Just over a year ago, 3rd August 2023, this £109m-capitalised group announced its First Half Trading Update, I am hoping that we will see it doing similarly within days.
That could give private investors the chance to slip into a small position in the stock ahead of hoped-for positive news.
Its shares, which were up to 50p at the end of 2023, are currently trading at only 30.25p.
The Business
The Chepstow-based Creo Medical (LON:CREO) is a medical device company focused on the development and commercialisation of minimally invasive electrosurgical devices, bringing advanced energy to endoscopy for pre-cancer and cancer patients.
Its declared mission is to improve patient outcomes by applying microwave and radiofrequency energy to surgical endoscopy.
Procedures that previously took place in the operating room can now be undertaken in an endoscopy room, with material advantages in cost, time and patient outcomes.
Using the group’s technology, initial health economic data has demonstrated that the NHS can save approximately £5,000 per procedure.
Such Markets As
It focuses on significant markets where it can bring products to market that serve poorly met needs.
Interventional gastroenterology – for the dissection, resection, ablation and haemostasis of diseased GI tissue.
Interventional pulmonology – soft tissue Microwave ablation devices for ablation of tumours in a wide range of tissue types in the lung, stomach, oesophagus and colon.
Surgery – its unique IP portfolio has a clear potential to meet needs in several additional lucrative markets in robotics and beyond.
Urology – comprehensive line of Urodynamics equipment to treat conditions such as bladder cancer and incontinence.
AGM Statement
At the end of June, the group held its AGM at its offices in Chepstow, with the departing Chairman Charles Spicer stating that:
“The past 12 months have shown continued momentum in Creo’s journey towards becoming a mature, international medtech group. Using the financial resources provided by our March 2023 equity raise, we have continued to execute on all fronts of our strategy.
This has included the launch of Speedboat UltraSlim, accelerated in the EU by 18 months, quickly being followed by the product being used in the US, APAC and Latin America, with exceptional clinician feedback. We have been delighted to see the investment in our Pioneer training programme continue to deliver a growing number of worldwide users, with a 119% increase over the course of 2023.
The recent NHS Supply Chain data, which confirmed net cash savings of £687k from 130 Speedboat procedures at one NHS Trust, was a fantastic validation of the difference our technology can make to healthcare systems in addition to improving patient outcomes. We look forward to working alongside NHS Supply Chain as they promote the value proposition of Speedboat to Trusts around the country.
The potential of Creo’s technology has also been demonstrated through our Kamaptive partnerships, as MicroBlate Flex was recently used to treat a cancerous lung nodule in the same sitting as a diagnosis performed with a robotic platform, in a world’s-first combined procedure at the Royal Brompton Hospital.
The team has worked hard to keep disciplined control over costs, even as the business has continued to grow, which contributed to a reduced operating loss for the financial year ended 31 December 2023, and we continue to progress towards our goal of achieving cashflow break even in 2025.”
The Equity And Significant Shareholders
There are some 361.5m shares in issue.
Larger holders include Canaccord Genuity (10.85%), M&G Investments (9.21%), Baillie Gifford (6.17%), Hargreaves Lansdown (4.95%), Amati Global Investors (4.70%), River Global Investors (4.42%), AXA Framlington Investment Managers (4.22%), Finance Wales Investments (3.98%), and Director Shareholdings (3.27%).
Analyst Views
Soo Romanoff and Jyoti Prakash, at Edison Investment Research, have estimates out for the current year to end-December, for revenues of £40.1m (£30.8m) helping to significantly reduce pre-tax losses to just £16.6m (£22.1m loss).
For the coming year of 2025, they estimate £54.1m in sales and only a £4.8m loss.
They conclude by noting that:
“Robotics-assisted surgeries are widely regarded to be transformative for the healthcare system, given the ability for early cancer detection, greater surgical precision and shorter recovery times and we see this deal progression as an exciting opportunity for Creo to tap into this field.”
Over at Cavendish Capital Markets, analyst Chris Donnellan stated that the group was at a significant inflection point in its development.
His 2024 estimates are for £41.0m in revenues and only a £13.6m adjusted pre-tax loss.
For 2025 he has £53.7m turnover and a £4.2m pre-tax loss.
His Price Objective for Creo Medical’s shares is a significant 99p a share.
In My View
Just two months ago this group’s shares were trading at 36.50p, they are now only 30.25p – at which level risk-tolerant investors might do well taking a position now ahead of further positive news.