Ilika making significant progress in developing both Stereax and Goliath product lines

Ilika plc

Ilika plc (LON:IKA), a pioneer in solid-state battery technology, has announced its unaudited half-year report for the six months ended 31 October 2022.

Operating Highlights:

Ilika has continued to develop and commercialise its thin-film StereaxÒ miniature solid-state batteries (SSBs) for powering medical devices and industrial wireless sensors in specialist environments, as well as progressing its development of large-format Goliath cells for electric vehicles (EV) and cordless appliances.

Stereax

·  Programme launch of product qualification and process optimisation to increase process yield in preparation for initiating commercial release in Q2 calendar year 2023

·   Commercial demand remains strongest from the miniature medical device sector

·  Secured 21 initial orders from 18 customers of which 11 are for implanted medical devices, 3 for smart dental applications, 2 for smart lenses, 1 for aerospace and 4 others

Goliath

·    Improved the performance of the large format SSBs for electric vehicles and cordless consumer appliances

·    Energy density of prototype cells have increased by c.80% since the start of the financial year

·    Launched a series of scale-up studies including:

Ø Completing a manufacturing equipment design study with COMAU

Ø An economic feasibility study with the UK Battery Industrialisation Centre (UK-BIC)

Ø Securing grant funding for the commencement of manufacturing equipment trials

·  Continued to interact with a portfolio of automotive and consumer appliance OEMs globally, demonstrating strong interest for the product

·   Progressing discussions for both grant-supported and commercial projects

Financial Summary:

·   Total revenue for the period £0.2m (H1 2022: £0.2m)

·    EBITDA loss £4.1m (H1 2022: £2.7m)

Ø The EBITDA loss for the period, excluding share-based payments, increased due to the increase in operational costs associated with the Stereax manufacturing facility and the Goliath development programme

·    Cash balance at period end £18.6m (H1 2022: £27.7m)

·    Grant funding of £0.2m (H1 2022: £0.2m)

Ø In respect of three grant applications during this period.

Post Period End:

·  Signed a memorandum of understanding (MOU) with Cirtec Medical LLC (Cirtec) to transfer Stereax manufacturing under license to Cirtec’s facility in the US

·    Appointment of new Chief Financial Officer, Jason Stewart

Commenting on the results Graeme Purdy, CEO of Ilika, said: “The first half of this year has seen our technical teams make significant progress in developing both Stereax and Goliath product lines. Our recent MOU with Cirtec is an important milestone on the journey to implementing our chosen IP licensing model. The Goliath programme has reached the half-way point in matching lithium-ion equivalence and we are engaging with partners to assist with product specification and scale-up. Our Goliath partnering activities will provide a platform from which we aim to secure both grant funding and commercial revenue.”

Joint Chairman’s and CEO’s Statement

Review of Period

Principal Activities

Ilika has continued to pursue its strategy of developing and commercialising its cutting-edge solid-state batteries (SSBs). The Company’s mission is to rapidly develop leading-edge IP, manufacture and sell SSBs for markets that cannot be addressed with conventional batteries due to their safety, charge rates, energy density and life limits. We will achieve this using ceramic-based lithium-ion technology that is inherently safe in manufacture and usage and easier to recycle, which differentiates our products from existing batteries.

Ilika has two product lines: miniature Stereax® SSBs for powering medical devices and industrial wireless sensors in specialist environments, and large format Goliath SSBs for electric vehicles (EV) and cordless appliances.

Stereax SSBs

Ilika’s miniature Stereax cells are differentiated from other solid-state technology through its choice of materials and its use of an efficient, low temperature evaporation process that is capable of higher manufacturing rates than other existing miniature solid-state routes. This results in the following benefits relative to previous solid-state battery designs:

·    Lower cost of manufacture, avoiding the use of expensive sputtering targets

·    Can be charged and discharged more times through use of a silicon anode

·    Less packaging required

·    High temperature resilience

The unique benefits of Stereax batteries make them particularly useful for medical implants and industrial applications. Miniature Stereax batteries can enable medical devices in a way that is currently not possible with conventional lithium-ion batteries. Their compact, high energy-density, high power characteristics make them useful for a range of medical implant applications covering blood pressure monitoring to neuro-stimulation. Industrial automation, or Industrial Internet of Things (IIoT) as it is sometimes referred to, requires low maintenance batteries with a long lifetime, sometimes in situations that require them to operate at elevated temperatures above those for which standard lithium-ion batteries are rated (typically 60 degC).

Stereax Manufacturing Scale-up and Commercialisation

Ilika successfully commissioned its UK Stereax factory, or fab, at the end of calendar year 2021. The first product to be released to customers will be the M300. As mentioned in Ilika’s trading update of 17 November 2022, initial release of this product is expected to commence in Q2 calendar year 2023. In the medical device sector, commercial ramp up usually takes five years, in line with regulatory approval timelines. Demand from applications such as smart orthopaedics, neurostimulation and smart contact lenses has created opportunities for technology transfer and licensing. Over the past year, Ilika has experienced significant inflation in energy and consumable costs relative to its budget expectations, but also relative to other countries such as the USA. This makes IIoT markets difficult to address from our UK facility and by the same token it is making an early technology transfer to a larger manufacturing partner overseas more attractive.

Ilika has intensified its partnering discussions, in particular with Cirtec Medical LLC, with whom Ilika has recently entered into an MOU to transfer production under license to Cirtec’s Lowell, Massachusetts, US facility. Ilika will focus on advanced technology development and IP licensing in support of Cirtec’s manufacturing and commercialisation activities.

Large Format Goliath SSBs

Ilika’s Goliath cells are differentiated from other solid-state prototype cells through Ilika’s choice of materials, cell architecture and manufacturing process. The key materials choices to be made by SSB developers relate to the selection of cathode, electrolyte and anodes. Different developers have selected differentiated combinations of these materials to achieve an outcome suitable for their target markets. Ilika has chosen materials that have the potential to enable longer range vehicles with battery packs that last longer and can be recycled more easily.

Ilika’s initial target market for Goliath in automotive is the luxury performance market, which is less cost-sensitive than higher volume segments and is willing to pay a premium for the enhanced vehicle range. In order to address that market, Ilika is driving forward its Goliath development programme, in which it has improved the energy density of its prototype cells by c.80% since the start of the financial year. Ilika is now halfway to its target of matching lithium-ion energy density by the end of calendar year 2023, which is an important milestone on the way to the initial release of prototype cells to automotive partners for evaluation in 2024.

Ilika is currently implementing a plan to increase the capacity of its existing pre-pilot production facility using automation and larger scale items of equipment, such as a roll-to-roll coater. Ilika has increased the target capacity of this equipment from 0.5 to 1.5 MWh/a to allow it to scale production volumes and mature its technology to the level required to respond to automotive requests for quotation (RFQ) by the end of 2025. Ilika’s experience working with automotive partners in the first half of this year has shown that the industry expects suppliers to have reached what it defines as A-Sample readiness to respond to RFQs. Beyond 1.5 MWh/a, at B- and C-Sample readiness and volumes, Ilika intends to work with manufacturing partners such as the UK Battery Industrialisation Centre (UK-BIC) to scale to higher levels of production capacity on production-intent equipment i.e., equipment that could be used for mass production.

Ilika has financed its Goliath technology development programme with grant funding from the Faraday Battery Challenge and equity funding. In addition, Ilika has received grants to support market strategy analysis and scale-up studies managed by the Advanced Propulsion Centre (APC). The APC-supported SOLSTICE project between Ilika and Comau, part of Stellantis and a world leader in the industrial automation field, concluded that there were no cost or technical barriers to scaling-up Ilika’s Goliath solid-state battery technology for electric vehicles and delivered a plant design for a mega-scale manufacturing facility. The recently completed BUS100 project was a collaboration between Ilika and UK-BIC which analysed the economic feasibility of placing a 100MWh SSB line at UK-BIC to enable Ilika’s Goliath electric vehicle batteries to be manufactured at scale. The findings of that study were that the UK-BIC’s electrode coating lines could be used for Goliath, which would significantly reduce future capital requirements for Ilika as it scales-up. Ilika continues to work with equipment suppliers in the STEP project to de-risk the move to pilot line production levels.

Furthermore, Ilika continues to interact with a portfolio of automotive and consumer appliance OEMs globally, with a view to intensifying interactions through both grant-supported and commercially-funded collaborations as the Goliath technology matures.

Board appointment

Post period end, the Company appointed Jason Stewart as Chief Financial Officer, effective as of 3 January 2023. Jason has a significant commercial experience in the manufacturing sector and was most recently interim CFO at Sunseeker International ltd where he successfully managed the company through the COVID-19 crisis, managing costs and re-establishing production following the lockdown.

Outlook

Ilika will continue to deploy its resources to maximise shareholder return while it delivers its programmes. Regarding Stereax, Ilika will broaden and deepen its relationship with Cirtec, following up on the recently-signed MOU with an expected fully-developed contractual relationship. Goliath is well-aligned with the electrification transformation of the transport sector and Ilika expects that both government grant support and commercial interest will intensify as the product matures. Ilika will continue to monitor competitor developments to ensure Goliath remains a differentiated and compelling proposition.

Graeme Purdy, CEO

Keith Jackson, Chairman

Ilika plc

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