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Rex Bionics – a business you’d want to succeed, but to own the shares?

By Steve Moore | Thursday 18 December 2014


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Robotic technology that enhances the mobility of wheel-chair users-focused, Rex Bionics (RXB) has updated that “sales are currently materially behind market expectations” and “in the period ending 31 March 2015 will be only a nominal amount”. However, with the company now set on generating “as rapidly as possible the clinical data required to support the clinical and quality-of-life benefits that we believe REX can deliver”, is a near halving of the share price currently today, to circa 70p, overdone?

The admission document for the company’s 180p per share May AIM Casino IPO noted that the “near term objective is to grow sales of its REX Rehab product by targeting rehabilitation centres in the United States and Europe”. However, the company now states that “it has… become increasingly clear that… the sale of REX on commercial terms and on any scale to healthcare institutions requires clinical data on the health benefits, as distinct from, albeit very positive, wheel-chair user feedback”.

Excluding expenditure of a one-off nature relating to the IPO, cash consumption in the last six months is noted to have been “approximately £2.6m”, with a cash position at 30th November of £5.8 million. The company reckons that, in sales, it will see “some improvement in the first half of our 2015/16 fiscal year, and with a stronger growth trajectory starting towards the end of the 2015-16 fiscal year”.

However, it admits that the generation of clinical data “will take some time”, though “intend to continue with our recruitment programme for commercial representation in the coming months, including expanding our direct representation into the US and seeking to expand our distributor representation in Europe, the Middle East and Asia”.

The market cap is now reduced to £10 million and this is a type of company you want to succeed but, with Rex looking to be some way from being able to prove its commerciality and cashburn concerns until it gets there, the shares don’t look to appeal as an investment currently.


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