CROSSJECT FINANCING ISSUE
We welcome the launch of a c. €8m capital increase aimed at securing the needs of the group until the Emergency Use Authorization is reached, in the Q125 according to the management. It will give the management some room for manoeuvre as well as calm investor fears in a context where the financing of the development of Zepizure was not clear after September 2024.
FACT
Crossject has announced a capital increase with preferential subscription rights.
ANALYSIS
The total number of new shares would reach 4.33m with a €0.1 nominal value, that is a €0.433m capital increase with a €7.56m issue premium. 17 shares will enable investors to buy 2 new shares at a price of €1.848 or a 10% discount to the share price as at 30 April and a 23% discount over the average price over the last 30 days. At the end of the day, the new number of shares would reach 41.1m.
The subscription periods runs from 16 to 30 May 2024, with the subscription rights listed between 14 and 28 May and the final outcome of the capital increase announced on 4 June.
In all, Crossject would raise €8m, mainly to finance the launch of Zepizure in the US (€6m) and the development costs of other NTEs (Hydrocortisone and Epinephrin)
All in all, we like this move since:
- It solves the financing issue, the group having made public that it was only financed until September 2024 which was obviously a major concern for investors.
- Gemmes Venture, the main shareholder of the group with 24.48% is committed to subscribing up to €6m of the capital increase or 75%) and has the right to subscribe to 100% of the offer. This is a clear sign of confidence from this shareholder and can only please the market.
- This financing tool is potentially far less dilutive than the previous one (70 amortizable bonds convertible into new stock with a nominal value of €100,000, for an amount of €7m that could lead to the issuance of 7.8m shares). It also, by definition, does not increase the net debt of the group and does not bearing interest unlike the 7.5% coupon on the bonds.
- It also avoids the group needing to resort to such bonds which investors tend to dislike with a number of examples where share prices have remained under pressure for sometimes a very long period of time.
- It will finance the company’s needs until the EUA authorization is granted (in the Q125 according to management), together with the financing already provided by BARDA.
IMPACT
We welcome this move which allows the group to move forward calmly towards the granting of the EUA (Emergency Use Authorization) in the US planned for the Q125. We will integrate the impact of the capital increase on our forecasts and valuation.
