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Vicore Pharma Holding AB (VICO-SE): Acquisition of INIM brings HealthCap on board
Recommendation: OUTPERFORM
Target Price: SEK43.00
Current Price: SEK11.50 (COB on 2^nd July 2018)

KEY TAKEAWAY

Vicore has announced its intention to acquire INIM Pharma AB, a private Swedish biotech company focused on severe rare lung diseases, through a share issue that will lead to INIM's majority shareholder and leading VC firm HealthCap becoming Vicore's largest shareholder. In connection with the acquisition, Vicore's Board of Directors proposes a SEK80m rights issue and the distribution of the majority of Vicore's shareholding in recently listed I-Tech to current shareholders ahead of the acquisition and rights issue. Both transactions require approval of an EGM to be held on 13 August 2018. The acquisition of INIM complements Vicore's lead asset C21 in Phase IIa for idiopathic fibrosis ("IPF") and brings on board a successful, well-known life science investor. We expect the SEK80m rights issue plus SEK20m net cash from INIM to extend Vicore's cash runway until at least H2/2019E. We maintain our OUTPERFORM recommendation and SEK43 target price.

Acquisition of INIM Pharma AB brings in complementary asset for lung disease

INIM Pharma focuses on inhaled immunomodulatory drugs. Its lead asset, due to enter Phase I in 2019, is a local treatment for severe lung diseases such as IPF which is being developed with Nanologica using their drug delivery technology. Vicore will pay for the acquisition through the issue of 8.851m shares, diluting current shareholders by 35.8%.

Leading European VC firm HealthCap becomes Vicore's largest shareholder

Following the transaction, HealthCap, INIM's majority shareholder with an 85% share, will hold 30.4% of Vicore shares. HealthCap is a leading European venture capital firm focused on life sciences that was an early investor in multiple European biotech success stories including Algeta and Wilson, sold to Bayer and Alexion for $2.9bn and $855m, respectively. Thus, we expect Vicore to benefit from the extensive scientific, medical, operational, and financing knowledge and expertise of the seasoned HealthCap team.

SEK80m rights issue plus net cash from INIM extends cash runway to H2/2019E

The proposed rights issue of SEK80m is already covered by 56.5%, with HealthCap subscribing to its pro rata share. The resulting cash inflow, together with the SEK20m net cash on INIM's balance sheet, should extend Vicore's cash runway to at least H2/2019E on our current estimates.

Majority of I-Tech shares to be distributed to current Vicore shareholders

As part of the deal, Vicore's Board proposes to distribute the majority of the shareholding in I-Tech (listed on Nasdaq First North in May) equating to 2.075m shares to Vicore shareholders ahead of the acquisition and rights issue.

Kind regards,

Brigitte de Lima, PhD, CFA | Analyst

goetzpartners Healthcare Research Team | Research Team

goetzpartners securities Limited

The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.

T +44 (0) 203 859 7725 | healthcareresearch@goetzpartners.com / brigitte.delima@goetzpartners.com

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