Issues are back after a pause


Last year almost all companies in the portfolio asked for more money and made issues. On this front, this year has been quiet – until now. The last two months, though, CybAero, Dignitana, Cantargia and Recyctec have announced private and preferential right issues – and there is a warrant series due as well, which I got as part of A1M Pharma’s issue in June 2016. In other words, I could easily switch Christmas presents for shares – but I am not sure that my sons will be happy.


CybAero have had a difficult year. One year ago, the share price were above 26 SEK and now it hovers slightly below 4 SEK. During the year the company has been close to the edge and at one time, I wondered if I were to experience my first bankruptcy. The Dubai-based Bracknor stepped CybAeroin and provided a part of the necessary funding – another will come with this preferential rights issue. The aim is 46 MSEK if fully subscribed.

Issue conditions are that current shareowners got subscription rights 1:2 (1 share – 2 rights) and can subscribe for units until December 7th at a price of 3.75 SEK. Friday the share closed 3.79 SEK. The units are 1 share and 1 warrant. The warrants each gives the right to buy one share in September 2018 at 5.5 SEK. Guarantors have made guarantees for ¾ of the issue.

If it is the last issue? I guess it is 50:50. CybAero still needs to prove their ability to commercialize their huge developmental spending.


Cantargia’s issue is highly ambitious and is a quite huge issue. The aim is to get 232 MSEK. There are at the same time a private (101 MSEK) issue and a preferential rights issue (131 MSEK). Issue price is in both cases 6.8 SEK. Current shareowners will have 3 subscription rights per 5 shares and can subscribe between December 1th and 15th. The issue is fully guaranteed. November 29th is the spilt date when share and subscription right are divided.

The issue will provide funding until 2020 and will enable Cantargia to expand the current Phase I/IIa studies of CAN04. After the issue Cantargia will apply for the Nasdaq main list (Small Cap).

I am not sure that this issue will bring Cantargia to a point where there is a positive cash flow. On the other hand it CAN04 seems to be a strong candidate for treating cancer. This might attract partners at an early stage.


Dignitana ran out of cash and announced a preferential rights issue in the beginning of November. Shareowners can subscribe 1:1 and the subscription period is December 11th to 27th. The subscription price is 2.1 SEK per share and spilt date is December 5th.

This year have been a strange year for Dignitana in many respects. On one hand, the market Dignitanapenetration in America goes well and on the other, problems have accompanied the market penetration. For the investors the year has been terrible with a share price falling from around 20 SEK one year ago to around 4 SEK now. Reports this year have been strange as well, since revenue has gone down each quarter – despite the fact that revenue this year is more than the double of 2016.

Lately the company has decided to move to USA and announced that breakeven will be reached by the end of 2018.

The last issue? Well, I thought so last time and proved wrong. On the other hand, the burn rate is moving downwards. The coming issue of 42 MSEK will last for 4 quarters at the current level of cash burn. If the burn rate goes down in Q4 and during 2018, there should be sufficient cash for at least 2018. So it might be the last issue…


Recyctec moved to the observation list this week. The reason is cash shortage. The plan is to make a private placement of app. 5 MSEK. This will suffice for Q18, during which Recyctec plans to sell and lease back its property in Jönköping. Probably there is a buyer at hand – otherwise it is risky to hope for a sale at the right price in just 4 months.

A1M Pharma

Along the shares in A1M’s 2016-issue came warrants. This warrant series are due in December and holders can buy shares at a price of 15 SEK. This series had two windows where investors could buy shares. At the first window no one bought as the share price were significantly below 15 SEK. Therefore, in the current window you either buy or lose the warrant.

A1M PharmaSometimes I cannot help feeling a bit sorry for A1M. Their latest issues was not fully subscribed and things do not seem work for the company in terms of funding. On the other hand, the drug that they work with seems to hold potential in numerous areas. Nevertheless, it cannot attract funds. Now we are back at the warrants. The share price has gone up during October and November as a number of good news same out. At several occasions, it has passed 15 SEK, which is the magic line in terms of securing funds for the future development. Unfortunately, this week the share fell heavily and as the subscription period begins, the price is below 14. If the share price stays, all the effort the company does participating in investor meetings, buying reviews from Nordea Markets etc. will be in wain.

Owners of warrant have until December 8th to decide if to participate.

If I were to rank the issues

I guess that if I should make a list of risk-reward in the issues I would take Cantargia and Dignitana first and CybAero and A1M last. The potential in Cantargia and A1M is probably comparable, but there is a distinct difference in ability to attract funding that makes the risk in A1M larger. CybAero is still completely a lottery ticket. The market cap today is approximately half the book value of the assets. If CybAero manage to land an order, there is a probable short term upside. On the other hand, the company burns 6 MSEK per month and have achieved a revenue of 0.65 MSEK in the first six months of 2017.

Check out my growth share portfolio, the share price trigger list or my EGS (Evaluation of Growth Shares) Model.


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