Trial & Appeal Board.
The first trial in Texas was initially scheduled for 22nd September. This was pushed back to 3rd October and this rescheduled date was also pushed back.Tenner said: “”We are pleased with the developments in our litigation against Samsung. The progress vindicates and enhances our confidence in the merits of our case. We won all five of the inter partes reviews at PTAB. At the pre-trial conference, the motions that are important to Nanoco were resolved in our favour. We have been able to narrow our focus ahead of the short one-week trial onto those claims that Nanoco considers to be the strongest and most clearly infringed. We patiently await a confirmed date for that trial.”
The company expects the outcome of a hearing in 1H23.
Shares in Nanoco closed trading at 36.6p on 20th October. The company has offered an 81.5% year-to-date return and a 75.4% one-year return, with prices ranging between 16.1p and 60.5p over a 52-week period.
