Good afternoon, and welcome to the Ilika PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and could be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself; however, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll, and now I'd like to hand you over to Graeme Purdy, CEO. Good afternoon, sir.
Hello, and many thanks to everybody for choosing to listen to Ilika's half-year results. I realize that you've got a news-rich day with lots of executive orders that you could digest if you wish, but we're going to focus on what's happened in the first six months of Ilika's current financial year and talk you through the key items that are related to our Stereax and Goliath products. I'm joined today by our CFO, Jason.
Good afternoon, everyone.
Together, we'll whip through the presentation and take your questions. I just want to apologize for those of you who have perhaps tuned in to previous webcasts from us. Because we've got a mixed audience of people who are familiar with the Ilika story and perhaps those who haven't come across it before, we're going to cover the basics, but I'll try and do that at a speed that keeps everybody engaged. Okay, here we go. First of all, we are going to focus on Ilika's progress as a pioneer in solid-state batteries. The company has got a long history. Actually, we were created at our local university here in the U.K., at Southampton University, which has always had a strong focus on electrochemistry. We're addressing some of the biggest markets for batteries in the world.
The battery market for automotive, for example, continues to grow at an astonishing speed. We've got a really strong patent portfolio, 62 patents, which protect the IP and know-how that we've created over the years, and we've got an adequate cash balance to execute the plans that we have to bring us through to commercial maturity, so on the one hand, we've got our Stereax miniature cells, which are primarily designed for miniature medical devices and also some industrial IoT applications, so wireless sensors, and actually, you can see one of our wafers being held there on which we deposit our Stereax batteries, and then on the other hand, we've got our Goliath large-format cells, which are being developed for the automotive industry as well as cordless consumer appliances, so today, you're going to hear from myself and Jason. I'm not going to go through our bios.
There's the same information actually on our website if you want to look us up later, and we are part of a seasoned management team with some really strong experience and know-how from a range of industries, so first of all, how do we make money at Ilika? What's our business model? First of all, just to emphasize that the company is focused on developing IP for materials, batteries, and processors. We license that information through to partners, either typically tier-one manufacturing partners or OEMs who want to take that IP, scale up the process for manufacturing the batteries, and generate revenue for themselves, and in return, they pay us licensing fees and a percentage of sales as royalties. Why would they do that?
Well, actually, they can access world-leading know-how and intellectual property through working with us, and they may prefer to focus on manufacturing and marketing and have us work together with them in partnership in order to build a business. So the advantage to Ilika and our shareholders is that we have a low working capital requirement, and that's combined with a faster time to market because instead of learning how to be a manufacturing organization ourselves, we actually work together with experts in the field in order to reduce risk and have a higher likelihood return on investment. So in terms of our investment case, there's a few key aspects of the Ilika business that investors should pay attention to. First of all, there's that really strong s olid-state battery technology that we've got and a growing portfolio of patents that are being secured in all important jurisdictions across the world.
Like a lot of other battery developers, we're actually hedged across two markets, so medical devices and automotive, with that near-term route to commercialization with Stereax, and that reduces execution risk. We have got our own in-house facilities. They are pilot facilities, and they help give a lot of credence and credibility to our scale-up plans. We've already got a licensing and royalty agreement in place with Cirtec that was put in place in 2023 and really formed the basis of the transfer of the Stereax technology across to their facility to allow them to deliver that economy of scale and ability to rapidly ramp production. Also on the Goliath side, we've shipped our first batch of Goliath batteries.
They've been assessed by automotive customers, and we are engaged with a wider portfolio, indeed, of 21 OEMs and tier-one companies who are working with us in order to implement our next generation of prototypes. So let's start with Stereax. Yeah, there is an unfortunate trend in global healthcare where, actually, although people are living longer, they're not necessarily living healthier lives, and this creates an immense burden on healthcare systems. Obesity, unfortunately, is also a global trend, and that's got all sorts of healthcare implications that need to be addressed. One of the ways of addressing this more effectively is to use active implantable medical devices, or AIMDs, as they're referred to, and they can address all sorts of different applications that we'll mention in a bit more detail as we go through this presentation.
But this is really part of what some people call the electroceutical revolution, where electronic devices that stimulate parts of the body are used more efficiently than pharmaceuticals, which are, of course, chemicals which have been designed for a specific outcome, but often come along with undesired side effects. When you deploy an AIMD, unfortunately, the largest component is often the battery, particularly if you use a primary battery. So a definition of a primary battery is that that is a single-use battery that needs to be discarded once it is fully discharged. There are some rechargeable cells that are used, but often during that miniaturization process, you end up with a fairly low-power and slow-charging solution with a lot of encapsulation and not much active material as a percentage of the overall device that you see a little coin cell that's being held between somebody's thumb and forefinger.
The attraction of Stereax batteries is that there is a higher energy density associated with that design, and we'll look into that in a bit more detail. So what are the applications? There are some very large and fast-growing markets. The ones that we talk about a lot are neuromodulation or neurostimulation, where you stimulate, in particular, the peripheral nervous system. You can deal with cognitive disorders, chronic pain, psychiatric disorders, and even strokes. Really important market. Then we've got implanted sensors. So often, these are very simple things like blood pressure or, indeed, oxygen concentration. Then we've got orthopedics. This is often more about data capture associated with the recovery of patients from knee and hip implants. Often, the recovery of patients is more driven by the physiotherapy that they do rather than the surgical intervention per se.
So actually, understanding how the patient is exercising after surgery is really important. Ophthalmics, you can actually learn an awful lot of information through the eye, and if you put these batteries onto contact lenses, it is a way of recovering information very effectively from that interface. Of course, you need a really thin battery in order to achieve that, so there's not many alternatives to using a Stereax approach. Then we've got orthodontics. Perhaps this is a market that is closest to commercial realization because, actually, putting batteries into aligners or mouth protectors is actually more like deploying a wearable, so there are lower risks associated with that, and therefore, the regulatory approval pathway is shorter for this type of application. So I hope I've convinced you that there are very many large and rapidly growing applications for Stereax. Why are people interested in Stereax for these applications?
First of all, there is the promise of reduced surgery time because if you've got a miniature implant, you actually need less time to deploy it than if you've got a substantial and large device that you're trying to implant. You can often put smaller implants close to the point of therapy, which means the connectivity of the implant is less complicated. Stereax offers a long life in the body. Clearly, if you have an implant, you want it done as few times as possible. The users can recharge these at home. There aren't cables going to the batteries, but they can be recharged inductively, so people would typically wear a collar or a belt, depending on where the implant is, and in a matter of minutes, recharge the device.
One of the big attractions is that Stereax has sufficient power capabilities, and by that, I mean the ability to release the energy that is stored such that you can power a Bluetooth radio chip. Some of the applications that we've just been mentioning require data transfer, and typically, that's done with a small Bluetooth chip, but they're quite power-hungry, so you need a battery that can release its stored energy really quickly. This is what they look like. You can see, for a comparison of scale, a pair of tweezers there. These are very small devices. The first product that we are bringing to market is called the M300. It's a 300 microamp-hour battery with a long 1,000-cycle life. These are very effective little batteries.
Of course, they look more like electronic components than, say, a familiar pouch cell or a cylindrical cell, but they've been designed that way to minimize their volumetric size in the body and to enable them to be connected through those gold contacts that you see on the surface of the device as effectively as possible with the medical device. So the big news, actually, last week that was very well received was that, actually, we've completed the commissioning of the equipment at Cirtec Medical site. So as part of the licensing agreement that we entered into with Cirtec, we agreed to transfer some of the key equipment that is needed for the back-end processing of our devices. That was installed last year, and the team there has been working really hard to complete commissioning.
So commissioning, of course, is demonstrating that the equipment operates in the way that you require for your process. We've actually completed now the user acceptance test, and what Cirtec call the engineering lots have been started. So these are the official and initial production runs for creating batches of product which can be verified and tested to make sure that it hits specification. So this is an exciting time for us, and this is, of course, a precursor to the release of product to customers later on in the year, and let's keep our eye on the money, the start of revenue flow associated with product sales. So there are some benefits to Ilika of this Cirtec partnership. It validates the Stereax product and its process.
So, of course, as investors, you're looking for some sort of sense of validation because it's very difficult for you to do your own technical due diligence, so you do that by proxy through the partnerships that we enter into. They really do have the manufacturing scale that's required in order to address those rapidly growing markets that we're talking about. And also, it gives us the opportunity to work together with a larger organization that's already got commercial relationships and to co-promote the products. In fact, over the next six weeks, we'll be going to three trade shows and conferences in the U.S. You can see them advertised on our website, so you can go along if you're interested and actually speak to the Cirtec and Ilika teams at these events. So we have the same sort of technology alignment, strategic alignment.
We both believe in the growth of these AIMD opportunities, and in fact, Cirtec has already got product in the market addressing some of these opportunities. They've got their neurostimulator technology platform. This really accelerates the adoption of the Stereax offering. Of course, we've really got a U.S.-centric customer base. Of the initial orders that we've got, three-quarters of those orders are in the U.S. from 21 companies. We've got 24 orders, and you can see them spread across those different applications that we were talking about previously. 80% of them are actually focused on medical applications, but 20% of the applications, primarily in aerospace, are focused on industrial IoT. There you can see Shawn Martin, the Operations Director from Cirtec over in Massachusetts, shaking hands with Chris Lee, our Stereax Director. Chris is leading up the transfer of that technology across to the Cirtec facility.
And in terms of the revenue and how that is likely to affect our top line, I'm just going to hand over to Jason for a few minutes to talk about this illustrative projection.
Thank you, Graeme. So presented here is an illustration of cumulative revenue. So that is cumulative over time. And just that's helping to give an understanding of how we expect revenue to build for Stereax line of products as it's made up of a number of different streams that build at different rates as we progress forward and as the product is commercialized into the market. So one of the elements that we have retained in the U.K., although we've completed that licensing deal with Cirtec, is we've actually retained the cathode deposition process here in the U.K. for a number of reasons. It was the most difficult process to get correct.
We didn't want to disturb that and have a chance of delaying that tech transfer process where we do move that to the U.S. And also, it is the most proprietary of the technology that sits behind Stereax. So really, it's the secret source that underpins it. So retaining that here gives an element of additional control in the early years of our relationship with Cirtec. So while we have that in the U.K. down at our facility in Romsey, we have designed into the contract the fact that we will operate that as a subcontractor to Cirtec, and as such, we will be paid for operating that as an element of the Stereax M300 production process. And we'll derive revenue, and as Graeme said earlier, as batteries start in the middle of the year, we will start to generate revenue.
Actually, that's the first revenue we would expect to see from the Stereax product just about the end of this financial year, start of the next financial year. So look to that in the middle of the calendar year. Following on from that, you will see battery revenue commencing, albeit that in the early days. So once again, in this calendar year, we would expect the revenue from batteries under the Cirtec deal to be very small as they're first delivered for those initial lab-based trials. So Graeme talked about the number of leads that we have already, so customers waiting for those products. And we expect that to grow through those trade shows that Graeme talked about. But in the early year, we're expecting that to be very low volumes but growing as they then progress through their certification, depending on the class of device that they're supporting.
A major element then that feeds into that within the med tech sector is what's called non-recurring engineering. So this is a very well-trodden path, and actually, we've taken a lot of information from Cirtec as to what to expect from this as they live and breathe this on a daily basis. And that's the gray section you can see on the graph. We would expect there to be lots of interaction with those customers that are interested in taking our batteries.
Many of them will be interested in the product as we present it, but a number will also look to say, "Actually, for their particular application, their particular device, please, can we look at making it slightly different?" And that's one of the key advantages of the Stereax product that Graeme talked about, is that we have the ability to change the size in terms of length, height to fit particular applications. So that really gives us a lot of opportunity to drive revenue and new product lines coming out that we can develop. And then finally, across the bottom, we would expect and have preserved the right within that contract with Cirtec to issue other licenses outside of med tech.
So for that industrial internet things that Graeme talked about that makes up 20% of that order book, if those applications come along at very high volume, then we can raise additional licenses, and there would be a license fee associated with that. And also, if we have very high volume, even within the med tech sector, then we have preserved the ability to make sure that we can support that. So hopefully, that helps you to understand how revenue can build on different streams as years go forward.
Brilliant. Thanks, Jason. So let's change gear a little bit and talk about large-format Goliath batteries. Of course, this is one particular sector where there is tremendous regulatory-driven uptake. So 145 countries have now announced net-zero targets, perhaps with one or two notable emissions. And this covers actually 90% of global emissions, and transport really is the largest emitting sector. So addressing this particular opportunity is really important to the governments in many countries. We have seen sustained growth in electric vehicle sales, although perhaps the rate of growth hasn't been quite as rapid as some analysts and indeed OEMs were anticipating. Typical reasons for not purchasing an electric vehicle are, first of all, concerns about driving range, sometimes referred to as range anxiety, time it takes to recharge an EV, costs, and also safety concerns.
Actually, solid state can go a long way towards addressing these concerns, and that's why many OEMs include solid state batteries on their technology roadmaps. One of the things that is important to understand about solid state batteries is that actually the technology landscape is quite complex. You can make solid state batteries using different material combinations. We actually combine oxide electrolytes with silicon anodes, and the principal reasons for that are that those materials are easy to handle in a manufacturing environment. Right from the start, we've designed our batteries so that they can be easily implemented either in existing or new gigafactories. You also get a long cell life by choosing those materials. Typically, they're low cost, and also, they've got a lower manufacturing carbon footprint.
So there's no point in building a battery for an EV if the emissions associated with making that battery pack are so large that it takes a long time to offset those initial emissions. So that's why having a low carbon footprint manufacturing process makes a big contribution towards that carbon net-zero approach that we're just mentioning. There are other approaches. I typically say it's sometimes difficult to compare these different approaches directly, and actually, I do believe that there will be applications for many of the different types of solid state batteries out there. Typically, the batteries will be chosen for applications that are the best fit for the properties of the batteries.
At this point, actually, we're going to shortly show a video which some of you may have seen before, but it's a really important video because it helps explain the importance of the differentiated approach that Ilika has taken with its Goliath batteries. So on the left-hand side, you're going to see a video of a standard lithium-ion battery that's currently used to make vehicle packs. And on the right-hand side, you're going to see an Ilika Goliath battery, in fact, one of our P1 prototypes tested under identical conditions. And what's not totally clear, but if you look closely at the video, you'll see it. There's actually a nail penetration, and that's actually on the head of a drill bit that is descending into the battery. And there you go. Look at that fireworks display that you get from the standard lithium-ion battery.
You wouldn't necessarily want to be in a vehicle when that happens. And on the right-hand side, you see the same sort of penetration, and don't worry, we'll show this video again, for a Goliath battery. Down goes the penetration. Do you see that? And it's a very inert response that you get from the Ilika battery. And this has got massive benefits to the pack designer because imagine you're designing an EV to be totally safe. So what you do is you put in all sorts of control systems and mechanical protection for your standard lithium-ion battery so that if you do, unfortunately, damage the battery pack, say that the car is involved in a collision, then actually the driver and passengers in the vehicle are kept safe from the hazard that the battery pack poses if it's damaged.
Now, if you're a battery pack designer dealing with Ilika Goliath batteries, you don't have to worry about all of that, so you can reduce the cost and the weight of all of that, let's say, auxiliary safety protection that you're putting into the vehicle, so what we often say is that actually we are addressing consumer or customer concerns through the design of our batteries, and we get the performance, and by that, we really mean energy density and power density and life cycle of NMC, which is a chemistry that's used a lot in automotive batteries, so nickel, manganese, cobalt. That's the chemistry of the cathode. That's combined with the safety of LFP batteries, so that's lithium iron phosphate, which is a less expensive, let's say, material that doesn't perform quite as effectively as NMC.
And so therefore, you're getting lightweight vehicles with a longer range that are made from materials that are safe to handle and manufacture and use and also are easier to recycle at the end of life. Imagine trying to recycle an NMC battery where you've got that flammable liquid electrolyte that you're having to deal with in safe conditions as you strip away the packaging of the battery. Well, in Goliath solid state, you don't have those concerns. So you've got an ease of recycling. And actually, just recently, we have commissioned a company called Balance Batteries to actually do a little bit of quantification of the benefits of Goliath at pack level. So they modeled a Hyundai Ioniq 5, so state-of-the-art EV, and worked out what the benefits would be if we deployed Goliath solid state batteries in that vehicle. So the battery pack is 20% lighter.
The bill of materials is GBP 2,500 less. Actually, by the time you put a profit margin on that, that explains already a lot of the price differential that you see between equivalent EV and, say, diesel or petrol-driven vehicles. And you've got a faster charge rate. You've got a six-minute faster charge rate for a typical charging opportunity. And that's because actually the Goliath batteries are more tolerant to higher temperatures, and they need less packaging. So they're giving you also a longer range as well as these other benefits. So the last 18 months or so has been a pretty news-rich period for the development of Goliath. We've had a lot of U.K. grant funding through the two programs that you see there from the Faraday Battery Challenge and the Advanced Propulsion Centre.
We talked about, at the end of 2023, a design freeze, a D4 design freeze for first-generation customer prototypes. We then achieved lithium-ion energy density parity. So what does that mean? It means actually that the batteries we're making now have got at least as good as the energy density of existing lithium-ion batteries. We then announced just last year our 12-month collaboration agreement with Agratas, which is the sister company to Jaguar Land Rover. We commenced testing of our batteries on behalf of customers, and customers got samples themselves. We published this great safety data, and of course, that video we were just watching was part of that. So that's what we called our D5 milestone. And then actually, just recently, we've announced our 10-amp hour battery capacity being reached at D6.
So that's a five-times increase in battery capacity relative to the P1 prototypes that we'd released to customers. So what do the next 18 months or so hold in store for us? So this is a really exciting time. We're already getting customer testing feedback from those P1 samples. We've got a design freeze coming up for our 10-amp hour batteries. We've also got the last pieces of our assembly line that we're building that are coming up to factory acceptance test. We've got our design freeze for a much larger 50-amp hour third-generation prototype, what we call our D8. And then we've got the release of these prototypes to customers. So our P1.5, which really relates back to that D7 design freeze, that 10-amp hour battery.
Then, of course, we'll be using our assembly line, which is being developed together with us by Mpac, our partner under the APC SiSTEM project. That's going to have its site acceptance test. That will allow us to then build our third-generation P2 50 amp-hour prototypes. It's the start now of opportunities for OEMs and tier ones to take an option to license this technology, scale it up further, and push it through to commercialization. That's what this timeline really explains. We've now gone into production of these batteries using our 1.5 megawatt-hour pilot line. Towards the end of this year, we will be releasing our A samples, which is really another way of saying our MVP or our minimum viable product, our P2 prototypes. At this point, potential licensees are saying, yeah, I like the look of these batteries.
How do I then take these and scale them up ready for commercial production?" So a lot of them have their own scale-up facilities. When they're thinking about gigascale deployment, they often want to do that at megawatt scale on large pieces of equipment and make what the industry calls B and C samples on production intent equipment and get ready then for gigafactory rollout. So this scale-up is really done together with the OEM and the licensee. And that's how our business model works, is that we're transferring that know-how onto a manufacturing partner. So who's interested in what we're doing? We've now got 21 companies. These are not the same 21 companies that we've got orders from for Stereax batteries. In fact, they're very different. These are typically automotive or consumer electronics companies.
And you see that breakdown actually by non-disclosure agreement on the left-hand pie chart there by geography. Quite a few in the U.K., a lot in the EU, some in the U.S.A., and some in Asia. In fact, the majority are in the EU. Some of the biggest car companies in the world, of course, are located in the EU. So that's an important trading partner for us. And in terms of the first deployments, we've really designed these batteries not in the first instance for the mass market, for low-price mass market EVs, but actually for some of the higher performance, higher volume performance vehicles. That'll be our market entry point. And in due course, as the volume of manufacturing increases, you might see solid state cascading then into some of the entry-level lower-cost vehicles. Forecasts are still pretty strong for solid state batteries.
They're still expected to own a significant percentage of the overall EV battery market as you move forward towards the end of this decade. Jason, maybe say a few words, please, about the growth of Goliath revenue and how we can expect that to develop in the coming years.
Thanks, Graeme. And very similar to the build of the Stereax revenue expectations. So the graphic is illustrative of how we would expect the cumulative income to grow over a 10-year period. And very similar, it's built up with a number of different layers. So we've obviously had great success at securing grant funding to date with the HISTORY and SiSTEM grants that we have in operation at the minute, albeit that they are tailing down to their end points. And we would expect that to continue.
The government did announce in their autumn budget that there is GBP 2 billion of funding available to support the automotive industry within the U.K. over the next five years. The grant funding body, the Advanced Propulsion Centre, the APC, who are responsible for deploying that, are working through how that will be deployed in recent announcements around the next schemes and competitions that they will be awarding. We will be certainly looking to apply for those grant fundings over the coming years and would expect grant funding to continue to support that within the Goliath automotive sector. Underpinning that, we would expect to get a small element of non-recurring engineering or commercial collaboration. Much smaller in percentage when compared to the med tech sector that we talked about earlier, but certainly continues to drive some small revenue from that.
That actually can be seen as a reflection in our half-year results with just under GBP 100,000 worth of income coming from that side of things in the half year to October. Then, in a slight difference to the Stereax side, we would expect, as we've talked about, licensing to be a much bigger proportion. Early options and then feeding into full licenses as we deploy those to automotives or tier ones. That eventually transitioning into revenue from battery royalty as those batteries are produced and put into the automotive supply chain, ultimately ending up on the forecourts for use in vehicles.
Thanks, Jason. Maybe a few words from you on ESG as well.
Yeah, carrying on. ESG remains really important for us at Ilika.
While obviously some of the news coming out of the U.S. over yesterday implies that there might be some areas that might look to delay or roll back some elements on the environmental side, it does stay really important. And certainly in the U.K. and Europe, for the largest of companies, ESG is mandated from a regulatory point of view. So for us looking to license into those substantially sized automotive OEMs or tier-ones, it's really important that we ourselves maintain great governance and an environmental and socially responsible focused attitude. And actually, that was borne out as we were delivering those P1 samples. Doing the onboarding process through the procurement departments of those OEMs that we talked to was a very intense process, and they had huge amounts of requests around ESG.
So the work that we do stands us in good stand for making sure that we can pass on a product that will fit nicely into those OEMs and tier ones' own manufacturing setup without causing them any problems from an ESG point of view. Moving on then to just touch on the finances. So the unaudited results, so turnover of GBP 1 million just down slightly from this time in the prior year. As I said, predominantly from grant funding. And that really reflects the timing of those two major grant funding activities that we've got underway: HISTORY and SiSTEM. HISTORY was a two-year project and SiSTEM was an 18-month project. Both of those are now winding down to a close. So the majority of the funding came early part of those, hence the drop-off.
And we would not expect there to be very much more funding coming through for that in this financial year for those. But that was fully expected and planned for. And then, as I've already said, we would look into those next applications to apply for and hopefully succeed in securing further grant funding in future years as we go forward. But then just to point, as I'd already said, we have derived the first bit of commercial income from the Goliath batteries, really around those P1 samples and the commercial collaboration programs that goes underneath them.
While that's not going to be a major part of revenue driving going forward, it's essential to ensure that having a price associated with these samples ensures that they are actively tested and used by these large companies that receive them, not just disappeared into an R&D department so that we get active engagement and good feedback from those customers who are starting to look at them. So that's a really important piece, a good indicator of engagement. Feeding in there to EBITDA loss, excluding share-based payments of GBP 1.9 million, which is exactly the same as prior year. So despite that slightly lower turnover, we've really kept on top of cost management at an operational level to make sure that we are watching our cash burn, making sure that we are tightly controlling that, and continuing to ensure that we're delivering to the timescale.
No change to the timescales from previous presentations, but still managing costs in doing so. So deploying shareholder capital to best effect. And then on top of that, with our management around our capital spend. So Graeme touched on the large manufacturing tool that we've got coming that we're working with Mpac. That's through the system grant. That's a really good example of how we've reduced our capital spend requirements by using that grant funding to support that activity. So that helps to deliver us the appropriate equipment to close out that 1.5 megawatt production line, but at a really limited capital cost. And that, along with that cost control in the EBITDA position, really has underpinned that cash balance at the half year of GBP 10.1, down from GBP 13.2 at the prior year, obviously with that small raise that we undertook in May to bolster the balance sheet.
And we will continue to manage that cash appropriately as we go forward and look to maximize the opportunities that we get through R&D tax credits and payments that we secure and have succeeded in doing for years.
Thank you, Jason. So just to wrap up before we get into the questions, I can see there's plenty of interesting questions that have come through. Our outlook, I think, can be summarized by saying that, first of all, it is a period of scaling up Stereax through that joint manufacturing agreement and co-marketing with Cirtec. We are maturing the Goliath technology with partners through a series of very nicely defined technical milestones, which we've summarized earlier in this presentation. And as Jason's just emphasized, we'll continue to pursue grant support and strategic partnering to make sure that we push commercial momentum into the Goliath program.
That commercial opportunity really continues to build for our technology across some very large addressable markets, giving us a strong platform for that future growth that we aspire to. Many thanks for listening to the presentation. I hope you found it insightful. We're now going to address some of the questions that have come in. Many thanks to everyone for submitting those.
Graeme, Jason, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions. Just by using the Q&A tab situated on the right-hand corner of your screen. Just while the company takes a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via our investor dashboard.
As you can see, we received a number of questions throughout today's presentation. If I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.
Fantastic. Thank you. So Jason, I see the first question is one that you perhaps should address. Do you want to take that?
Yeah. So first question here, in which financial year do you anticipate starting potentially profitable production of a first commercial battery product? So going back to the conversation we've had earlier, following the completion of the user acceptance testing at Cirtec, which we talked about only recently in the U.S., Stereax will commence production in 2025, with batteries expected to commence dispatch to customers in the middle of the calendar year.
Look for those announcements coming in terms of the start of production and then revenues coming on the back of that. Goliath batteries will continue that development cycle that Graeme took you through. Following the achievement of the minimum viable product, the MVP, as we have talked about, these will be produced as A, B, and C samples by prospective licensees. However, the timeline for this will be dictated by discussions on licensing as these will develop over the next 18-24 months.
Brilliant. Next question is, will your miniaturized battery also have a use in robotics? Actually, our Stereax miniature batteries, they've got potential uses in powering sensors used in robotics, particularly if the sensors are located where it's difficult to hardwire a connection.
The Stereax batteries themselves are a bit too small for most robotics' primary power supply, but you could use Goliath batteries for robotics. The next question is, would licensing to a Chinese manufacturer ever be an option, so currently, there wouldn't be a legal barrier to licensing a Chinese manufacturer, but we'd need to be assured that we'd receive an attractive return on the investment, and I guess with any licensee, ensure that our IP would be protected. Switching on then to some more questions here, and there's one that pops up a number of times.
So just to clarify it, so when looking at the graphs that we've shown for both Stereax and Goliath in terms of indicative expectations around the build of both revenue and the timeline that those come over, as we are waiting to put those batteries into full production on the Stereax side and waiting to go through the Goliath side, we're not in a position where we can give defined forward guidance from this perspective at the moment. But as soon as those start to crystallize, and we would expect that to start to come sooner from the Stereax side, as we've said, we will start to be able to give better information and better guidance coming into the market so that we can guide you specifically.
But until such time as we enter into that, we must carefully follow the regulations in terms of sharing any forward guidance information, hence why they are not included at this point in time.
Yeah. And maybe I would just sort of add to that and say that, of course, analysts who cover us do give forecasts of revenue, of their expectations of revenue. And in fact, I would point people to Research Tree, which is a publicly available resource where sophisticated investors are permitted to read some of the analyst coverage that's available on Ilika. So for instance, the Cavendish Initiation note that was written recently by Jean-Marc Bunce is available on Research Tree. So there's more detailed information and his assessment of forward prospects for the company.
The next question is, why is non-recurring engineering revenue larger than royalty revenue in a company that seeks to replicate ARM's IP business model? Actually, we are lucky enough to have Monika Biddulph, Dr. Monika Biddulph, on our board as a non-executive director. Monika was a director at ARM earlier in her career. She's given us a lot of insight, actually, into the development of ARM. Those of you that have followed us for longer will remember that Mike Inglis, who was commercial director for many years, was also a chairman, actually, before Keith, who's a current chairman. They often explained to us that in the early years, a lot of the revenue for ARM was NRE and license issue fees as opposed to royalties. It's only relatively recently in the life of ARM that royalty revenue has dominated their revenues and income.
And actually, therefore, we are just reflecting the fact that we are at the beginning of that licensing journey where NRE is an important component of our revenue stream. Next question is, what was the reason for the recent change of broker? Yes. So we have appointed Cavendish just before Christmas. And we periodically review all of our advisors. And no matter how good advisors are, sometimes when you have a change, you inject a bit of energy and renewed enthusiasm. And actually, Cavendish convinced us that they were going to go over the barricades for us, that they were going to go the extra mile. And so we decided to give that a try. And so far, we've got every reason to believe that they are doing their absolute best to promote the interests of Ilika and its shareholders.
We've also changed our investor relations advisor to FTI Consulting, and they're doing a great job for us as well. It's not the first time that we've done it, and may not be the last either. But I think it's only healthy to renew those relationships now and again. Next question. Actually, there's two questions, but I'm going to take them separately. So first of all, do you see any benefit to Ilika from the Coventry Warwick Gigapark? Actually, I would say that we are receiving lots of benefits from that cluster of capability in the Midlands. So I would include UK BIC, the UK Battery Industrialisation Centre, in that gigapark, as you referred to it. And you will know that we already work closely together with them. In fact, they are a member of one of the programs that we're running.
So they're a partner in the Advanced Propulsion Centre funded SiSTEM project, which is our scale-up project. And they've recently been doing some work demonstrating the scalability of our manufacturing process on their substantial coating line that they've got at UKBIC. So some very direct interaction there. There's a lot of fantastic know-how, and I'm sure actually going forward, we'll be continuing to work in close partnership in order to deliver some very convincing scale-up data from our approach. And that scale-up information and demonstration is really important to convince licensees that they can deploy this solid-state technology of ours in a gigafactory. And actually, the conversion from a standard gigafactory process to our process is not as traumatic as you might fear. Next question is, the recent broker note mentioned Apple. And are you able to confirm any engagement with Apple at any level?
So look, I think that mention in the note was just illustrative. Of course, we have a number of interactions with large commercial organizations that are interested in battery technology. And we will continue to engage with those organizations and define opportunities as they mature. Next question is, will 10 amp-hour capacity be competitive? Okay. Well, so the 10 amp-hour capacity is actually an intermediate milestone that we will be launching as part of our P1.5, which is the prototype we expect to release in the middle of this year. So it's not actually a minimum viable product at that scale, but still of great interest to the OEMs that are testing our technology. And we've spent a lot of time engaging with those 21 OEMs and tier ones that I mentioned. And we've already verified that there is significant interest in that 10 amp-hour capacity device.
Will D8 improve on 10 amp-hour capacity? Yeah, absolutely, so as we mentioned earlier, actually, D8 is a precursor to P2, and the P2 is a 50 amp-hour capacity pouch cell, so plenty of opportunity to address some of the larger capacity rollouts that the OEMs are interested in, and the next question is, can you share initial feedback from the testers? Yeah, so the feedback is that these batteries at P1 status, remember, that was our first prototype, do what they say on the tin, so there is continued engagement with those testing companies in order to go to the next level. Jason, do you want to take the next one?
Yeah, so a question here from Paul, so cash remains a major concern for investors. When do you expect further grant or similar funding?
So as I mentioned earlier, we have a strong track record with securing grant funding. And there has been a small hiatus in available grant funding while we had the election last year and then waited for the budget. But as I said previously, we've now got GBP 2 billion confirmed over the next five years to be deployed to support automotive transformation. So grant funding to support that transformation within the U.K. being deployed through the APC, the Advanced Propulsion Centre. And they've recently just restarted to launch their competitions, as they call them, so the funding rounds for applications. So we are working very closely with them to identify which will be the right applications to go through. Not all of those open competitions are applicable for what we are trying to achieve.
We need to choose the right one that is the best match for our scale-up and the next steps of activity that we need to do with that Goliath story. Unfortunately, it remains very much a support of the Goliath activity. No grant funding is available for the Stereax side of the business, with MedTech not really being heavily supported from that grant perspective. But we do continue to get strong interaction and good time and engagement from Whitehall around the Goliath side of the business. We will continue to push on that and secure what funding is available.
The next question is, in the last 20 years, what would you say is the biggest success? Wow, that's a great question.
I would say, actually, the transition from being a service-based organization where we used high throughput to innovate different materials on behalf of customers to a product-based organization, to have done that successfully and to have two very exciting product lines is probably one of the highlights for me. Next question is, I probably missed it. What chemical do Ilika batteries use? So Stereax batteries use an LCO cathode combined with a silicon anode. So LCO is lithium cobalt oxide. It's a cathode material that's used extensively in consumer electronics. The Goliath batteries actually use a choice of materials which is found more extensively in the automotive sector. So that's NMC, which is a lithium nickel manganese cobalt oxide cathode, a bit of a mouthful, combined with a silicon anode again. So these are materials that are very familiar to the automotive industry.
Of course, the secret sauce for us is really the oxide electrolytes that we use in each of our solid-state batteries. Actually, we use different oxide electrolytes for Stereax and Goliath, but they've been chosen for a combination of their ionic conductivity and compatibility, chemical compatibility with the other components in the cells. Look. Is Stereax adaptable to the rechargeable hearing aid market? Yeah, there is some interest in rechargeable hearing aids. It's not our primary objective because, believe it or not, there are other opportunities which give a higher gross margin and have a higher need for some of the USPs of Stereax. I would say that Goliath probably isn't suited to the hearing aid market. Of course, that's been designed really for large format deployment in automotive.
So it would be a very different product development effort in order to miniaturize it for that type of miniature device.
Question here from Paul. Our safety doesn't command a premium in the EV market. Why not address markets that are safety obsessed, like aviation? Just going back to Graeme's presentation elements earlier in terms and obviously the nail penetration test that we saw. EVs are intrinsically safe, but they've been engineered to be so. And a lot of time, cost, and effort is put into that safety within the vehicle battery pack itself. So the wider engineering that goes around the cells themselves. So actually, that safety, while at a cell level, may not have such an appeal side by side.
At a pack level, that does allow in the automotive sector the pack designers to re-engineer, taking out complexity, weight, and cost, therefore either making the car cheaper, allowing more weight for additional batteries to be added for additional range. So that does provide a significant benefit in the EV sector. And you saw that in the slide talking about the Balance Batteries report on what the benefits of solid-state would be. So while safety in and of itself doesn't change that the cars are intrinsically safe now, it does enable further cost saving or further range coming through the EV market. So it is fair to say that it is important to be in the EV sector. However, we do continue to talk to other use cases outside of EV while it's a primary part of the presentation that we've just gone through in the business.
Because it is the world's biggest battery market, we continue to talk to many other markets and applications who would see benefit from solid-state batteries and their benefits, both in temperature sensitivity and also in that safety element. Please be reassured that our business development team continues to explore all opportunities, and we won't leave any stone unturned in a search for a new market.
Thank you, Jason. There's an interesting question here about one of our institutional investors. It says, "Why are long-standing investor Baillie Gifford selling out? Presumably, they don't believe the story anymore." I'd say, on the contrary, actually, there is information out there in the public domain that Baillie Gifford has decided to return funds to investors from one of its investment vehicles.
Actually, Baillie Gifford is invested in Ilika through multiple funds, but one of them is being returned to investors, and there is some selling activity from that particular fund. I would also say, actually, another one of our institutional investors, for those of you who track those types of transactions, has picked up the majority of those shares. So the reality is that investors do get different priorities and have different strategic directions that they wish to take. But that's part of the normal turnover of a company's shareholder register, particularly when it's publicly listed like Ilika. And then maybe one final question. Let's have a look. We will try and deal with any that we haven't addressed separately and make sure we include responses in our wrap-up. There's one here.
It says, "Could you say something about other manufacturers of solid-state batteries for medical devices?" Well, really, the alternative to the type of approach that we take is to use either a small pouch cell, like a sort of miniature Goliath, or really, in order to be comparable with Stereax, a miniature coin cell. But as I mentioned, actually, when we were talking about those alternatives, when you start to make a tiny little coin cell, you end up with an awful lot of can and not very much active material. And the big attraction of the Stereax batteries, it's a radically different, let's say, disruptive design, which has a lot of encapsulated active material and not so much encapsulation. So actually, the energy density on a volumetric and gravimetric basis, i.e., how much energy you can put into a space or a given weight of battery, is much higher.
That's why these Stereax batteries are of so much interest to some of the medical device product developers. Well, I think at this stage, we're going to wrap up the Q&A session. I see we've overrun our slot. So many thanks for your engagement. And I'll just hand back over to the IMC team.
Graeme, Jason, thank you for answering all those questions from investors. And of course, the company can review all questions submitted today and will publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide with their feedback, which I know is particularly important to the company, Graeme, could I please just ask you for a few closing comments?
Yes, thank you very much. And as I said at the beginning, I realized that you had lots of choices about what you could do with your time today.
I really appreciate you taking the time to interact with us and give us your feedback. Speak soon.
Graeme, Jason, thank you for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This can only take a few moments to complete, and I'm sure it'll be greatly valued by the company. On behalf of the management team of Ilika PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all.