Nanologica

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Scibase Holding

Spago Nanomedical

Redsense Medical

AroCell

Alzinova

* Pre-revenue stage with no proven business model, currently generating no profits and negative cash flow, increasing investment risk.
* High dependence on a single product (ALZ-101) for future revenue, limiting revenue diversification.
* Vulnerability to regulatory interference typical in the pharmaceutical industry, potentially impacting development and commercialization timelines.
* Reliance on key personnel and continued dependence on capital markets for funding, increasing operational and financial risks.
* Binary outcome risk associated with clinical trials, where failure in upcoming Phase II/III trials could significantly impact the company's viability.

* Strong growth potential in the expanding Alzheimer's disease market, with ALZ-101 positioned to benefit from increased interest in disease-modifying treatments.
* Asset-light business model typical of pharmaceutical companies, allowing for efficient scaling once products are approved.
* Intellectual property protection and market exclusivity for ALZ-101, providing a competitive advantage for at least a decade post-approval.
* Potential for diversification through the AβCC peptide technology platform and second candidate ALZ-201, offering growth optionality.
* Product (ALZ-101) contributes to the greater good by aiming to improve Alzheimer's patients' health, aligning with ethical investment considerations.

* Lack of profitability across multiple metrics, including gross profit margin, operating margin, and return on equity.
* Absence of consistent revenue and earnings growth, potentially signaling challenges in market penetration or product demand.
* Poor cash flow conversion and lack of dividend payments, indicating limited ability to generate sustainable cash profits.
* High likelihood of needing to raise capital in the near future, potentially leading to shareholder dilution.

* Strong short-term liquidity with current assets 1.5 times greater than current liabilities, indicating robust working capital management.
* Sufficient cash and short-term investments to cover expected cash burn for more than two years, demonstrating financial resilience.

* Short tenure of top management team (less than five years), potentially limiting institutional knowledge and proven teamwork.
* History of postponing clinical trials, raising concerns about consistent delivery on promises and timely execution of strategic plans.
* Lack of long-term incentive programs and sustainability-related performance incentives for executives, potentially misaligning long-term interests.
* Limited gender diversity on the board, with only 1 out of 6 board seats held by a woman, potentially missing out on diverse perspectives.
* Pre-revenue status necessitating share dilution, coupled with weak commitment to sustainability reporting, which may concern some investors.

* Strong leadership with CEO Tord Labuda bringing extensive pharmaceutical industry experience and a clear long-term vision for Alzinova's innovative Alzheimer's treatment.
* Lean, decentralized organization promoting efficiency and accountability, with a consistent focus on innovation and cost-effective clinical development.
* Transparent and timely communication with investors, maintaining consistent long-term goals and strategies while being candid about challenges and shortcomings.
* Significant insider ownership (over 18%) and presence of a controlling owner with long-term commitment, aligning management interests with shareholders.
* Business-savvy board with diverse expertise relevant to the company's strategy, capable of effectively evaluating CEO performance and understanding the value creation process.

To secure a robust and validated manufacturing process, and as earlier communicated, Alzinova has changed supplier to Bachem, a world-leading supplier of peptides. The news in the most recent press release is that it is a further delay of approximately six months before the phase Ib trial with ALZ-101 can start.
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Based on the latest press release, further questions of interest for investors that remain unanswered are:
&nbsp;
<ul>
<li>Does the current cash position fund the updated timeline?</li>
<li>Are there risk for any additional delays, as the timeline has now been updated with two delays in the last eight months?</li>
</ul>
&nbsp;
Regarding the first bullet, it is positive that Alzinova has a low burn-rate when no clinical trials are running. However, even before this news, our stance was that the cash position was sufficient until read-out of the phase Ib trial, but with no margin of safety. Thus, we now see a risk for the need to raise capital before read-out. In our updated timeline, we anticipate read-out in the second half of 2021. In that sense, there is, at the same time no urgent need for additional equity funding.
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The second question addressed is just as important. We argue that the uncertainty of additional delays, combined with the financial position, are the two major reasons why the Alzinova share trades close to our Bear Case levels. We believe that it is the absolute right thing of Alzinova to secure a robust production method of ALZ-101 at this early stage of the development. It will hopefully pay off later on in the development. Although further delays can never be vaccinated fully against, we hope to learn more about the delivery and production process during the coming quarters, which strengthens the updated timeline.
&nbsp;
We update our timeline accordingly, which leads to a new Base Case of SEK 32 per share (35). It is effective immediately. The stock market traded down the share by some 8 percent on Thursday but has done a small rebound so far today.