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Last close As at 25/03/2023
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Research: Healthcare
Pharnext announced that it has signed a €2.5m short-term bridge loan agreement with the French biotechnology company Neovacs (ALNEV). The loan has a six-month maturity and will carry an interest rate of 1% per month. The current loan is part of ongoing discussions between Pharnext and Neovacs to potentially enter into a broader financing agreement. As a reminder, in June 2022, Pharnext had raised another €12.0m in short-term, fixed-rate financing from Global Tech Opportunities 13, a member of the Alpha Blue Ocean (ABO) group, proceeds from which were to be used in part to pay off €8.0m in venture debt obligations to IPF Partners (raised in 2018), releasing Pharnext from the restrictive covenants requiring it to maintain a €8.0m cash balance. If talks progress with Neovacs, we expect the new deal to replace this fixed-rate ABO loan. We await more information before updating our estimates.
Pharnext |
Neovacs €2.5m loan part of a potential larger deal |
Funding update |
Pharma and biotech |
23 August 2022 |
Share price performance Business description
Analysts
Pharnext is a research client of Edison Investment Research Limited |
Pharnext announced that it has signed a €2.5m short-term bridge loan agreement with the French biotechnology company Neovacs (ALNEV). The loan has a six-month maturity and will carry an interest rate of 1% per month. The current loan is part of ongoing discussions between Pharnext and Neovacs to potentially enter into a broader financing agreement. As a reminder, in June 2022, Pharnext had raised another €12.0m in short-term, fixed-rate financing from Global Tech Opportunities 13, a member of the Alpha Blue Ocean (ABO) group, proceeds from which were to be used in part to pay off €8.0m in venture debt obligations to IPF Partners (raised in 2018), releasing Pharnext from the restrictive covenants requiring it to maintain a €8.0m cash balance. If talks progress with Neovacs, we expect the new deal to replace this fixed-rate ABO loan. We await more information before updating our estimates.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
2.8 |
(21.4) |
(1.17) |
0.00 |
N/A |
N/A |
12/21 |
3.6 |
(30.6) |
(1.01) |
0.00 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Earlier this month, Neovacs announced a proposed strategic investment in Pharnext for a maximum €20.0m (to be converted in whole or in part into Pharnext shares plus associated warrants) to support Pharnext’s operations and cash flow needs, including progressing its pivotal Phase III clinical study of PXT3003 in Charcot-Marie Tooth disease type 1A. Of this, €2.5m was to be paid out immediately following the signing of the deal. It is unclear as of now if the ongoing discussions with Pharnext would lead to any modifications in deal terms and/or deal value. If the deal goes through, it is likely to replace the recently signed €12m fixed-rate loan agreement with ABO. Its possible impact on the OCEANE-BSA convertible debt agreement (first eight of 11 tranches fully converted to equity and tranche nine partially converted) is to be ascertained and we await more clarity on this from management in the coming weeks.
One noteworthy aspect of the potential deal with Neovacs is that in the event the companies enter a broader financing agreement, the funding will translate to a convertible instrument (including for the initial €2.5m tranche) possibly giving Neovacs access to one-third of Pharnext’s capital, per information released by the company. If no agreement is reached, the €2.5m loan will be reimbursed by Pharnext at the loan maturity date of 21 February 2023. Given that the investment will be strategic, we expect a possible review of the business and financial situation at Pharnext, if the deal is concluded successfully. We await further clarity on this front before updating our estimates and valuation.
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Research: Investment Companies
Deutsche Beteiligungs (DBAG) reported a net loss of €78.3m in 9M22 (ending June 2022), which translated into an 11.7% NAV decline (in total return terms), less than the 28% fall in the SDAX during the period. The contraction of public multiples used to value its portfolio outweighed positive earnings contributions. The fund services segment generated €9.4m profit in 9M22 from managing €2.5bn assets, and DBAG confirmed its segment guidance of €14–16m profit in FY22. DBAG also continued its high acquisition activity with €127m spent on seven new investments so far in FY22 (of which four are in IT services and software) and 23 add-ons by portfolio companies (with a €12m equity support from DBAG).
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