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A disappointing trading statement has led to a halving of the REX Bionics share price.
The share price fell 70p to 68.5p, which values REX at £9.8m. The flotation raised £10m at 180p a share.
Sales of robotic technology for wheelchair users are much lower than expected. Management has been trying to sell the equipment to professional rehabilitation providers but a lack of clinical data has hampered this. The equipment remains expensive and customers are unwilling to make the investment even though there is positive feedback for the people using the equipment. This means that revenues in the year to March 2015 will be at a nominal level.
A deal has been done with PhysioFunction, which will offer physiotherapy using the REX equipment in its 15 clinics in the UK. REX will share in the fees generated by each session.
The new factory will be fully up and running by the middle of next year. The REX product is being enhanced so that it can be relevant to additional users.
The key to the business is getting the cost of producing the equipment down to a level when it is a realistic commercial product for a wider market.
There was still £5.8m in the bank at the end of November 2014. The underlying cash outflow in the past six months, excluding the costs of coming to AIM was £2.6m. Given that sales are unlikely to be significant in the next 12 months it is likely that a fundraising will be required next year.
The main objectives for the period to March 2016 are the commencement of clinical trials to prove the benefits and value for money of the equipment, file a 510(k) notification with the FDA so it can be reviewed before the end of 2016, recruit more distributors, recruit ten reference centres by the end of 2015 and provide evidence of progress with projects in additional areas.
Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFDecember2014_63.pdf
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