RUA Life Sciences (LSE:RUA) has completed the spin-out of its subsidiary RUA Structural Heart alongside securing a £3 million convertible funding round led by the Leducq organisation. The transaction also included the conversion of £4.8 million of intercompany debt into equivalent loan stock.
Although RUA continues to retain full equity ownership of the subsidiary at present, the company said RUA Structural Heart will now be accounted for as an investment rather than a directly funded operating division. Management expects the move to strengthen the group’s balance sheet, improve annual profitability and allow greater focus on the company’s contract development and manufacturing (CDMO) operations.
The newly raised funding will support further development of the company’s AurTex-based surgical mitral valve programme, including optimisation work, durability testing, animal studies and expansion of the specialist development team.
The valve technology is primarily aimed at treating rheumatic heart disease patients in low- and middle-income countries, where access to durable and affordable valve replacements remains limited. RUA Structural Heart said the programme has backing from leading heart valve specialists and is designed to attract specialist healthcare investors as development progresses.
Management believes the AurTex platform has the potential to address a significant unmet medical need while improving the durability and cost profile of polymer-based heart valves on a global scale.
The company’s outlook continues to be affected by ongoing operating losses and negative operating and free cash flow despite strong revenue growth and a relatively low-leverage balance sheet. Technical indicators remain supportive, with positive momentum trends and a favourable MACD signal, although overbought conditions may create some near-term volatility. Valuation metrics appear more attractive due to the company’s comparatively low price-to-earnings ratio.
More about RUA Life Sciences
RUA Life Sciences is a medical technology company focused on implantable biostable polymers and cardiovascular devices. The group provides contract development and manufacturing services while also developing proprietary medical implants using its AurTex polymer composite platform. Its RUA Structural Heart business is focused on next-generation heart valve technologies targeting rheumatic heart disease in emerging markets as well as future applications in aortic valve treatment in developed healthcare systems.
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