Ilika PLC (AIM:IKA, OTCQX:ILIKF) this week announced the completion of process qualification for its Stereax M300 batteries in collaboration with Cirtec Medical.
The milestone follows the commissioning of manufacturing equipment in January and successful production trials, and, Ilika told investors that the qualified process will now enable production of products for testing and initial customer deliveries, which are expected to commence by the end of the calendar year.
Revenue from the ten-year supply contract with Cirtec will build gradually. It expects to fill facility capacity within three years.
Chief executive Graeme Purdy joined the Proactive studio to share details of the progress, here we take a closer look at what was said.
Proactive: Graeme, very good to speak with you. You've announced a big manufacturing milestone for your Stereax M300 batteries, along with Cirtec Medical. Now the process qualification is complete. How quickly can you ramp up the Stereax batteries to meet customer demand this year?
Graeme Purdy: Hi, Stephen. Great to speak again. Thanks for giving me the opportunity. It's a fantastic milestone to have reached together with Cirtec. I think it really validates the choice of partnership. Both parties have worked together to implement our plans very effectively.
Since January, when we finished commissioning the equipment, we've been running wafers and batches of battery production through the process. We’ve now qualified that manufacturing process, and now is the time where we start production of products for testing and then initial customer deliveries. We expect those deliveries will commence towards the end of this calendar year.
Proactive: What level of revenue impact do you expect from initial Stereax deliveries under the ten-year contract with Cirtec?
Graeme Purdy: We expect a gradual ramp-up of revenue in the coming period. We want to moderate initial expectations of the level, but over the next three years we expect to be able to fill the capacity of our facility. I would guide people to look at some of the analyst coverage we have available, such as notes from John-Marc Bunce at Cavendish, for guidance on expected revenue levels.
Proactive: How big is the addressable market for batteries like these, and how much market share can Ilika realistically capture?
Graeme Purdy: One of the exciting things about this particular market is that it is growing very quickly. The Stereax batteries really enable part of this electroceutical revolution that’s sweeping through the healthcare industry, which we’ve already seen gathering momentum in the US. There are opportunities in orthopedics, orthodontics, and neurostimulation — some really big opportunities that also have a massive impact on quality of life. In terms of end markets for each of these, they are multi-billion opportunities, and batteries are absolutely key to supporting those technical solutions.
Proactive: Are there plans to expand the Stereax portfolio or adapt the technology for non-medical applications?
Graeme Purdy: Yes. We have a technology roadmap for Stereax. The next product is the M1000, which is a larger capacity battery. The M300, our minimum viable product, has a capacity of 300 microamp hours, and in due course we will launch the M1000 with a milliamp hour of capacity. Other applications we are looking at tend to be IoT or industrial wireless sensor applications, typically combined with an energy harvester. The cheapest energy harvester is a small photovoltaic chip, and then you can power sensors that are distributed in the environment. Some people refer to this as the ubiquitous sensing opportunity, often gathering information on things like strain in existing infrastructure such as bridges, gantries, or railway lines, to monitor the condition of assets that might be aging and require data management and acquisition to control their condition.
Proactive: Graeme, congratulations on this latest milestone.