So the news says that the offering is 7.2 MUR vs. oversubscribed 25+3.75 MEUR
Price -23% (-0.9 / 3.9 EUR)
Springvest organizes a 7.2 M€ share issue for Bioretec
“There is now demand for Bioretec shares, as the cancelled 25 million euro IPO and the 3.75 million euro additional share option were oversubscribed last week”
the financing round will start already on Tuesday. As unlisted shares are now being issued in the share issue, the share price was lowered from the IPO price of 3.90 euros to 3.00 euros. Investors are thus offered the opportunity to participate in Bioretec’s share issue at a significantly more favorable price than in the IPO.
This manipulation is quite interesting. My war chest is a bit empty anyway, so I wouldn’t have participated in the offering regardless, but it seems like I’ll be avoiding this company in the future too. It doesn’t really inspire confidence in the leadership when they go back and forth with something like this. Of course, if it was purely Danske’s decision, I understand, but that should be communicated more clearly.
It’s completely unnecessary to blame the company for this, especially if the chairman of the board is to be trusted, and why wouldn’t he be? The company was put in a very awkward position because Danske feared a short-term drop in the share price, and now the company indeed has to urgently seek funding through various channels. It might even be possible that Bioretec tries to list again this or next year, as all the processes for it are already in place.
“Danske estimated that this would not be an opportune moment, as there would be a risk of the share price falling,” replies Tomi Numminen, chairman of Bioretec’s board.
Doesn’t the oversubscription of the offering indicate interest in the company?
“That’s how we assessed it, but they (Danske) have their own view, which they will comment on themselves,” Numminen says.
“It’s clear that this is disappointing for the company because we reached our goal, but it wasn’t a good enough goal for the arranging bank.”
Well, the board chose the organizer of the listing. Often, companies bid for offering organizers, and it’s possible that Danske was chosen simply because it offered the “best price.” Of course, this is 100% speculation, so I really don’t know. But I wouldn’t say that the cancellation of the offering was an event independent of the company.
Nonetheless, the urgent need for money is apparent here and there. It’s interesting why it was left so “down to the wire.” Did some financing arrangement (e.g., a private equity investor) go wrong, or did getting ready for listing simply drag on too long?
Ultimately, the board of directors is responsible for the pricing of the share issue. Therefore, Danske Bank cannot be solely blamed. Secondly, the pricing of the current share issue might still be too high. Shares are now being traded at a -23% discount, and it’s not possible to trade them on the listed secondary market. In my opinion, the company-specific risk for participants in the new issue is significantly higher than it would have been in the canceled IPO. I still think greed is evident at €3.00. Is the “discounted” price a sufficient risk premium?
In risk calculations, it must also be considered that the less money a company has available, the higher the probability of failure.
Bioretec, by the way, takes a jab at Danske by using the term “reliable partner” for Springvest; it wasn’t just, for example, an old or familiar partner, but a reliable one.
There are bad signs regarding the sales permits for the new product family; the US application was submitted in April 2021, and the forecast was that sales would begin by the first half of 2022 at the latest. Since then, not a word has been heard about the progress of the permit application; the assumption, therefore, is that additional questions have arisen, which in the worst case mean conducting additional studies that must be passed, or the application process will end in a negative decision. A negative decision is practically the same as bankruptcy, so it is regrettable that the situation has not been updated for investors in any way. Silence is a bad sign.
Revenue grew by 35.9% and was EUR 1,422 thousand (1–6/2021: EUR 1,047 thousand).
Gross profit was EUR 1,018 (778) thousand, or 71.6% (74.3%) of revenue, an increase of 30.8%.
The result for the financial period was EUR -1,367 (-2,791) thousand. The result for the comparison period was burdened by separate costs related to the capital acquisition in June 2021.
Earnings per share (undiluted) were EUR -0.10 (-0.26).
Significant events during the review period
In January 2022, Bioretec signed a supply agreement with German Meotec GmbH for the magnesium alloy used as a raw material for biodegradable RemeOs™ products.
In May 2022, Bioretec announced that it had submitted a marketing authorization application for the biodegradable RemeOs™ magnesium screw in the United States and clarified the estimated timeline for granting the marketing authorization. Bioretec estimates that marketing authorization in the United States will be granted in the second half of 2022.
In May 2022, Bioretec signed a distribution agreement with AMI Medical Technologies for bioresorbable Activa products in Israel.
Here’s an article from Salkunrakentaja about Bioretec, a good read especially for those unfamiliar with the company.
“The European Patent Office has announced that it will approve Bioretec’s patent application for hybrid composite material and will grant and publish the patent after confirmation by the company. The announcement caused the company’s share price to rise by 10.5 percent on Friday.”
"Bioretec’s CEO Timo Lehtonen states that seeking De Novo marketing authorization for new products in the United States was an important strategic step for the company, as the United States is the world’s largest single market for orthopedic trauma products.
”Our goal is to be the first to commercialize biodegradable metal implants in the U.S. market. I believe there is demand in these growing markets for our products, which promote patient healing and increase safety and cost-effectiveness in clinical care. The De Novo marketing authorization application provides a registration pathway for new medical devices for which no predicate device is available in the U.S. market,” Lehtonen states."
Bioretec is at an interesting stage as the company awaits the FDA’s decision on market approval for its new bioresorbable metal implant (trauma screw). With market approval, Bioretec plans to transition into a period of strong growth.
On Monday, we are scheduled to record an interview with Verneri regarding the report. Questions are welcome.
It’s great that the tracking has started, but in my opinion, the Bioretec analysis missed the essential point.
Bioretec’s biodegradable metal is an alloy that can be developed into an immensely valuable implant offering. It is an obvious acquisition target because, according to all orthopedic implant market forecasts, the share of biodegradable implants will grow strongly in the future. It seems that not a single one of these market research papers was consulted! And the value of such innovations is typically in the hundreds of millions in an acquisition situation.
Secondly, Bioretec’s biodegradable metal would be the FIRST on the market. I don’t think this was understood in the analysis. What is the so-called first-mover advantage and the overall benefit, for example, for Stryker if it acquires Bioretec’s implants? Currently, no load-bearing implants are biodegradable because there hasn’t been an implant strong enough. Bioretec has the world’s first implant that makes this possible! In the future, every major company in the field will need its own biodegradable metal product families – the one that has it first will have a huge head start.
Also, note that the results in clinical trials were “perfect”; every patient recovered exactly as expected, and also recovered at an accelerated rate. Magnesium, calcium, and zinc all accelerate bone formation, and no removal surgery is needed at all. The time and cost savings for all parties (healthcare, doctor, patient) are considerable.
P.S. I don’t work for the company. I know the company quite well, from a long time ago, and I am an investor
