Aortech Share Discussion Threads

[bones] 08/1/2020 00:01

I am at a loss about why some investors have interpreted the latest heart valve development update as containing news of unexpected changes!

The 29 November 2019 interims reported the following:

“We are continuing to make good progress on both valve design and design for manufacture and feedback from the process is currently driving further improvements. We hope to commit soon to the manufacture of early proof of concept prototypes. This should confirm the capabilities of the novel manufacturing technology we are looking to adopt before finalising the design. The objective being to have design freeze quality valves under testing next year.”

All that yesterday’s update did (as far as I can see) was confirm that the commitment to acquire the tooling necessary for the manufacturing of prototypes has now been made. In other words, the trigger has now been pulled for the expenditure to go ahead on the basis that the valve design and design for manufacture processes have advanced enough to make the company confident of those designs. Something that had not happened as of 29th November 2019 interims.

The rest of yesterday’s RNS dealt with the historic reasons why Aortech believe that this new technology (which it has worked on all last year) is needed. This isn’t information that has just been discovered since the November interims. The updates all last year refer to the new novel technology being worked on.

What I think has caused confusion is the layout of the information being relayed in the RNS. It is not necessarily clear to everyone where the past tense and the present tense separate. Maybe the RNS could have been ordered slightly differently so that the information in the middle of it (that the commitment has now been made to make the investment) followed immediately after the first paragraph that referred to the 29th November information? That’s the main thrust of the RNS after all. Then it might have followed that by explaining the historic background reasons for the change. That was useful information in itself and clearly the company thought it would be helpful to explain it. It also highlights the issues that the competitor Foldax may have to face which Aortech hopes to avoid by having a far superior new method of manufacture.

I have followed this company for a long time so I did not see the confusion myself but I guess I can see why others have misinterpreted the detail about changing from a previous methodology as being a recent change. It is not recent and it is not new news, IMHO.

Also, no one has ever suggested the heart valve project would be inexpensive. That is not new news either.

[the stigologist] 07/1/2020 22:11

Well that's one way of looking at things

I'd have taken more of a strategic Porter Analysis approach.

How many big medical devices companies will require this technology eventually ?
How many suppliers of this technology are there ?
How much will they be prepared to pay for the Company which can supply them the best product with the greatest potential commercial return or strategic benefit ?

Once you've worked that out I'd approach this supposed mis-step or risk in the context of you are buying an option now for c.£10m which gives you a potential binary option return of £0m or £1000m

Why would you sell at this level when the potential risk in terms of costs/timing has almost zero effect on the ultimate raw optionality ?

[amt] 07/1/2020 18:18

I afraid I took the announcement as a negative and sold out. So often Aim companies promise much but don't deliver. I took it as a negative because I hadn't realised there were such significant manufacturing issues that they have had to make fundamental changes. We're we ever told about these issues? The fact this creates new IP seems like trying to make something bad sound good. Also there is more than a hint of additional costs and perhaps softening us up for a fund raising at some point. I have seen this with Transense Technology which after a very long 20 years is beginning to come good and I still need the share price to treble just to get my money back.

[bones] 07/1/2020 13:37

Good point Stig, that validation from Scottish Enterprise should not be under-emphasized and will have been hard earned proving up the potential business case.

[7767] 07/1/2020 12:28

With the development of the valve and the coating the product will be unique and of world wide demand, a stock to hold not traded. IMHO

[netcurtains] 07/1/2020 11:56

could make serious money on the bounces if time this right. LOL. Good game if you can do it. I'm here for the medium term though so I'll watch and enjoy the "wild" swings. Bon Chance

[greedy rooster] 07/1/2020 10:29

Looks to me like we've got selling by people trading the break out. This should not be trading here given yesterdays news and the anticipated flow of updates due this year. The announcement yesterday does not spell out any delay and was entirely in keeping with expectations except that the co has identified a process that could add more value than previously anticipated.

[bones] 06/1/2020 23:00

Yes, someuwin, first time I have seen share price Angel offer up a note. Maybe Bill has been out spreading the word. Hopefully the house broker Shore Capital is busy behind the scenes.

[langland] 06/1/2020 15:54

Despite the fall, there seems to be little stock around- at least online though I have managed to buy more in the last half hour or so with a phone call or two.

[someuwin] 06/1/2020 15:38

Yes bones - a good summary. I was a bit surprised because I didn't think that share price Angel were covering AOR?

[bones] 06/1/2020 15:32

Someuwin, that share price Angel note is very well presented, distilling the key elements of the RNS into the parts that really matter. Clearly lost on many of today’s sellers.

That said, all good runs pull back from time to time and it seems today was an excuse for that. Maybe some punters wanted funds to play the oil sector?

[someuwin] 06/1/2020 15:30

New Year Sale prices. Buy before the cheap stock's gone!

[cybernest53] 06/1/2020 15:20

Netcurtains.... Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; symbols, names and images used in commerce.

As Someuwin says the share price should be going up on this interesting positive news... not taking a massive dip... but I've topped up with a few more! GLA!

[someuwin] 06/1/2020 15:09

SP Angel today...

AorTech International plc (AOR.L): Heart valve development update

Share Price: 102p; Market Capitalisation: £15m

•AorTech International plc (AorTech), a medical devices business, issued an update on its polymeric heart valve development programme.

•The Group indicated that the product’s design for manufacture project has determined that certain production limitations can be overcome by an alternative manufacturing process.

•As a result, the Company has now committed to the design and manufacture of bespoke equipment upon which proof of concept prototype valves will be produced.

•The specialist equipment has also been designed to allow valve production to be industrialised going forward.

•The Company indicated that the novel manufacturing method may also lead to the creation of new intellectual property for the Business.

AorTech’s commitment to a manufacturing process for its flagship heart valve programme demonstrates further progress in the product’s development. Moreover, the company continues to run the programme in a cost-effective manner, as a portion of the costs incurred are being financed through a grant from Scottish Enterprise.

[bones] 06/1/2020 15:07

Netcurtains, think of the Coca Cola recipe (= valuable IP) and apply it to a method of manufacturing on an industrial scale a precision medical device in a way never previously devised!

[netcurtains] 06/1/2020 14:50

treble post

[netcurtains] 06/1/2020 14:50

treble post - no delete button.

[netcurtains] 06/1/2020 14:50

someuwin: Not sure what an "intellectual property" Is. For all I know it might be a flat in Cambridge.... Even that would be a nice asset if freehold for such a small company.

[someuwin] 06/1/2020 14:27

"Much of the novel method of manufacture identified may lead to the creation of valuable new intellectual property for the Company."

If this is what I think it is, then it could be massive for the company.

[someuwin] 06/1/2020 14:23

Today's news was all positive.

The share price should be rising - not falling.

[donalc] 06/1/2020 12:09

I am holding and not selling.
Just have the view that this will take longer than maybe I erroneously had considered before.
This drop in price is a good oppurtunity...if i had loose cash.

[langland] 06/1/2020 10:23

Agreed.....good post.

[bones] 06/1/2020 10:09

Donalc, there is not anything new here not already envisaged by the previous updates apart from highlighting the benefits such as potential industrialisation and the fact that Scottish Enterprise have stumped up what I can only assume is a significant wedge in grant funding.

It is confirming, with a bit more detail and colour, that Aortech have the confidence to commit to the tooling up stage for prototype production and that the design and process of manufacturing is as good as they can get it at this stage. If anything, the confirmation of the next stage being commenced helps firm up the expectations of a return on investment, not lengthen them.

[donalc] 06/1/2020 09:51

this clearly is right path, but for a return on investment point of view pushes returns further down road, but prospects are greater.
Patience.