New and larger shareholders back SynAct’s capital raise – CEO comments
SynAct Pharma has announced a capital raise of approximately SEK 65 million. The funding, subject to approval by an extraordinary general meeting, will be achieved through a combination of directed issues and a fully guaranteed rights issue. This initiative is supported by some of the company’s larger shareholders and will fund the continued development of resomelagon in rheumatoid arthritis, for which the company just received EU trial approval for its phase IIb ADVANCE study.
SynAct Pharma is developing selective melanocortin therapeutics to address inflammatory and autoimmune diseases. Its lead compound, resomelagon (AP1189), may help resolve inflammation by providing both anti-inflammatory activity and by triggering the immune system’s natural inflammatory resolution mechanism. Resomelagon is primarily being developed for the treatment of rheumatoid arthritis (RA).
Progress of the ADVANCE study
SynAct Pharma is advancing its efforts to address the needs of newly diagnosed RA patients with high disease activity and systemic inflammation. This patient group is the focus of the company’s ongoing phase IIb ADVANCE study, which is actively recruiting patients at more than 20 sites in a total of seven countries across Europe and the US. SynAct Pharma aims to complete patient enrollment by the fourth quarter of 2025.
The ADVANCE study is set up as double-blind placebo-controlled trial with the aim to test three doses of resomelagon vs placebo in combination with methotrexate as a new patient friendly first-line treatment option in RA. The primary aim is to confirm the treatment potential of the compound in newly diagnosed patients with sign of systemic inflammation and identify optimal doses for phase III.
Capital raise to fuel continued development
To finance the phase IIb trial, SynAct Pharma has announced its intention to raise capital, subject to approval at an extraordinary general meeting on December 13. The capital raise consists of directed issues amounting to SEK 45 million, along with a SEK 20 million rights issue.
For technical reasons the directed issues are divided into three tranches and will include SEK 44 million from external investors such as Sanos, the company’s largest shareholder, Hunter Capital, specialist investor in tech and life sciences Johannes Schildt, co-founder of Kry. In addition, 2 tranches of a total of approximately SEK 1 million from board members and management. Priced at SEK 8.65 per share, the offering represents a 6.1% premium to the last closing price prior to the announcement.
The rights issue
The SEK 20 million rights issue, fully underwritten by Hunter Capital and David Palm, provides existing shareholders with the opportunity to participate in the capital raise. Also, the rights issue is priced at SEK 8.65 per share, which represents a 6.1% premium to the last closing price prior to the announcement.
Shareholders will receive one subscription right per share, and 18 subscription rights will allow the purchase of one new share. The record date for the rights issue is December 17, 2024, with the subscription period running from December 19, 2024, to January 7, 2025.
Use of proceeds and next steps
The net proceeds, estimated at approximately SEK 61 million after issuance costs, will be allocated as follows: 60% to advance resomelagon’s development for rheumatoid arthritis, 20% to explore additional indications, and 20% for general corporate purposes.
The capital will extend SynAct’s operational runway for the next 12 months and enable progress on its strategic priorities. The outcome of the rights issue is expected to be announced on January 8, 2025.
The CEO expresses confidence in the development plan
BioStock contacted SynAct Pharma’s CEO Jeppe Øvlesen to gain insights into his perspectives on the capital raise and the company’s development.
What is your comment on the capital raise?
– I am very happy to announce this transaction, which is a result of great support from some of our larger shareholders believing in our plan going forward. It was done in a very cost-efficient way compared to other transactions in the market. We are now for the second time this year executing on a financing structure which we and our larger shareholders view as a sign of strength in this rather tough financing market for Biotech companies. We continue to execute on the plan we communicated in Q2 and with this financing in place, we are securing the funds to facilitate that.
How do you assess the potential of your pipeline?
– Our pipeline, including our lead compound resomelagon (AP1189) gives us the potential to be a leading player in the new innovative field of resolution therapy, where the concept is to reset the immune system rather that suppress the immune system, which is how most current therapies for inflammatory and autoimmune diseases works.
– Resomelagon (AP1189) that we are now testing in a large phase IIb study in Europe and the US as first line treatment in Rheumatoid Arthritis is a complete new way of addressing inflammatory and autoimmune diseases and fits perfect into the current treatment guidelines for Rheumatiod Arthritis as well as for other diseases, as it has an fast onset of action, is well tolerated and is given as a tablet once daily.
Could you tell us a bit more about how resomelagon could fit into the treatment regime and improve it?
– In combination with the widely used first line compound methotrexate, we strongly believe that it could significantly reduce the use of glucocorticoids that are effective, but also associated with a number of severe treatment limiting side effects. Further, in the right setting the combination of resomelagon and methotrexate has the potential to delay or even reduce the introduction of the expensive biologics and JAK inhibitors that are in many effective compounds, but also expensive and importantly associated with unwanted often treatment limiting side effects.
What is your perspective on the significance of conducting the capital raise at a premium?
– The potential of the pipeline as well as the focused and cost-effective way we run the company is probably why it has been possible for us to, for the second time in 2024, make a directed issue at a premium. We decided to combine the directed issues with a smaller rights issue to send the signal to our existing shareholders that we appreciate their continued support and thereby giving them the opportunity to project their investment in the company.
– We have recently seen larger right issue with significant discounts where the small retail investor has been diluted and at the same time seen the price of their share be reduced significantly. This is to our best opinion not the way you should handle long-term investors and we are proud that we with the current investment round minimize our existing investors dilution and have been able to raise new money to a premium rather that a discount. We trust that our thousands of shareholders will appreciate this transaction.
– In 2025 our focus will be on execution the strategy laid out and continue our strong focus on business development.
The content of BioStock’s news and analyses is independent but the work of BioStock is to a certain degree financed by life science companies. The above article concerns a company from which BioStock has received financing.
