BioInvent: A Substantial Capital Raise
Redeye Research Note 2021/02/23
BioInvent announces a directed issue of about SEK 962m to international and Swedish institutional investors. The intended use of funds is to prepare for a pivotal trial for BI-1206 in lymphoma and expand the clinical programs for BI-1808 and BT-001 to include combinations with checkpoint inhibitors pembrolizumab.
Our initial reflections on the news
- Following the issue, BioInvent will have an exceptionally strong ownership base, certainly for an early-stage Nordic Biotech company. In addition to industrial owners like Pfizer and CASI and several European specialist investors, the top owner will become US Redmile Group with some 16.8 percent. Redmile is a large (USD 8bn) specialist US investor and the largest owner of Hansa Biopharma. We view the capital raise as a stamp of quality and validation of the project portfolio.
- While the dilution to existing owners not participating in the issue is substantial (32.7 percent), the issue price of SEK 50.36 is in line with current trading in Bioinvent shares.
- We will review our valuation following the news. However, we believe an extended financial runway, possible faster development for BI-1206 in lymphoma, and a motivated lower WACC should compensate for the dilution and expect to stand by our current base case valuation SEK 75 (barring any major surprises in the Q4 report to be released later today).