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Rex Bionics – results statement notes “a number of important milestones”, but what about the financials?

By Steve Moore | Friday 26 August 2016

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.

Robot technology to enhance the mobility of wheelchair users-focused Rex Bionics (RXB) has announced results for its year ended 31st March 2016 and that this “has been a period of broad progress across all areas, and we are pleased to be able to report to shareholders on the achievement of a number of important milestones during the period”. Hmmm…

The noted milestones include “the first sales of REX since the company's IPO, the first successful award under a personal injury claim to include a REX, the appointment of exclusive distributors in the company's two most important markets, the US and China, and highly positive results from an interim analysis of the RAPPER II clinical trial looking at the feasibility and safety of the use of REX by people with spinal cord injury”. However, it is also admitted that “the sales cycle for REX has been longer than we initially expected, reflecting both the pressure on healthcare budgets around the world and also the fact that REX together with other exoskeleton products is creating a completely new market segment”.

This leads me to the financials - which show revenue of £0.45 million and, even after a net £1.90 million of new equity, cash reduced by £2.51 million to £1.86 million and a £2.16 million swing to a £0.29 million net tangible liabilities position. This saw another fundraising earlier this month – this raising a net £2.1 million, with also warrants on a 1-for-1 basis.

The announcement adds “at the current burn rate the net proceeds of the fundraising will extend the company's cash runway into the second quarter of 2017” and that “notwithstanding the equity fundraising that was successfully concluded on 10 August 2016, the capital required by the company appears unlikely to be readily available from new public market portfolio investors at this time and therefore it is appropriate to evaluate alternative opportunities with a view to maximising value for the shareholders and to build on the successes to date”.

Hmmm. I’ve previously concluded, with the shares then at around 70p HERE and 43.5p HERE that, although a type of business you want to succeed, some way from being able to prove its commerciality and cash burn concerns until it gets there, the shares don’t look to appeal as an investment. At a current 32.5p, this looks to remain the case.

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