MIDAS SHARING TIPS: Creo’s surgical tools can be a game-changer

Creo Medical is a small UK healthcare company that has attracted the attention of the biggest and best.

Intuitive Surgical manufactures the da Vinci robots, which have revolutionized surgical procedures around the world.

Valued on the New York Stock Exchange at $170bn (£130bn), the biotech firm has also devised a way to detect tiny nodules in the lung via an ultra-thin tube inserted through a patient’s mouth.

The procedure, which is performed robotically, is quick and easy but is designed to detect lumps, not remove them. In 2021, Intuitive approached Chepstow-based Creo for help.

Creo has invented surgical tools small enough to fit inside long, flexible endoscopic tubes.

The kit is already in use for several types of early-stage bowel and stomach cancer, so Intuitive felt Creo CEO Craig Gulliford would be the right person to take its diagnostic technology to the next level.

Early results suggest that Intuitive was right. The first operation was successfully carried out at the Royal Brompton Hospital in London, several more have since been carried out and the programme is being trialled across the UK and Europe.

The procedure should be widely available within a couple of years, not only here but in the United States.

This could be a game-changer in medicine, helping to diagnose and treat small, suspicious lumps in the lung before they spread.

Success could also transform Creo’s fortunes, sending its share price soaring after years of disappointment.

Gulliford floated his company on AIM in 2016 at 76p. The shares soared to more than £2 in 2019 but are now worth just 28p, largely due to poor timing and a lack of funding.

Having already secured regulatory approval for his innovative equipment, Gulliford was on the verge of launching it when Covid hit.

In February last year, £30m was raised for just 20p and the funding has put the business into action. Sales teams are working at full speed and revenues are increasing as Creo wins over doctors around the world.

Brokers expect turnover to rise by around 30 per cent to £40m this year, rising to almost £55m by 2025. The group is still loss-making but profits should start to show from next year.

I also think it is changing the way bowel cancers are treated, allowing doctors to remove tumours or lumps using endoscopic tubes rather than open surgery.

This market is believed to be worth more than £700m. The partnership with Intuitive has similar potential and Creo has also developed other tools.

MIDAS VERDICT: Creo shares They have had their ups and downs since their IPO, but the outlook should be considerably better, especially after the merger with the world-renowned Intuitive. At 29p, the shares could prove to be a bargain.