# Ilika plc Q&A with Dr Tom McColm Research Director at Zeus Capital (LON:IKA)

- Link: https://www.directorstalkinterviews.com/ilika-plc-qa-dr-tom-mccolm-research-director-zeus-capital/412726193
- Published: 2017-03-27T11:47:22+01:00
- Author: Amilia Stone

**Zeus Capital** Research Director Dr Tom McColm caught up with DirectorsTalk for
an exclusive interview to discuss **[Ilika plc](https://www.directorstalkinterviews.com/company/ilika-plc/ika.l)**(
[LON:IKA](https://www.directorstalkinterviews.com/company/ilika-plc/ika.l))

 

**Q1: Following the recent trading statement, Ilika’s share price has taken a bit
of a hit, can you talk us through what’s happened there Tom?**

**A1**: Yes, I actually think the share price reaction is a bit of an overreaction
to something that was actually well flagged ahead of time. Ilika’s top line is still
relatively small and of much more commercial importance to them is hitting their
technological and commercial milestones rather than the actual volume of revenue
that we’re seeing. What we had forecast and what the market had forecast this year,
it still wasn’t a large number, about half of it was forecast to come from their
ongoing materials development and discovery business which is very visible and that
half of the revenue was fine. The other half is in there to come from an upfront
licencing payment from one of the OEM’s that Ilika is in discussions with regarding
the commercialisation of its solid state battery technology. Now, those discussions
are ongoing, they’re very positive, there’s lots of them ongoing and so as an analyst
it would have been remiss maybe to have given absolutely no value or no chance of
one of those things dropping. What Ilika have done is be cautious, they see their
year-end approaching, they know how the discussions are going and their thinking
one of those upfront payments may well not drop before the year-end so let’s just
assume that that isn’t going to happen. So, that’s the reason the revenue, the top
line miss came and that’s the reason the share price reaction happened but in reality,
there’s nothing unusual going on, everything is as you would expect, the discussions
are ongoing, the core business is still functioning. It’s not really justified, 
Ilika are doing fine.

 

**Q2: Now, prior to the trading statement, Ilika announced a partnership in bioelectronic
medicine with Galvani, what’s your take on that deal?**

**A2**: It’s a very interesting deal, this whole bioelectronic medicine it’s about
getting tiny electronic devices actually inside the body where they can affect the
nerves and potentially cure chronic illnesses. It’s a very futuristic, hot area 
and one of the necessities to make it work is that these things need to have power
to run and Ilika’s tiny batteries are prefect a) because they can get them very 
small and still maintain charge and b) there’s no liquid in there, they’re solid
state so there’s no toxic horrible liquids that could leak into the body chemistry.
My take on the deal, it’s with Galvani which is a joint venture company, if you 
like, between [GlaxoSmithKline](https://www.directorstalkinterviews.com/ftse-company/glaxosmithkline-plc/gsk.l)
and Verily which are the two guys that founded Google so it’s quite a high-profile
company in quite a high-profile area. It’s just exactly the sort of thing that we’re
looking for from Ilika, this one is probably a little bit further out than some 
of the other markets like sensors etc. that they’re looking at doing deals in but
very exciting, potentially large but won’t really see any significant revenue from
this for some time I would think.

 

**Q3: So, in terms of news flow then, what should we be looking out for from Ilika
plc to drive the share price in near to medium term?**

**A3**: Again, slightly different but basically commercial deals, as we said, these
discussions are ongoing now with people licencing out Ilika’s solid state battery
technology. What will really make the price go up if we see one or two of those 
drop, some upfront licencing payments, a joint development programme with a OEM 
that leads towards a product launch. Any news flow around that kind of commercial
development would be great and then you’ve got their ongoing core materials optimisation
discovery business and new contracts there. So, just commercial announcements around
solid state battery commercialisation and also new contracts in other high tech 
areas for their core business.

Share on: