Ilika Plc (LON:IKA) Chief Executive Officer Graeme Purdy caught up with DirectorsTalk to discuss the company’s year-end results, progress on Stereax and Goliath product lines, and the recent £1.25 million grant awarded under the Drive35 programme.
Q1: Ilika issued a great set of results this morning, highlighting progress across both product lines. If we start with Stereax, are you still confident of the strategic alignment with Cirtec?
A1: Absolutely. We worked quite hard to select Cirtec as a manufacturing partner and licensee of our Stereax technology. Some of the key reasons why we selected Cirtec are as valid today as they were when we signed up to that licence agreement.
First of all, they are a US-based contract manufacturing organisation specialised in the medical device sector, and that US location is really key to establishing strong relationships with their customers and the ultimate OEMs who would use Stereax batteries in their products. They’ve also got a business model which is very much focused on manufacturing and is complementary to our development and licensing business model. Thirdly, they have a focus on AIMDs, Active Implantable Medical Devices, which all require batteries to work.
So, from a strategic perspective, the two companies are very well suited.
Q2: How are they progressing with the implementation of manufacturing?
A2: Well, they’ve made great progress over the last 12 months. As you heard earlier in the year, we’ve now completed the installation and commissioning of all of the equipment that we sent across from our UK facility to allow Cirtec to do the majority of the manufacturing process steps in the US.
In addition, we have now started the engineering lots, which means running the process from beginning to end and making trial products to understand the yield that we’re getting out of the different process steps and optimising that prior to going into initial production of the manufacturing volumes.
So, in terms of hitting the milestones that we were expecting, we’re well on track there, and we can look forward to some of those products being ready by the end of this current calendar year and then the start of that all-important revenue for Stereax and the ramp up of revenue that that is associated with.
Q3: Speaking of milestones, you just hit some important Goliath milestones over the past 12 months. Which ones stood out for you?
A3: Again, there’s been some great operational progress with Goliath. I think, for me, the most important story is that we issued prototypes to customers in the summer of last year and into the autumn as well, to some of our OEM and tier-one partners, and they have now validated the performance of those cells versus their specification. That’s really helped our credibility, as those customers have confirmed that our batteries do what they say on the tin.
Q4: Now, over the weekend, the government announced its £2.5 billion Drive35 programme. Will this be important for Ilika?
A4: Absolutely. We spoke just a couple of days ago about the initial award of £1.25 million of grant funding through the Demonstrate part of Drive35, which covers some activities that we have planned with UK Battery Industrialisation Centre in Coventry, for the manufacturing of our P2 prototypes, our minimum viable products, really, and also the collaboration with HSSMI on modelling and digital twinning of our process at giga scale. That’s the front end of some support that we expect to be able to apply for under Drive35.
There are other incentives that the government is rolling out in line with their industrial strategy. We’ve just heard this week also about the incentives for buyers of electric vehicles. All of this is stimulating the market. The more people that buy EVs, the more demand there is, and the greater the requirement for improved batteries. All this cascades down through the supply chain and gives businesses like Ilika greater momentum.
Q5: What should investors look forward to this financial year?
A5: From the Goliath perspective, the thing to look out for is the release of our next generation of prototypes, our P1.5 prototypes, to customers. They’re undergoing testing at the moment; we have an ongoing test programme to get enough data to be able to support their release.
On the Stereax side, towards the end of the year, as we were saying earlier, the release of our product through to customers in the beginning of revenue generation.
