Neola Medical is in the process of establishing itself properly in the US to gear up its work with the Neola lung monitoring system. The company is now carrying out a directed share issue of 20 million SEK to finance the development and market preparations. BioStock reached out to CEO Hanna Sjöström to find out more.
Neola Medical has developed the Neola system for continuous monitoring of lung function in premature infants. This technology enables healthcare professionals to detect and treat complications at an early stage in hopes of improving the survival chances of these vulnerable patients.
The company is currently in the process of establishing itself in the US, where it has established an office in Palo Alto. Recently, a subsidiary was also registered in the country.
Directed share issue of 20 million SEK
To drive further development and market initiatives, Neola’s Board of Directors has proposed a directed share issue totaling 20 million SEK. The issue deviates from the shareholders’ preferential rights and is intended to strengthen the company’s shareholder base and secure financing in a cost-effective manner.
According to the Board of Directors, they have carefully considered alternative financing methods and concluded that the directed issue is preferable to a rights issue. A rights issue would have entailed a higher cost and taken longer to carry out, as well as increased exposure to potential market volatility.
New owner joins the company
Among the participants in the planned share issue are current shareholders such as Anmiro, Pär Josefsson and LMK Forward. In addition to securing financing for the coming year, the issue also aims to include a new investor who has shown a long-term commitment to the company, namely Brodvik, who will participate in the issue with 10 million SEK.
Subscription price set at premium
With regard to the subscription price, the Board of Directors has placed great emphasis on it being in line with market conditions, which according to the Board has been achieved through arm’s length negotiations with the investors participating in the issue. The subscription price has been set at approximately 1.38 SEK per share, which represents a premium of 11.5 per cent compared to the closing price of the company’s share on Nasdaq First North Growth Market on 12 December 2023. The resolution on the directed share issue entails a dilution of approximately 20.62 per cent for existing shareholders.
The final approval for the directed share issue is now in the hands of the shareholders at an extraordinary general meeting, which will be held on December 29. The shareholders participating in the issue have undertaken to support the proposal.
BioStock contacted Neola’s CEO Hanna Sjöström for a comment on the company’s success in securing financing for the coming year.
First of all, Hanna, what are your thoughts on the fact that you have now managed to secure financing for the coming year?
– It is very gratifying that we have managed to secure financing for 2024 in a time and cost-effective way and we now have funding for 2024 and our clinical study in the US. It will be an exciting and intensive year focused on study activities. As a shareholder, you have the opportunity to look forward to a clinical study on premature infants in the US, and several other studies, with the purpose of proving our technical measurements and ensuring that healthcare professionals use Neola correctly.
What does this mean for the company’s development?
– The directed share issue means that we get space to work and can put all the energy and focus of the team into developing the company’s operations in the same fine way that shareholders have been able to see over the years. With a focus on our clinical study in the US starting in 2024, we are also preparing for the market launch of Neola in the US.
– We are now on good financial footing to reach our upcoming milestones linked to our studies, and, at the same time, we will have the resources required to start establishing ourselves in the US. We have started our US subsidiary, which is another step in our strategy to reach the US market and from there continue to create long-term shareholder value.
With this capital round, Brodvik becomes a new major shareholder. How do you view their entry into the company?
– Brodvik is a family office that is particularly interested in new technology and has a personal connection to premature babies in the family. This is an investor who has followed the company for a long time and was keen to invest in the company and take a larger position than was possible by buying shares on the free market. We saw an opportunity for an efficient capital raise at the same time as we welcome a strong and long-term major shareholder in Neola Medical. Brodvik enters as the third largest owner with 10.3 per cent of the ownership and I see it as a sign of strength for Neola Medical that we have strengthened our ownership base and broadened the ownership circle with a new strategic investor who has a great interest in the company and its development.
The capital market for life science companies is pretty tough right now. Nevertheless, you secure a premium in your issue. What’s your take on that?
– The new investor Brodvik and our existing owners have for a long time seen that we have followed our plan, fulfilled our milestones and developed very well as a company. Therefore, there has been a great deal of support from our largest owners for financing, both in the short term and in the longer term, which was the reason they wanted to participate in this directed issue and have been positive about paying a premium. Brodvik is now entering as a completely new investor who has followed the company for a very long time. They will come in to finance the company in a first step for 2024, to secure the clinical studies in the US but also to be involved in the long term, which creates security and stability for both the company and all shareholders.
– It was very important for the company that there is a premium on the share price to ensure that the dilution effect is as small as possible for the existing shareholders. This is also the perspective that both Brodvik and the other participants in the directed share issue have had. With a premium, we show the potential of Neola Medical and what a great company it is. This has been a very important signal, and an unusually strong one at that, especially in the current capital market.