Ilika plc (OTCQX:ILIKF) Q2 2023 Earnings Conference Call January 19, 2022 11:30 AM ET
Company Participants
Graeme Purdy – Chief Executive Officer
Jason Stewart – Chief Financial Officer
Conference Call Participants
Operator
Good afternoon, ladies and gentlemen and welcome to the Ilika plc Half Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions and this is today and where appropriate, we will publish those responses.
Before we begin, we’d like to submit the following poll. And I’m sure the company will be most grateful for your participation.
I now like to hand over to CEO, Graeme Purdy afternoon.
Graeme Purdy
Thank you for that kind introduction, Mark. And many thanks to everybody that’s taken the time to listen to this presentation. I’m joined today by Jason Stewart, our new CFO, who is just getting his feet under the table, and he will be co-presenting with me today.
Jason Stewart
Good afternoon.
Graeme Purdy
So let’s get into the presentation now. This is our half year update that covers the period from the 1st of May last year through to the end of October. I think many of you know about my own profile. And of course, this information is on our website.
So, I’ll just give Jason the opportunity to say a few words about his background as is new to this forum.
Jason Stewart
Thank you, Graham. So to introduce himself, Jason Stewart. I’m a semi-qualified accountant with over 20 years of experience within the commercial sector. I have a degree in business from antiemetic University and have then been working through a number of finance roles within a variety of businesses, starting first with Kerry Foods before moving on to B&Q as part of the Kingfisher Group before most recently being with Sunseeker International, helping them through the last 12.5 years. Through that role, I both helped to deploy significant capital and navigate various challenges for the business but ultimately, the excitement and the challenge and the opportunity presented by Ilika and the products that are being developed were such a great traction that I was delighted to take the opportunity to come and join Graeme and the team and hopefully provide some help towards the success of the business over the coming years.
Graeme Purdy
Thanks, Jason. Very welcome. So from luxury yachts to solid-state batteries and that’s what we’re going to talk about over the next 20 minutes or so. Ilika is one of the few global experts really in the design and manufacture of solid-state batteries. There you see one of our Stereax miniature batteries on the end of one of my colleagues fingers; that’s our M300 device.
And then on the other hand, we have our second product line which is our Goliath solid-state pouch cells which are designed for consumer appliances and EVs. So why are people interested in solid state for med tech? Well, first of all, they’re very compact. You can see from the size of these batteries relative to the tip of that pencil. So clearly, if they’re going to be incorporated into an implanted device, they’re ideal because of their low volume impact during that surgical procedure. There are also high power density which is important because you need them to deliver power pulses not only for a therapy, say, in the case of neuro stimulation but also for communication, so to be able to power the data chips and the radio chips that actually send out information from the patient that can be picked up and then relayed to the consultant. And also, they’re intrinsically safe. If you’re to have an implant, you don’t want any risk of toxic fluid leakage. And with solid state batteries, there are no liquids involved.
So what are the applications? Well, really, in Medical Devices, we are building on this wave of tech innovation that is all about replacing traditional pharmaceuticals which are chemical-based with electroceuticals, — so typically, stimulation of the peripheral nervous system, so the PNS with very small currents and nanoamp of current to avoid the need for patients to ingest what can sometimes be quite toxic chemicals in order to deal with their complaints. The Vegas nerve is a really good example of part of the peripheral nervous system that is linked to a number of organs that you can electrically stimulate and therefore deal with some unpleasant conditions. And of course, we have been using electronic devices in med tech for a while pacemakers are ubiquitous. And one of the major advantages of being able to use Stereax miniature devices is that actually the size of the implant becomes much reduced and therefore, the surgical intervention much more palatable.
The other example is in cardiac sensing, cardiovascular diseases, unfortunately, are the number one cause of death globally. And it’s not only stimulation that can help address this problem but also actually just data collection. So implanted sensors can help with heart failure prevention and also monitoring of arrhythmia — and in fact, these devices are being designed so small that they can be implanted by a catheter which means that the surgical intervention is reduced in scale even further. So where are we with operational implementation. So in 2020, we raised sufficient capital to be able to move from our pilot line at the local University, the University of Southampton here to a mid-scale fab which we installed on time and on budget in 2021 in the teeth of the pandemic.
And over the last year, we’ve been carrying out our product qualification and also process optimization to increase the yield of that process. And actually, we’ve made alpha samples of our first product, the M300 which are currently undergoing testing, ready for release to our customers starting in Q2 of this year, so starting from April onwards — so what is the commercial traction for Stereax look like?
We’ve actually got commercial orders from a diverse med tech customer base. You see the company names here are kept private because, of course, a lot of these orders are placed under NDA. But they cover companies that vary from being start-ups through to listed multinationals. Actually, in the U.S., a start-up can be very well funded, can have hundreds of millions on the balance sheet. So they’re not necessarily small organizations. And there you can see the application area, a lot of med tech applications that we’ll talk about in a minute, with very interesting sector sizes and addressable markets and then reduce their to the serviceable addressable and serviceable obtainable markets.
So basically which are the exact customers in those market sectors that we can talk to that we are talking to and how many devices are those customers likely to buy so that we can build bottom-up forecasts to support our scale-up activities. And here’s a bit of analysis actually about those commercial orders by application. You can see that the majority of the orders in the green pie chart on the left are in implanted medical devices. A number in smart dental applications and these are what we call braces in the U.K. or retainers in the U.S., compliance monitoring, making sure that patients are wearing them correctly to ensure that you get proper alignment of teeth so that the efficacy of these retainers is guaranteed and also actually to monitor the chemical content of saliva.
Then we also have smart lenses. This is often used for interacting with the so-called Metaverse, a very important area of new technology development that has seen massive investments, in particular, on the West Coast of the U.S. And then some other miscellaneous opportunities typically in industrial IoT applications, ranging from aerospace through satellites, applications and some other industrial deployments.
And then on the right-hand side, you can see actually the jurisdictions that are key for our business development efforts. The vast majority of these orders have come from the U.S., so actually about 3/4 of the orders with the remaining ones in Europe. So really the pipeline dominated by U.S. med tech opportunities. And the pathway that we have to navigate for med tech is a reasonably long one. Typically, it takes about 5 years to get products to market to get regulatory approval. And so clearly, we need to make sure that we manage our cash through this period as we’re supplying relatively low volumes of batteries in the initial years through preclinical trials, the first human trials through to regulatory approval and then mass production.
And of course, the ultimate end markets for a lot of these applications are very large, as we’ve seen, in fact, larger than the capacity of the U.K. facility that we’ve got. And therefore, we need to make sure that actually we support our customers on this journey through to full market commercialization. What does our business model look like? Well, we have a mid-scale fab manufacturing facility right now that we’re using for the vast majority of the process steps, although we are outsourcing some of the steps where it makes sense at lower volume production that we’re at right now before forming the batteries, testing them and dispatching them to customers. But as per our announcement on Monday, we’ve entered into a tech transfer agreement with Cirtec in the U.S. that’s allowed us to accelerate our licensing model. This is ultimately where we wanted to get to as an organization where Ilika remains the design authority effectively selling the IP or licensing the IP. In fact, as part of this arrangement, we will retain the responsibility for manufacturing the cathode which is perhaps the most proprietary of the steps in our process.
Cirtec will carry out most of the manufacturing, including, in particular, the microfabrication activities before we wrap up with the forming and testing of the cells — and this is a business model that we believe will allow us to significantly scale our business. So we’re very excited about the MOU that we’ve signed with Cirtec Medical. They’re an industry-leading, vertically integrated outsourced partner for the big medical device OEMs who actually outsource platforms as well as components to Cirtec for manufacture. And we plan to transfer the manufacturing that we currently have in the U.K. from our facility to their much larger facility in Massachusetts and Lowell, Massachusetts which is a large thin film facility that they’ve built up there.
So in terms of the benefits to liquor and our shareholders, it provides validation of Stereax’s capabilities. It’s a manufacturing partnership with the economy of scale that we know we need in order to push down the cost of manufacture while going hand in hand with an ability to ramp production. And also, of course, they have a substantial and very skillful business development team that’s capable of bringing additional momentum to the activities that we’ve initiated through building the pipeline that we were just looking at. So in terms of next steps, actually, there’s a show coming up called the MD&M show that we’ll be doing some joint marketing ads in California at the beginning of February, from February 7 through to the 9th in Anaheim. We will be completing our contract in the coming months and, of course, initiating transfer of the technology to bring this through to commercial conclusion.
So in summary, for the first half of this financial year, the highlights for Stereax. We’ve launched that program for product qualification and process optimization heading towards commercial release in quarter two of this calendar year. We’ve got these 21 orders from 18 customers as we’ve seen mainly for medical devices in the U.S. And most recently, we’ve signed this MOU with Cirtec Medical to allow us to transfer manufacturing under license. So let’s now start talking a bit about Goliath, so a large format, solid-state batteries.
So why is automotive interested in this technology? Well, first of all, actually, the compactness of the technology is very attractive. It occupies half the volume of standard lithium ion. So it enables more attractive designs, smaller designs in vehicles. And also the high-temperature tolerance of Goliath allows designers to reduce that pack size and weight. So ultimately, confers a greater range on the vehicles that use solid-state batteries. It’s also non-flammable. It doesn’t have any formal liquid in it. So solid-state batteries are intrinsically safe. And also, there are some environmental benefits. So as time goes on and a larger number of batteries enter the market and some reach the end of their life. We have to have a robust strategy for recycling those cells. And the attraction of solid state is that once we’ve stripped off the outer packaging, we’re able to crumble and granulate the batteries more readily and then extract the metals, put them back into the supply chain using standard recycling technology.
In terms of the market dynamic here, we’ve got an electric vehicle uptake mechanism that is growing, actually has significant momentum. And solid-state batteries can really enhance this momentum. It can allow designers to overcome range anxiety because we’re getting that extension of range that we talked about, a very robust battery life, so a larger number of cycles and also overcome any safety concerns. So where are we in terms of technical readiness? Here, we’ve got an updated technical development program, hopefully, a little bit simplified relative to previous charts that we’ve shared.
So we’ve achieved an energy density of about 100 watt hours per kilo. We’re ramping that up to a point — data point that we’re calling D4 which will be closer to 200 watt hours per kilo and that will be at a level that then becomes interesting for us to productize with our product P1. So effectively, that’s the same performance but is capable of being manufactured in batches that allow us to send out reproducible pouch cells to customers for their validation and testing.
We’ll then be moving on through lithium-ion equivalent towards the end of the year through to what we call D8 which will then be sufficiently powerful to be able to support our first product launch which is our MVP, minimum viable product which will be turned into a process that will support manufacturing volumes. In parallel with this work, we’ve been trailing processes on larger scale equipment or production intense equipment, including roll-to-roll processes like you see pictured on the bottom right of this chart.
So, where are we going to sell ourselves in the first instance? You’ve heard us talk about high-end vehicles, high performance and specialist vehicles in the past. We’ve probably extended that into luxury vehicles now. It’s a large addressable market. We think that’s about 50 gigawatt hours per year. So large enough for Ilika and its competitors. And we’re actively engaged with brands that you would recognize from this sector.
I also wanted to say a few words actually about the outlook for EVs. There’s been some talk in the press recently that actually EV sales are perhaps not as robust or not as significant as perhaps had been forecast earlier in 2022. This is actually a chart from the Bloomberg NEF team that are actually revising their forecast for 2030 upwards. They’re about 20% higher than they were a year ago. So actually, the long-term forecast for EVs looks very robust. Probably the near-term disappointment of some of the OEMs is more related to short-term inflationary effects and supply chain constraints. But most analysts expect those to be overcome in the coming years.
So what’s our scale up plan? I think it’s important to understand the direction of travel here. And to understand also the amount of capital that we’re likely to need to deploy Currently, we are manufacturing on a pre-pilot line. The automotive industry uses a certain language to define the stage of maturity of the samples, the cells that they use in their process. So, A) samples are effectively cells that meet a given specification but are not necessarily manufactured at scale. So often, they’re manufactured on pilot lines like we intend to do. B) samples are manufactured on production intense equipment but are not necessarily available in large quantities. So they’re manufactured in limited quantities. And C) samples are manufactured at the scale that is required to support a vehicle launch.
So with the investment that we raised in 2021, we are currently investing in a pilot line that will allow us to make a samples that will enable us to respond to RFQs which are requests for quotation issued by automotive OEMs. If we’re successful in winning those contracts, then we will collaborate to produce B samples and C samples on larger scale equipment. And typically, we’ve seen that the OEMs would invest in the equipment in order to enable that level of cell production. And so we do not intend to come back to shareholders to try and finance, let’s call it, a mega facility or a Gigafactory.
A lot of the finance for these facilities would be provided by the ultimate customers who are interested in offtake from these plants and also manufacturing partners. So that creates then as in the case of Stereax-licensing [ph] opportunities. So we are not a Gigafactory building company. We will work with companies who’ve got the expertise to be able to manufacture at that scale — in terms of commercial interactions, we’ve met with most of the global automotive OEMs across different countries and sectors. And we have participated in RFQs to understand time lines and the scale of demand.
We will be issuing commercial quotes with our P1 product at the end of 2023. And actually, some of those OEMs have entered into early evaluation contracts in anticipation of P1 availability. And then, of course, further partnerships and grant support is being pursued and there will be some news flow associated with those interactions as we move forward this year. So in summary, in the first half year, we have increased energy density for our GLIA cells by over 80% over the last 6 months. We’ve launched the scale-up studies, one of them an equipment design study with [indiscernible] that’s given us lots of insights into the type of equipment that is needed in order to manufacture at scale.
We’ve carried out an economic feasibility study with the U.K. BIC which has demonstrated the feasibility of manufacturing at megascale at their facility in Coventry. And we’ve also carried out a series of manufacturing equipment trials with equipment vendors. We’ve also continued the interaction with both automotive but also consumer appliance OEMs.
So Jason, this is our half year results. So if you could talk through the numbers, I think that would be useful.
Jason Stewart
Thank you, Graham. So just to review the financial results for the half year, the turnover position of $0.2 million is flat year-on-year from the same half 2021 and once again resulted from funding in respect of 3 ongoing grant-funded projects as part of the evaluation matrix. And we will continue to seek further opportunities for that through the latter half of this financial year. And as Graeme said, into next financial year. With regard to the EBITDA loss of GBP4.1 million versus GBP2.7 million in the prior year. This is a reflection of the increased operational costs associated with Stereax manufacturing fab facility which was fully expected as that facility came fully online and up to speed to our capacity expectations. And although that is in line with our expectations for the performance, it does reflect the increased cost base that we’re seeing naturally across the U.K. with expensive energy prices and increasing inflation. So in line with our expectations despite those external factors pushing the cost base up. And the cash balance at GBP18.6 million is in line with our expected drawdown on the capital, both for the consumption required for operating costs but equally with the deployment of capital towards the Goliath development program as we discussed.
Graeme Purdy
Thanks, Jason. So, let’s just wrap up with a bit of outlook here. So what can you expect over the coming months? Well, first of all, delivery of the initial batch of 300 samples in quarter two of this year. We’ll be progressing that Cirtec relationship through the joint marketing activities we were talking about and also moving towards contract completion and tech transfer. And of course, we’ll be continuing to mature that Goliath technology with partners through the defined technical milestones that we covered earlier. And we believe that these activities allow us to build that increasing commercial opportunity to address these large markets, giving us a strong platform for future growth.
So, I think that wraps up the presentation and happy to move over.
Question-and-Answer Session
Operator
That’s great. Graham, Jason, thank you very much indeed for updating investors this afternoon. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab just situated on the right-hand corner of your screen. I just want to give the company a couple of moments to review the questions you submitted already. I’d just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A will be accessed or can be accessed via your Investor-Meet Company dashboard.
Graham, Jason, as you know, you received a number of pre-submitted questions which you very kindly provided some written responses. And of course, you’ve got a number of questions that have come in on that Q&A panel on the right-hand side. I wondered if I may, just hand back to you guys. If I could ask you to read out the questions, of course, where it’s appropriate to do so and give a response and then I’ll pick up from you at the end. So just click on that Q&A tab; hopefully you should see them all there.
Graeme Purdy
Thank you, Mark. We will do our best and let’s have a look to see what questions we’ve got today — so the first one is, when will you enter a partnership agreement with an actual automotive manufacturer. So we’re actively in discussions with OEMs and we’ll leverage opportunities to collaborate with these OEMs alongside grant funding. So we believe that grant funding will be important in catalyzing those interactions. And we expect to be able to provide some more news flow on this in the coming months. The next question is 2 years to OEM prototype for Goliath is way too slow. Why can’t you go faster? Well, look, we have a very dedicated technical team working on this technology.
Actually, the feedback that we’ve had from people in the industry that are active in this field is that actually this rate of innovation is realistic and entirely aligned with the road maps of the automotive companies. And unfortunately, this type of new technology development does take time to mature but we believe actually that we’re moving at a competitive pace.
So there’s a question here. Do we have any update on the Stereax fab in terms of yield. So the answer is, actually, we’ve been increasing the yield of that facility very effectively. I think last time that we gave you data on where we were, we were about at 40%, while that’s been gradually improving. And in fact, we expect that with the additional expertise of the Cirtec team that particularly on the microfabrication steps that we’re going to transfer that we should see some further benefit on increased yield from that process. But the yield is adequate for us to meet the needs of the initial orders that we’ve got and we will be optimizing that further through the tech transfer.
There’s a question here from an investor who recalls that we need to go through a medical testing regime before something can be used and they’d like a few words about that time scale; so that’s right.
All of us, of course, would like to make sure that any medical device that we use has been properly tested and validated. It depends a bit on the nature of the device. Most of the applications that we’ve got are either for Class III or Class II devices. Typically, Class III devices are implants and so need to be tested more thoroughly, more rigorously. That testing can take up to 5 years. And then the Class II devices require testing that usually is a bit shorter. They’re often wearables and that can be in the order of about 3 years. So we’ll be supplying products to our customers who will be testing their devices powered by our batteries over that time frame. But of course, we have a revenue-generating opportunity in the sale of those batteries to those customers while they’re doing that testing. And that’s what we’ll be ramping up together with has have a look at some others.
Question here. Are we seeing any new technologies that might compete with Stereax? So yes, we’re monitoring that very closely. We have a function within the company that is responsible for updating competitive landscape. I would say the competition really comes from a couple of different angles. One of them is miniaturization of existing technologies, so conventional lithium-ion technology. This is getting down to pretty small sizes but is intrinsically limited in terms of energy density because of the weight and size of the can. These are often cylindrical devices that look a bit like miniature AA batteries. And clearly, there’s a limit to how small you can make these containers, effectively, they become more container than active material at a certain point. But also solid state has got the advantage of being completely solid and more safe.
The other area of competition comes from something called MLCCs which are multilayer capacitors or ceramic capacitors. They typically act in situations that require a high power but have got a lower or shorter energy storage life so that they’re reasonably leaky in terms of draining over time. So you charge them and they don’t really hold their charge as well as batteries. So if you don’t need to hold charge for a very long time, then sometimes MLCCs can be very effective.
A question here. Are you looking for other industrial applications for Stereax batteries outside of aerospace? Is that what have shown as the other 17% in the pie chart? Yes. So actually, a lot of those other applications are miscellaneous industrial applications.
And the — that is the minority of our pipeline at the moment but we believe that as we get to larger scale, that we’ll be able to offer the product at a price point which will be interesting to a number of other application sectors. So typically, people are interested in sales for aerospace, satellite applications and hostile environments where normal lithium-ion technology struggles to deliver the performance that’s required.
Let’s have a look. There’s a question here; a technical question. So a recent QuantumScape press release mentioned a new hybrid prismatic and pouch architecture to support the uniaxial expansion and contraction during charge and discharge. Is this the direction you’re heading in? Or is your architecture different? So actually, we use a traditional pouch cell architecture, the mechanism with which our batteries charge and discharge is not the same as Quantum scape batteries. As you probably recall, they have an nodes design which means that the anodes played out during the charging of the cell and ourselves actually use a structured anode which absorbs the lithium as you charge the cell. So we haven’t got the same mechanical stresses in our design as the Quantum scape architecture.
A question here. Can we comment on potential revenue values you’ll be able to generate for Stereax line in ’23, ’25, — what level of gross margins are you expecting as well in this time period.
Well, I’ve got to be careful not to give forecasts here as we want to stay on the right side of the regulations. But gross margins that we expect are for the product in excess of 50%. And — and once we get through licensing, of course, the revenue that you get from that activity is typically higher margin in the order of 95% because, of course, your cost base for the licensing model is much reduced. Targeted timescale for Goliath achieving lithium-ion equivalents looks extremely ambitious. How confident are you of achieving this? Well, these charts are done in close collaboration with our technical team. And we take guidance from them on what can be achieved. And actually, we’ve seen great progress over the last 6 months that we expect to extrapolate. And also, we expect an acceleration of energy density progress as we move into the stacking activities that we’ve got which become more of a packaging challenge rather than a chemistry challenge. Chemistry is quite difficult to get to work, particularly when you’re dealing with novel chemistries and compatibilities, whereas once you get into the realm of stacking and mechanical engineering, then that becomes more predictable in terms of the likely outcome.
A question here on the Cirtec deal. Congratulations on the Cirtec deal. Besides medical, are you considering other market sectors in the future. that could use miniature batteries. Yes. So one of the advantages of that particular deal is that it gives us an economy of scale and we’re pretty agnostic as to the end applications as long as they leverage the advantages of the Stereax technology. So once we’ve done some joint marketing and had feedback from people who have been able to consider the use of Stereax in their devices in more detail and have probably been given comfort from our ability to manufacture at scale, then we will incorporate these opportunities within our forecast.
Question here on what our monthly cash burn is. So I’ll let Jason answer that.
Jason Stewart
Okay. So with regard to the monthly cash burn, that element is actually just under review as a result of the Cirtec MOU and tech transfer. So part of the text transfer activity is allowing us to transfer through the microfabrication activities that take our experts at some of the more energy-intensive and cost-intensive aspects of the production process within our fab, that then allows us to reduce the monthly spend that we’re experiencing to better protect the cash flow that we have and capital available so that we can then better deploy that to the longevity and development of both, Stereax and the Goliath products. So currently under review at the moment but we would expect that to be reduced as part of the tech transfer negotiations as we see that to conclusion.
Graeme Purdy
Thanks, Jason. So as our patents regarding solid state — sorry, I’m not reading that correctly, are our patents regarding solid state, still in date? And will they effectively protect our IP from competitors? And is the position different between Stereax and Glint Yes. So a lot of our patents are still in date; patents typically are valid for 20 years. So we haven’t been active in solid state for that length of time. We’ve got good patent coverage in Stereax — more of our patents cover the Stereax technology than Goliath because actually, we started earlier developing the Stereax technology. So that’s proportionately a bigger part of that protection. But we maintain a freedom to operate search with our in-house patent attorney and where we identify potential problems or where we believe that patents have been incorrectly granted to competitors, then we will challenge those patents and make sure that we retain the ability to market our product.
How confident are we in being granted the funds to finish the job? I guess this question, so granted is written in capital here. I think this question is asking if we are likely to get further grant support for our work I think that is likely. The U.K. government has reiterated its commitment to the industrial strategy of supporting battery development and vehicle electrification. And I’m sure there’ll be some news flow regarding this as we go through 2023. So here’s a question that says in view of current levels of expenditure and delays to product sales, do you envisage a further capital fund raise in ’23, ’24, given cash deposits of only EUR18 million, how long before Cirtec have an approved production facility capable of manufacture, what is projected product sales, licensing revenue in the next 12 months. So there’s a few questions stacked on top of each other there.
Jason Stewart
I’ll take that. The first one, Graham, in terms of the level of expenditure. So as explained earlier, we’re looking to reduce the level of expenditure on an annual basis as we go through the tech transfer piece. So as mentioned, that will help to protect the capital that we do have and allow us to deploy that appropriately. Although we have always said through the Goliath scale-up process as we move to the scaling from our pilot line to the more industrial applications, we will have to deploy capital into machinery to make sure that we are proving that we’ll operate at scale and that’s where we will be looking to utilize our capital to best effect. And ultimately, as we are looking to go to sort of the final stage with automotive OEMs, we will probably need to look for additional funding but hopefully to do that with news around an OEM partner that is coming on that journey with us.
So, no need for additional capital in the immediate future and looking to shepherd our capital that we do have for that term. However, as we look out into longer-term development to be able to bring the product to a conclusion, we will need to review the needs to deploy further capital.
Graeme Purdy
All right. And this says how long before Cirtec have an approved production facility capable of manufacture. Well, you have to bear with us on that. We’re in the middle of a tech transfer discussion with Cirtec. So, I don’t want to pre-empt that but needless to say, we’re targeting early completion on that and we expect that to be done certainly within this calendar year. And then finally, what’s the projected product sales and licensing revenue over the next 12 months? Well, analysts who cover us are predicting between [indiscernible] in this financial year which ends in April of ’23. And then beyond that, we expect to see a ramp up, particularly actually in grant funding.
Question here. You talked about increasing Goliath capacity 80% but how does this compare in absolute output vis-à-vis the competition that you track? Well, actually, I think we feel pretty comfortable that we’re still in that cohort of leading large format, solid-state battery developers and the fact that OEMs continue to interact with us and support us in our grant applications means that actually we must still have a competitive offering.
Another question here. Have you considered solid-state batteries for storage purposes, so the renewable energy sector? And how does solid state compare with vanadium flow batteries, Yes. So that’s a good question. So for renewable energy storage, typically, you’re not too worried about the volumetric [indiscernible] energy density of the batteries, you’ve typically got a larger space in which to place those batteries. So often lower cost, larger scale energy storage formats are used for that. Our flow batteries are a good example actually that are often deployed — and more recently, people have been talking about using sodium ion batteries for that application. So they’re probably more suitable than solid state. Solid state is more useful when you’re dealing with a constrained space where you have constrained weight considerations, particularly in the applications we’ve been talking about this afternoon. Timeline for Goliath [ph], please [ph]?
So, the timeline really is given on Page 20 that we reviewed earlier, you can expect early revenue generation in addition to grant income from the point in time when we are able to sell a samples. So OEMs and other evaluators are happy to pay for those prototypes. And then as you go through the different stages and get to larger volumes, obviously, we’re able to run revenue. So significant revenue probably from 2020 onwards for Goliath.
Question here. Please, could you talk about your choice of chemistry, i.e., solid lithium or silicon anodes and why you chose that? Well, we’ve had quite a long history, a successful history of using silicon anode technology. I know historically, actually, a lot of commentators have said well, solid state is really just the use of solid lithium anodes. But as Stereax cells use a silicon anode and that’s been very effective in increasing the cycle life of sells beyond that which we achieved when we used a similar construction and lithium anode architectures. And we’ve decided in our Goliath program to use a similar approach. So, we find that by using a structured and that we actually get a better longevity from the cells and also less expansion and contraction of the sales when you charge and discharge them. And actually, other solid-state developers seem to agree with us recently solid power in the U.S. move from using a lithium metal anode to a silicon anode. So there’s an increasing wave of support for that approach.
A question here. Is the Cirtec MOU exclusive? Or can you seek similar relationships with others, if necessary? And what’s the history of the relationship did Cirtec come to you or did you approach them? Well, I can’t disclose any confidentialities here. But for the moment, actually, the MOU is a nonexclusive relationship. We’re very excited about it. We think it’s the best way for us to approach the medical device sector. And we’ve had a reasonably long exchange with Cirtec over the past year or so. they have a strategic interest in acquiring battery technology expertise to supplement the rest of their portfolio. And we have a strategic interest in scaling up our manufacturing capability. So far, it appears to be a very well-matched relationship.
Operator
Great. And I might just interject just coming on the basis that we’re coming up to time. And I’m mindful that you have a follow-up meeting beyond here. And for every question you answer, there’s another 1 or 2 that pop their way through. So if there are any further questions within that list that you wish to go through at this time. If not, obviously, we’ll make those available post the meeting for your responses where it’s appropriate. I don’t know if there’s anything there that you wish to address. And if not, if I may, just ask you for some closing comments because I will then redirect investors to give you their feedback.
Graeme Purdy
Very good. I think maybe I’ll just take one closing question which I think is probably pertinent this week.
There’s a question here. Any implications up or down in Britain for British folk. Well, I think it’s a very sad announcement that British fold were not able to secure the finance that they required for their business model. I just want to emphasize the difference in business model that Ilika represents relative to the one that British we’re pursuing. In Brushfield, we’re planning to build a Gigafactory or, in fact, giga factories — and I see that really as an infrastructure type project that requires substantial project-based financing with a mix of equity and structured debt. Ilika is a development — technology development offering and we’re developing a differentiated novel type of battery technology which will be licensed. We don’t intend trying to finance our own Gigafactory. So they are very different propositions. And I don’t think really the British fold story is really relevant to the journey that we’re on here at Ilika.
Thanks very much for your interest today, guys. We will endeavor to answer the rest of the questions that you’ve raised. And I’d like to thank you for your continued support and I look forward to updating you again shortly.
Operator
That’s great. Thank you, Graham, Jason, thank you once again for updating investors this afternoon. A company’s asking investors on the call not to close this session. We’re now automatically redirect you for the opportunity to provide your feedback in order the management team can better understand your views and expectations. Just want to take a few moments to complete but I’m sure we’ll be greatly valued by the company.
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