DNB Markets: Isofol Medical - Rights issue to secure arfolitixorin’s route to filing

Thu, Apr 29, 2021 17:32 CET

Isofol Medical plans to raise cSEK400m through a fully guaranteed rights issue, with an optional extra cSEK100m. Net proceeds are expected to be used to bring arfolitixorin beyond top-line results to submission to the FDA and EMA, as well as for pre-commercial activities and the exploration of additional indications. Top-line results are expected in H1 2022, with subsequent filing in H2 2022. As the terms of the rights issue have yet to be disclosed, our estimates are unchanged and we reiterate our SEK21–37 fair value.

cSEK400m rights issue and potential SEK100m over-allotment option. The company intends to carry out a fully guaranteed preferential issue, with the over-allotment conditional upon the rights issue being oversubscribed. The issue is subject to approval at an EGM, due to be held around 14 May 2021. The proceeds are planned to be used for: 1) taking main asset arfolitixorin beyond top-line results to filing; 2) CMC activities; 3) pre-commercial activities; 4) the exploration of additional indications; and 5) general corporate purposes. We note that the stock is down c19% on the news, but in our view it is difficult to assess what a ‘reasonable’ share price reaction is as we still do not know the terms of the rights issue.

Top-line results expected in H1 2022, with possibility of launch in 2023. The pivotal phase III study is fully recruited, and top-line results are expected in H1 2022, with regulatory submission to the FDA and EMA expected in H2 2022.

We reiterate our fair value of SEK21–37. A rights issue is already included in our SOTP valuation. However, as we do not yet know the subscription price or number of subsequent shares issued, it is difficult to estimate the impact on the fair value; therefore, our estimates are unchanged.

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DNB Markets: Isofol Medical - Rights issue to secure arfolitixorin’s route to filing

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