Creo Medical Group plc (AIM: CREO), a medical device company focused on the emerging field of surgical endoscopy, provides an update on trading.
Progress in the first quarter of the year ending 31 December 2020 in gaining regulatory approvals for a further four devices has been in-line with management expectations. The Company still expects to see significant growth in commercial orders for its Speedboat device over the long term. Understandably, however, the roll out of the Clinical Education Programme has been impacted by the ongoing travel restrictions and social distancing policies put in place by governments across the world to limit the spread of COVID-19. Whilst initial revenues from the early uptake of Speedboatare likely to be lower in the short term, EBITDA and cash is likely to be better than expected due to savings as a result of the slow-down. The Company can confirm that, following the Company’s £51.9 million fundraising in December 2019, cash reserves at the end of February were £77.6 million and are more than sufficient to secure the business activities and staff through the current situation and beyond.
Training and mentoring events across the Company’s clinical education programme in the US, EU and the UK have been cancelled or postponed. It is also expected that the undertaking of new procedures and elective cases will be significantly reduced worldwide which will impact the volume of expected Speedboat cases in the short term. Whilst the Company has been able to offer online training and remote mentoring via video link, the number of Endoscopists trained on the Speedboat device, will be lower than expected for this year.
Whilst the development of near term market development opportunities is heavily restricted, the Company remains focussed on the wider portfolio of flexible endoscopy devices for the GI and pulmonary markets. As previously announced, once the CE certificate is released from our notified body we expect multiple simultaneous CE mark announcements for associated devices. Additionally, with submissions in the hands of the FDA, device clearances for the US market and beyond remain on-track.
The Board believes that the outlook for the medium and long term remains very much unchanged, and will not be impacted by a short term slowdown in the early market development. Six months ago the business had a single cleared device for human use in multiple markets. As the world begins to emerge from the COVID 19 restrictions the business will have multiple devices cleared for multiple markets across the EU and US. This will allow the Company to introduce these devices into clinical practice once COVID-19 related restrictions are eased and to ultimately commercialise the full product range with four devices optimised around the core tissue effects of dissection, resection, haemostasis and ablation, as well as the Speedboat device, which uniquely delivers bipolar radiofrequency energy for precise tissue dissection along with microwave energy for highly controlled coagulation and tissue ablation.
The Company’s Final Results for the year ended 31 December 2019 will be published in April.
Craig Gulliford, Chief Executive Officer of Creo, commented:
“Whilst COVID-19 will have a short term impact on the roll-out of our clinical training programme, the medium and longer term prospects for our business remains undiminished. We have a very strong cash position offering us the security needed to gain regulatory clearances and to successfully commercialise our wider range of endoscopic surgery products.”