The cash position ended the quarter at SEK0.7m, with a quarterly burn rate of SEK-1.2m. We argue that the company’s cost control is solid, which we believe is appropriate as the focus should be on minimising the burn rate until a deal is announced. However, with the announced capital raise, the burn rate is not our primary concern any longer.

The rights issue, amounting to SEK28.6m in gross proceeds, is secured to 50%, of which 48.3% is secured via guarantee commitments and 1.7% through subscription undertakings from the CEO. A bridge loan of SEK2m will be taken to finance the company during the capital raising process, and the loan will be repaid immediately upon receiving the proceeds. If the rights issue is fully subscribed, the dilution will be c58% for investors who choose not to defend their ownership.

Following the report, we maintain our estimates regarding VAL-001, as the uptick in deal sentiment we witnessed was not enough to warrant a change in the likelihood of a deal. As for our valuation, we add the dilution effect from the rights issue and adjust our fair value range accordingly. Assuming a subscription rate of c60%, our new fair value range is SEK0.03(0.05)-0.55(1.00), with a Base Case of SEK0.22(0.40) per share.