Currency in GBP
Last close As at 17/03/2023
GBP0.01
▲ 0.10 (9.09%)
Market capitalisation
GBP2m
Research: Healthcare
Midatech has announced that its shareholders have not approved the acquisition of Bioasis Technologies at the company’s annual general meeting (AGM), thereby ceasing all proposed transactions/events (including the US$9.6m private placement) contingent on the deal. This comes as a major setback for Midatech as it was counting on the deal to diversify operations and extend its cash runway into Q423. The shareholders’ decision puts Midatech in a tough situation as the company only has cash to last until mid-March 2023 and will urgently need to secure alternative sources of financing. Midatech has appointed Quantuma Advisory, a specialist business advisory firm, to undertake contingency planning. The shares were trading down over 25% by close of play yesterday.
Midatech Pharma |
Urgent pivot required following Bioasis deal fallout |
Acquisition update |
Pharma and biotech |
24 January 2023 |
Share price performance Business description
Analysts
Midatech Pharma is a research client of Edison Investment Research Limited |
Midatech has announced that its shareholders have not approved the acquisition of Bioasis Technologies at the company’s annual general meeting (AGM), thereby ceasing all proposed transactions/events (including the US$9.6m private placement) contingent on the deal. This comes as a major setback for Midatech as it was counting on the deal to diversify operations and extend its cash runway into Q423. The shareholders’ decision puts Midatech in a tough situation as the company only has cash to last until mid-March 2023 and will urgently need to secure alternative sources of financing. Midatech has appointed Quantuma Advisory, a specialist business advisory firm, to undertake contingency planning. The shares were trading down over 25% by close of play yesterday.
Year end |
Revenue |
PBT* (£m) |
EPS* |
DPS |
P/E |
Yield |
12/18 |
1.94 |
(11.8) |
(339.0) |
0.0 |
N/A |
N/A |
12/19 |
0.67 |
(10.9) |
(50.0) |
0.0 |
N/A |
N/A |
12/20 |
0.34 |
(11.1) |
(22.9) |
0.0 |
N/A |
N/A |
12/21 |
0.58 |
(6.1) |
(6.8) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised.
In December 2022, Midatech had announced an all-stock acquisition of Bioasis Technologies (a Canada-based biopharmaceutical company) by issuing 75.9m new shares at an exchange ratio of 0.9556 Midatech share for each Bioasis share, translating into a deal value of c C$7.4m (c £4.4m) at the time of the announcement. The acquisition was aimed at diversifying Midatech into a drug development company versus a pure-play drug delivery player with an aim to support growth and create other income-generating opportunities. The proposed acquisition was contingent on the regulatory and shareholder approval, with a planned closing of Q123. Concurrent to the deal, Midatech had announced a two-stage equity raise worth US$10.0m, including a US$9.6m private placement to support the working capital requirements of the combined business and partially service Bioasis’s outstanding debt. The fund raise was contingent on the deal going through.
The proposal and terms of the deal were put to shareholders at the recent AGM but failed to receive the shareholders’ go-ahead. This puts the company in a precarious position, needing to make alternate funding arrangements imminently given the short cash runway (mid-March 2023). We believe that current capital market tightness may make this challenging. If such funding is not available, Midatech’s directors believe it is likely that the company could be forced to enter into administration. Bioasis also states that Midatech is required to pay it a US$0.225m expense reimbursement payment.
As a reminder, in January 2023 Midatech announced that its MAGIC-G1 study had been recommended for dose escalation (from 60uM to 90uM) by the Data Safety Monitoring Board, although we had maintained that progression of this study would be contingent on the successful conclusion of the said fund-raising. The company has now appointed specialist advisory firm Quantuma Advisory to undertake contingency planning and advise on next steps.
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Research: Healthcare
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