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Research: Healthcare
Oasmia has announced it has secured a preferential, one-for-five rights issue that will raise gross proceeds of c SEK151m and should alleviate near-term funding requirements. The company’s largest shareholder has agreed to subscribe to its allotment (24.8%) and a consortium of external investors has guaranteed the remainder (75.2%), albeit on a 6.5% cash compensation basis. Subscription rights can be traded from 8 to 17 March. Oasmia has also announced plans to change its name to Vivesto; both this and the rights issue are subject to approval at the EGM planned for 21 February.
Written by
Oasmia Pharmaceutical |
Corporate update |
Pharma & biotech |
20 January 2022 |
Share price performance
Business description
Analysts
Oasmia Pharmaceutical is a research client of Edison Investment Research Limited |
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Oasmia has announced it has secured a preferential, one-for-five rights issue that will raise gross proceeds of c SEK151m and should alleviate near-term funding requirements. The company’s largest shareholder has agreed to subscribe to its allotment (24.8%) and a consortium of external investors has guaranteed the remainder (75.2%), albeit on a 6.5% cash compensation basis. Subscription rights can be traded from 8 to 17 March. Oasmia has also announced plans to change its name to Vivesto; both this and the rights issue are subject to approval at the EGM planned for 21 February.
Rights issues secured and planned for Q122 |
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
04/19 |
2.0 |
(168.5) |
(0.7) |
0.00 |
N/A |
N/A |
04/20 |
201.8 |
(43.4) |
0.0 |
0.00 |
N/A |
N/A |
12/21e** |
16.5 |
(128.1) |
(0.2) |
0.00 |
N/A |
N/A |
12/22e** |
46.8 |
(139.1) |
(0.3) |
0.00 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **New reporting period from 1 January 2021.
Based on our revised forecasts in December 2021, we had anticipated additional financing would be required in 2022 and securing this rights issue should clear any funding overhang. We expect a prospectus to be published on 3 March, but Oasmia has initially guided that proceeds will be used for ongoing business operations, including business development and M&A; development of Oasmia’s clinical assets, Cantrixil and docetaxel micellar; and on its platform and preclinical projects.
Looking beyond the rights issue, Apealea (Cremophor-free paclitaxel) remains the primary near-term value driver, in our view. European launch is expected in early 2022 (Germany and the UK) by commercial partner Inceptua, enabling the first flow of royalties. Ultimately, the United States remains the key market for Apealea and Oasmia’s partner Elevar is reviewing the previously planned clinical and regulatory path. We expect an update in the coming months, but understand Elevar’s overarching goals are to maximise Apealea's commercial potential and to shorten timelines.
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Research: Industrials
Avon Protection should be well positioned to recover strongly following the value destruction caused by the relatively small Armor activity, which now faces a managed closure over the next two years. Future growth rates are diminished by the exit but remain healthy in the further focused core of Respiratory and Head Protection. Management needs to restore investor confidence as it continues with its growth strategy, in order to regain the historical premium rating to its UK defence peers. In this note, we reset our forecasts and valuation to reflect the revised shape of the business.