Genetic Analysis Secures NOK 12.8 Million Through Directed Share Issue
May 6, 2025, 10:29 am
Location: United States, California, Hercules
Employees: 5001-10000
Founded date: 1952
Location: United States, Florida, Fruit Cove
Employees: 5001-10000
Founded date: 1950
In a strategic move to bolster its financial footing, Genetic Analysis AS (GA) has announced a directed share issue, raising NOK 12.8 million. This decision, driven by commitments from existing major shareholders, marks a significant step for the company as it navigates the competitive landscape of diagnostic solutions.
The directed issue involves the placement of 14,889,576 new shares at a subscription price of NOK 0.86 each. This price reflects the average volume-weighted trading price on the Spotlight Stock Market over the 15 trading days leading up to April 24, 2025. The company plans to present this issue for approval at its Annual General Meeting (AGM) scheduled for May 19, 2025.
The funds raised will primarily support the development of GA's diagnostic products, particularly those related to Clostridium difficile. This initiative is further backed by a substantial innovation grant from Innovation Norway, amounting to NOK 1.125 million, contingent upon raising at least NOK 2.5 million through equity offerings.
This approach is not without its drawbacks. The directed issue deviates from the preferential rights typically granted to existing shareholders, leading to a dilution of approximately 30% in the number of shares and votes. However, the board believes that the benefits of this method outweigh the potential downsides. They are also aware of the recent fluctuations in share prices and have taken these into account when determining the subscription price.
To mitigate the impact of dilution, GA plans to implement a Subsequent Offering aimed at shareholders who were not included in the initial directed issue. This offering will allow these shareholders to purchase shares at the same price as the directed issue, totaling around NOK 6 million.
The funds from the directed issue will enable GA to strengthen its collaboration with Ferring, as previously mentioned in a press release from December 2024. The company aims to expand its business partnerships within the microbiome field, a sector poised for significant growth. The demand for diagnostics like GA-map®, which aids in baseline diagnostics and patient follow-ups, is expected to surge as new microbiota-altering drugs enter the market.
However, the board remains vigilant. They have explored various alternatives to the directed issue and found them to be either inaccessible or excessively dilutive for shareholders. If GA fails to secure the necessary capital, it may need to consider alternative strategic measures, which could jeopardize its current business plan.
As the company prepares for its AGM, all eyes will be on the approval of this issue and the subsequent offering. The landscape of diagnostic solutions is evolving, and Genetic Analysis is positioning itself to be a key player in this burgeoning field. With a focus on innovation and strategic growth, GA is poised to navigate the complexities of the market and emerge stronger.
The directed issue involves the placement of 14,889,576 new shares at a subscription price of NOK 0.86 each. This price reflects the average volume-weighted trading price on the Spotlight Stock Market over the 15 trading days leading up to April 24, 2025. The company plans to present this issue for approval at its Annual General Meeting (AGM) scheduled for May 19, 2025.
The funds raised will primarily support the development of GA's diagnostic products, particularly those related to Clostridium difficile. This initiative is further backed by a substantial innovation grant from Innovation Norway, amounting to NOK 1.125 million, contingent upon raising at least NOK 2.5 million through equity offerings.
Navigating Market Challenges
The decision to pursue a directed issue instead of a preferential rights issue stems from a careful assessment by GA's board of directors. They concluded that a preferential rights issue would prolong the capital-raising process and expose the company to greater market volatility. In a climate where liquidity is dwindling and market sentiment is shaky, the board determined that a directed issue would allow for quicker access to necessary funds.This approach is not without its drawbacks. The directed issue deviates from the preferential rights typically granted to existing shareholders, leading to a dilution of approximately 30% in the number of shares and votes. However, the board believes that the benefits of this method outweigh the potential downsides. They are also aware of the recent fluctuations in share prices and have taken these into account when determining the subscription price.
To mitigate the impact of dilution, GA plans to implement a Subsequent Offering aimed at shareholders who were not included in the initial directed issue. This offering will allow these shareholders to purchase shares at the same price as the directed issue, totaling around NOK 6 million.
Financial Health and Future Prospects
GA's financial health is a focal point of this capital raise. The company has been operating with restricted liquidity, which hampers its ability to enhance sales and marketing efforts or continue development projects. Despite gradual improvements in sales and stringent cost control, the board recognizes that additional financial flexibility is crucial for sustaining growth.The funds from the directed issue will enable GA to strengthen its collaboration with Ferring, as previously mentioned in a press release from December 2024. The company aims to expand its business partnerships within the microbiome field, a sector poised for significant growth. The demand for diagnostics like GA-map®, which aids in baseline diagnostics and patient follow-ups, is expected to surge as new microbiota-altering drugs enter the market.
Investor Confidence and Shareholder Engagement
The directed issue has garnered support from a range of existing shareholders, including Bio-Rad Laboratories, which is GA's main shareholder. The board and management have also participated, subscribing to 23% of the proposed issue. This involvement signals confidence in the company's direction and its future potential.However, the board remains vigilant. They have explored various alternatives to the directed issue and found them to be either inaccessible or excessively dilutive for shareholders. If GA fails to secure the necessary capital, it may need to consider alternative strategic measures, which could jeopardize its current business plan.
Conclusion
The directed share issue by Genetic Analysis AS is a calculated maneuver in a challenging market. It aims to secure vital funding for ongoing projects and future growth. While the dilution of shares raises concerns among existing shareholders, the potential benefits of increased financial flexibility and strategic partnerships could outweigh these risks.As the company prepares for its AGM, all eyes will be on the approval of this issue and the subsequent offering. The landscape of diagnostic solutions is evolving, and Genetic Analysis is positioning itself to be a key player in this burgeoning field. With a focus on innovation and strategic growth, GA is poised to navigate the complexities of the market and emerge stronger.