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Last close As at 25/03/2023
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Pharnext has announced that it has finalised its strategic funding agreement with Neovacs for total net proceeds of €20.7m. The funds will be raised by issuing bonds across 11 monthly tranches and associated warrants (equal to 50% of Pharnext’s total outstanding shares). The warrants become applicable for exercise on 1 January 2024, allowing Neovacs to hold one-third of Pharnext’s diluted share capital once fully converted. Proceeds from the first bond tranche (€10.7m) have been used to repay the €5.6m (including accrued interest of €126k) drawn down from the total €12m fixed-rate loan raised from Alpha Blue Ocean (ABO) in June 2022, as well as the initial €2.5m raised from Neovacs. Concurrently, Pharnext has also announced a share consolidation (1:5,000) and suspension of the right to exercise all securities, effective late October 2022. New shares will begin trading on 23 November. We will be revising our estimates and valuation following the company’s forthcoming H122 results to account for these developments.
Pharnext |
€20.7m funding agreement with Neovacs inked |
Financing agreement |
Pharma and biotech |
6 October 2022 |
Share price performance Business description
Analysts
Pharnext is a research client of Edison Investment Research Limited |
Pharnext has announced that it has finalised its strategic funding agreement with Neovacs for total net proceeds of €20.7m. The funds will be raised by issuing bonds across 11 monthly tranches and associated warrants (equal to 50% of Pharnext’s total outstanding shares). The warrants become applicable for exercise on 1 January 2024, allowing Neovacs to hold one-third of Pharnext’s diluted share capital once fully converted. Proceeds from the first bond tranche (€10.7m) have been used to repay the €5.6m (including accrued interest of €126k) drawn down from the total €12m fixed-rate loan raised from Alpha Blue Ocean (ABO) in June 2022, as well as the initial €2.5m raised from Neovacs. Concurrently, Pharnext has also announced a share consolidation (1:5,000) and suspension of the right to exercise all securities, effective late October 2022. New shares will begin trading on 23 November. We will be revising our estimates and valuation following the company’s forthcoming H122 results to account for these developments.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
2.8 |
(21.4) |
(1.17) |
0.0 |
N/A |
N/A |
12/21 |
3.6 |
(30.6) |
(1.01) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
The first €10.7m tranche will be followed by two tranches of €2.5m each (due in October and November 2022), two tranches of €1m each in December 2022 and January 2023 and six subsequent tranches of €500k per month between February and July 2023, which adds up to €12.6m in net proceeds (following the stated debt repayments). After signing the deal with Neovacs, Pharnext also renegotiated its agreement with ABO, holder of the OCEANE-BSA convertible debt, revising down the maximum gross amount to be raised from these securities to €26m from the previous €45m. This will be divided into 13 monthly tranches of €2m each and will be available for utilisation between December 2022 and December 2023, subject to certain conditions. Management asserts that the combined proceeds (€38.6m) along with funds on hand would be sufficient to fund operations until Q124, by which time the Phase III PREMIER trial would have read out. If favourable, the results will support regulatory filings in the US and Europe. We note that the associated warrants issued to Neovacs (50% of current shares outstanding) will vest on 1 January 2024 and will be available for exercise until 30 September 2027. If fully exercised, Neovacs will hold a 33% stake in Pharnext.
In a separate release, Pharnext announced a reverse stock split (one new share with a nominal value of €1 will be issued against 5,000 old shares with a nominal value of €0.0002). The share consolidation will be implemented from 24 October and the new shares will commence trading on 23 November 2022. Exercise of all outstanding equity warrants, convertible bonds and equity derivatives will be suspended from 21 October. We will be updating our valuation to factor in these developments.
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Research: Healthcare
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