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For this month’s “Snippet” we consider some comments made in the Interim Results of AorTech International which were released on 14 December. AorTech is a biomaterials and medical device development company. The Company has commercialised a range of specialised biostable polyurethanes coatings for medical implants which are branded under the ‘Elast –Eon’ name.

St Jude

The Chairman’s Statement in AorTech’s Interim Results makes for interesting reading. In particular we draw readers attention to the 3 paragraph section headed “St Jude Medical – Pacing Leads” which is reproduced below. St Jude Medical, a $12+ billion market cap company, is a key client of AorTech.

“Shareholders may well be aware of the success St Jude Medical (‘SJM’) is achieving in the Cardiac Rhythm Management market by having converted the insulation of all of their pacing products to Elast-Eon™ (re-branded by St Jude as Optim™). A recent Credit Suisse note on SJM (8 November 2011) increased the target valuation of St Jude by $1.6 billion due to the success of the durability performance of Optim™ insulated leads. We view this development as very positive as it demonstrates to not only the medical device industry but also the financial markets the value that can be added to a medical device by utilising AorTech’s Elast-Eon™ material, and this provides a significant marketing opportunity for us.”

“The validation of the performance of Elast-Eon™ in the lead application, as is the case in many long-term, life-sustaining implants, required several years and a large number of implants. To date, AorTech has not been informed of any Elast-Eon™ related failures in lead (or any other) products.”

“AorTech is capitalising on this highly-publicised success with its polymers by focusing on expansion in the related areas of headers (the part of the pacemaker or neurostimulation device into which the lead is inserted) and the insulation of neurostimulation leads. A number of evaluations are currently underway in both of these application areas.”

Thus AorTech are reporting that St Jude’s use of Elast-Eon™ has potentially added $1.6 billion to the value of that company.

increased the target valuation

by $1.6 billion

St Paul

Another key point highlighted in Jon Pither’s Chairman’s statement is in connection with the move of the Company’s production facility from Melbourne, Australia to the St Paul area of Minnesota. The Chairman explains the importance of this move:

“Our move to North America is of strategic importance as it has placed the Group’s operations at the heart of the medical device industry and has opened many opportunities to increase the penetration of our materials into the medical device industries.”

AimZine Comment

AorTech’s shares have responded well to recent developments and are currently testing the £3 level.

AorTech has a market cap of just under £15 million and yet its Elast-Eon™ is clearly adding considerable value for a multi-billion dollar client in St Jude Medical and this value addition relates to just one application of AorTech’s Intellectual Property.

We have highlighted just two points from AorTech’s Interim Results. For readers who wish to learn more about the company and other important developments we would recommend an in-depth article on the Company by AimZine contributor, Simon Murphy, which was recently published on the Stockopedia website – see here.

As always, the purpose of this Snippet column is to highlight a particular situation worthy of further research and monitoring.

at the heart of the medical

device industry

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