Abzena has announced a placing of £25m gross (issuing 75.8m new shares at 33p) to expand its service offering, capacity and capabilities. This was achieved through an accelerated book build process and should become effective on 24 April following a shareholder resolution. We expect the expansion of its service offering and capacity to move Abzena significantly forward towards profitability. We place our FY18 financial forecasts onwards and valuation under review to assess the full impact, but see this as a significant and positive step.
Written by
Abzena |
Fund-raising to expand services and capabilities |
Fund-raising |
Healthcare services |
5 April 2017 |
Share price performance
Business description
Analyst
Abzena is a research client of Edison Investment Research Limited |
||||||||||||||||||||||||||||
Abzena has announced a placing of £25m gross (issuing 75.8m new shares at 33p) to expand its service offering, capacity and capabilities. This was achieved through an accelerated book build process and should become effective on 24 April following a shareholder resolution. We expect the expansion of its service offering and capacity to move Abzena significantly forward towards profitability. We place our FY18 financial forecasts onwards and valuation under review to assess the full impact, but see this as a significant and positive step.
Year |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/15 |
5.7 |
(4.7) |
(5.89) |
0.0 |
N/A |
N/A |
03/16 |
9.9 |
(7.5) |
(6.00) |
0.0 |
N/A |
N/A |
03/17e |
19.1 |
(9.1) |
(6.17) |
0.0 |
N/A |
N/A |
03/18e |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Abzena has announced a £25m (£23.9m net) fund-raising through a placing of 75.8m shares at a price of 33p each. The funds will be used to expand its services, capabilities and capacity. Specifically, it has indicated that it will used the funds to upgrade and grow its US-based biomanufacturing facilities and capabilities, invest in its existing biology, chemistry and biomanufacturing services in the UK and US and invest in its sales and business development functions. In essence, this fund-raising, according to the company, should enable Abzena to fund its targeted revenue growth plans of 40% (CAGR) over the next three years and improve gross margins to 50%, which should move it towards profitability in a shorter time frame.
Abzena has made strong progress since its IPO in 2014. It has built its service offering and geographic footprint through investment and through two acquisitions in the US. Also, alongside this it has grown its Abzena inside portfolio to 12 (in clinical development) and has recently announced another significant licensing deal for its novel site-specific ThioBridge technology. We do not expect this to affect our FY17 (to March 2017) forecasts, but place our FY18 estimates onwards and valuation under review to assess the full impact of the fund-raising and expansion plans.
|
Disclaimer
|
|
Disclaimer
|
Key for Rockhopper (RKH), at a recent results presentation Premier Oil’s (PMO) management talked about progress being made for Sea Lion’s development and the options that are currently being explored. The turbulent macro environment and PMO’s financial difficulties have slowed Sea Lion’s progress, but these comments suggest increasing options to develop the asset. For RKH, we examine a number of possible scenarios for sensitivities (vendor financing, export credit approach, flexing of fiscal terms), although we leave our baseline approach and valuation broadly unchanged until news is more concrete. Our core NAV remains 73p/share (although a number of estimates change within this), representing material upside for investors as and when Sea Lion’s development moves forward.