Creo Medical Share Discussion Threads

[protrader3] 15/1/2023 22:18

After 12 months of constant selling, the question is how low can this share price go? It is highly likely that we could see a share dilution in the not too distant future. Looking at the cash burn CREO will run out of money by mid summer and will surely need to raise capital.

[edwardt] 11/1/2023 16:27

agree it will bounce on raise but they probably need double that amount imho.

[74tom] 11/1/2023 11:58

More than likely - the broker note today says they need £15m capital. It's an intriguing situation now though. There is plenty of good stuff on their Linkedin page & the tech is being used around the world. The Intuitive & CMR Surgical agreements validate their tech further, as ISRG in particular would have done intense DD before concluding such a deal and apparently making a ~£1m payment.

It feels like it's worth a punt for a 1-2% portfolio allocation at such a depressed valuation - the RSI is currently 2 and has sat below 30 since mid July... I actually don't think I've ever seen anything quite as technically oversold!

[toffeeman] 11/1/2023 10:15

In the current conditions I would be unsurprised by a discounted cash raise Advisors want their fixed price commission and the company needs cash.

[74tom] 11/1/2023 08:38

Yep, I've taken a starter position this morning - will add more if / when they sort out the cash runway. I certainly think an equity investment at a level well above the current share price is a possibility given where they previously raised capital.

This is particularly impressive;

"The Pioneer programme sits at the heart of the sales process tracking doctors engaged with the business to join the programme. The Company tracks all customers through this five-step process, from engagement, through to purchasing of equipment, training and mentoring, before becoming users. During FY 2022, the number of physicians in the process doubled to more than 450 by Dec 2022. With 60 doctors trained in H1 and 90 during H2, this resulted in 80 confirmed users at Dec 22, a fourfold increase from the start of the period and in-line with the Board's expectations, and leaving a wider cohort of engaged clinicians which the Group will work to convert to regular users in H1 2023."

[edwardt] 11/1/2023 08:19

amazed if intuitive don't take most of the placing and this thing doubles over night

[ny boy] 11/1/2023 08:16

0p would be about right, still attracting mug buyers though lol The charts don’t lie

[74tom] 11/1/2023 08:14

That's been known for a long time now though (see posts above) and is certainly priced in given the enterprise value of ~£31m vs ~£250m 12 months ago. There is a decent note from Cenkos (I know) that splits revenue between Kampative, Creo Device & consumables. They appear to have received a £1m up front payment from Intuitive Surgical & are lined up for another £9m over the coming 3 years, plus royalties from device usage via ISRG systems.

Certainly high risk, but I think this looks very interesting as a recovery play or potentially even an acquisition target. I.e. if ISRG are happy to pay them £10m in milestones + ongoing royalties, why not just take the whole lot for £40m, given they have a market cap of $95b?

The product is clearly very good, the issue is they are undercapitalised & early in the game.

[someuwin] 11/1/2023 07:26

Cash burn £13m over 6 months, And only £13m left means big placing coming.

"Cash and cash equivalents as at 31 December 2022 were GBP13.1m (30 June 2022: GBP26.1m) and the Board is considering a number of options to ensure that the Group is sufficiently funded to meet its stated growth ambitions."

[74tom] 16/12/2022 11:20

Placing finally inbound? Smells like it… utter disaster for long term holders to see a material raise at these prices. 20p would be my guess…

[bodgeman] 16/12/2022 09:27

Ouch! 10% drop.

[bodgeman] 14/12/2022 18:41

They will get gobbled up if the price continues to fall - take the product rights and strip anything else of value. Looking like there us nothing here for investors.

[74tom] 09/12/2022 12:48

Really surprised that CREO haven't announced a financing in the 5 weeks since I posted, the share price continues to fall and it's been nearly 2 months since this closed higher than it opened... the longer it goes on the higher the chances of a destructive placing sub 30p get. I suspect they are in denial and refusing to accept that the valuation has fallen so far - or maybe they have a trick up their sleeve. All will be revealed at some point in the next few months...

[hybrasil] 05/12/2022 10:57

And still they fall. New 52 week low today

[bodgeman] 01/12/2022 16:40

Like 74tom I have been watching for some time but as said already cash will be running low and some investors seem to be dropping shares. You would have thought, given the situation, they are a prime takeover target as their product looks good.

[74tom] 03/11/2022 10:41

I've been watching this with interest for some time but have held off even opening a starter position given the current environment. Looking at the fundamentals, you'd have to think we are in bargain territory now though with shares having declined some 57% from the day they announced the Intuitive Surgical deal...

CREO have raised capital 3 times since their IPO back in Dec 2016;

IPO : £20m @ 76p
July 2018 : £48.5m @ £1.25
December 2019 : £51.9m @ £1.80
August 2021 : £36.3m @ £1.825

That's a grand total of £156.7m at an average share price of £1.38

The problem right now is their cash balance is quite clearly running out;

31/12/2021 : Cash and cash equivalents £43.5m
30/06/2022 : Cash and cash equivalents £26.1m

Stripping out working capital movements gave cash used in operations of £15.7m in the first 6 months of the year, a burn rate of £2.6m a month...

So assuming that trend has more or less continued, they will now be down to around £16m, equivalent to just 6 months of runway.

I very much doubt they can afford to risk leaving a capital raise much longer or else run the risk of severely diluting prior investors (it's already bad enough, but £30m @ 40p would represent 40% dilution which isn't disastrous, whereas the same amount at 20p very much would be!) I doubt they would want to run the risk of any kind of debt financing at present given interest rates and appetite for risk.

Interesting to see what they can work out - you'd have to think longer term life science investors in the US would be sniffing around at current levels but there is zero sign of that at present!

[40 fathoms] 19/10/2022 05:08

Below is the transcript from last nights Intuitive Surgical Q3 results call, it is in response to a question about ablation technology. An indirect as opposed to a direct mention of CREO but it does provide context of ISRG thinking about how ablation will fit within their ecosystem.

"Jayson Bedford:
Hi. Good afternoon. Thanks for taking the question. One topic that I thought was interesting, you mentioned ablation technology with respect to Ion and starting a trial in Germany. Can you talk a bit more about the technology and the size and scope of the trial? And maybe any type of timeline you can offer in the U.S. in terms of starting a trial?

Gary S. Guthart, Chief Executive Officer:
Well, I'll talk a little bit about the motivation. In terms of the details of the trial, I don't have them at our fingertips but our team can respond to that in a future call.
Here, we know that Ion can navigate in -- deep into the lung. We know that surgeons and interventional pulmonologists want to treat tissue there. They want to be able to engage with it one way or another. So, ablative technology can be used for a couple of different disease states and we have high interest in that, whether it's inoperable cancer or whether it's something emphysema or chronic bronchitis.
So being able to navigate there with an energy source will ultimately be important. The first one that we're talking about here, I believe, is a microwave energy source. There are some other energy sources that people are interested in. In some cases, we're developing it ourselves, and in several other cases, we're partnering with others. And we think that will open the door to additional indications for Ion in the long and elsewhere. We're pretty excited about it. Apologies for not having the details of the trial at our fingertips, but I imagine our team will get that to you in the future."

[74tom] 09/9/2022 10:11

So a decent increase in Speedboat sales as expected, however gross profit contribution will need to rapidly accelerate from here if they are to reach breakeven any time soon. I hope they succeed as medical innovation is vital & shareholders will do very well, however significant capital will be required and that is in short supply at present! One for the watchlist.

[74tom] 28/6/2022 09:40

"Management expect Albyn sales to increase by £1mln in 2022 and Speedboat sales to double quarter-on-quarter (up to £1mln) as core accounts increase from 30 to 80"

Until any kind of financial momentum is achieved any talk of £200-300m revenue in 5 years time is pie in the sky, lets see how long it takes them to get to £1m revenue..

[edwardt] 30/5/2022 13:59

the question is how much dilution do we have to endure get there? also i suspect intuitive will potentially drop £30m with ease to buy a stake in creo if they see its potential post trials. all conjecture but creo appears to have a product that is better than those of the big boys which i put a lot of value on.

[edwardt] 30/5/2022 13:55

fair point - mine was a crude comparison. i just think you can look at the size of the potential partnership with intuitive and one can assume given their size a successful partnership could have a huge impact on creo and probably a low impact on intuitive? as such, potentially 5 years out you could easily see £200 /£300m revenue to creo from a tie up with them and not have overly heroic adoption rates. Clearly the market is factoring this in to an extent but i suspect not enough.

[74tom] 24/5/2022 14:37

Crikey, I'd not done research on Creo prior to today but it appears they've played an absolute blinder with their acquisitions...

Quotes like;

"maybe but on half the rating of sales to intuitive, i would have thought we should be on a higher ev/sales given the opportunity set given the gearing to this announcement"

And then you read yesterday's results and see;

"Revenues billed in the period in relation to Speedboat Inject and CROMA totalled £0.3m (2020, £32k). £24.9m was generated through distribution sales of Creo Europe (formally known as Albyn and Boucart). Other operating income of £0.05m in the 12-month period to 31 December 2021 (December 2020: £0.05m) relates to research grants."

They paid €5m for Boucart & €27.5m for Albyn, so we can say that they valued them both at ~1x sales and should presumably be worth a total of £28m today.

Creo has a market cap of £178m and had £43m cash left at year end, so the market currently values Speedboat at ~£107m or 356x revenues!

And yet some PI's think it's hard done by vs intuitive surgical which trades at 12x revenues. Crazy.

[buywell3] 24/5/2022 08:58

Good point

BUT Intuitive can't afford to make a mistake

Hence the clinical studies/trials to garner more data

imo could take years yet


A clinical trial is one of two main types of clinical studies. A clinical trial tests (or tries out) an intervention -- a potential drug, medical device, activity, or procedure -- in people. It also is referred to as an interventional clinical study. The other main type of clinical study is an observational study.

[c3479z] 23/5/2022 08:36

would have thought it would be easier for intuitive just to buy out Creo but may be they haven't done so because Creo would then be a small UK offshoot.

[edwardt] 23/5/2022 08:29

as most of their products have fda approval i am not sure clinical studies is the same as trials - happy to be proven wrong. i guess it is more of an integration and application trials of use with their world renowned da vinci robotic surgery machines?